Business

FG Unveils New Interest Regime For Late Tax Payments

Published September 28, 2026 at 8:29 AM

Key Takeaways

The Federal Government approved a new penalty interest regime for late tax payments, cutting the add-on to CBN MPR plus one percentage point from October 1, 2026.
Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, issued the Order under Section 65 of the Nigeria Tax Administration Act, 2025, replacing the old five-point penalty.
The order applies across federal, state and FCT tax authorities, sets a minimum floor at 364-day Treasury Bills yield, and uses SOFR plus six points for foreign-currency taxes.

Taxpayers who fail to settle their liabilities on time will face a lower penalty interest rate under a new regime approved by the Federal Government.

The new arrangement, which takes effect from October 1, 2026, will peg interest on tax liabilities payable in naira to the Central Bank of Nigeria’s (CBN) Monetary Policy Rate (MPR) plus one percentage point, Naija News understands.

This replaces the previous penalty of five percentage points above the applicable rate.

The measure is contained in the Nigeria Tax Administration (Interest on Late Payment of Tax) Order, 2026, issued by the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele.

The minister issued the order under Section 65 of the Nigeria Tax Administration Act, 2025.

According to Oyedele, the new interest regime will apply uniformly to taxpayers dealing with federal, state and Federal Capital Territory (FCT) tax authorities.

The order provides that interest on naira-denominated tax liabilities will not fall below the yield on 364-day Treasury Bills.

The government said this reflects the cost it may incur when it has to borrow money because of delayed tax payments.

For tax liabilities payable in foreign currencies, the interest rate will be based on the Secured Overnight Financing Rate (SOFR) plus six percentage points.

The order also states that if SOFR is discontinued, its officially designated successor rate will be used.

Oyedele said the new regime was introduced to bring the cost of delayed tax payments closer to prevailing market conditions.

He added that the arrangement would also give taxpayers more certainty about the financial consequences of failing to pay their taxes on time.

“Tax that is due belongs to the public. When it is paid late, Government may have to borrow to fill the gap, and the cost falls on everyone.

“This Order ties the cost of late payment to real market rates, so that delaying tax does not become a cheaper form of credit than the market itself,” the minister stated.

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