FG Slashes Interest Rate on Late Tax Payment
The Federal Government of Nigeria (FG) has implemented a new policy aimed at reducing the penalty interest rate for late tax payment. The move is part of efforts to align the cost of late tax payments with prevailing market conditions and provide taxpayers with greater certainty about their obligations.
The new arrangement, effective from October 1, 2026, is outlined 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, Mr. Taiwo Oyedele.
New Penalty Interest Rates for Late Tax Payments
- For tax liabilities payable in Nigerian Naira, the interest will be pegged to the Central Bank of Nigeria's (CBN) Monetary Policy Rate (MPR) plus one percentage point, with the rate not falling below the yield on 364-day Treasury Bills.
- 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 Minister explained that the new regime is aimed at ensuring that the cost of late tax payments is tied to real market rates, so that delaying tax payments does not become a cheaper alternative than the market itself.
The Nigeria Tax Administration (Interest on Late Payment of Tax) Order, 2026, is expected to provide taxpayers with greater certainty about their obligations and align the cost of late tax payments with prevailing market conditions.
Government's Motivation for the new policy
Speaking on the rationale behind the new policy, Mr. Oyedele stated that "Tax that is due belongs to the public. When tax payments are delayed, the government may have to borrow to bridge the gap, and the cost falls on everyone. This new order is aimed at ensuring that the cost of late tax payments is tied to real market rates, so that delaying tax payments does not become a cheaper alternative than the market itself.
The Minister of Finance and Coordinating Minister of the Economy, Mr. Taiwo Oyedele, has announced that the Federal Government of Nigeria (FGN) has introduced a new policy that aims to reduce the penalty interest rate for late tax payments.
New Interest Rates for Late Tax Payments
The new policy will apply to tax liabilities payable in Nigerian Naira, with the interest rate being pegged to the Central Bank of Nigeria's (CBN) Monetary Policy Rate (MPR) plus one percentage point. The rate will not drop below the yield on 364-day Treasury Bills.
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 Minister explained that the new order is designed to ensure that the cost of late tax payments is tied to real market rates, so that delaying tax payments does not become a cheaper alternative than the market itself.
New Order on Late Payment of Taxes
The Nigeria Tax Administration (Interest on Late Payment of Taxes) Order, 2026, has been issued by the Minister of Finance and Coordinating Minister of the Economy, Mr. Taiwo Oyedele.
The new policy will apply to tax liabilities payable in Nigerian Naira, with the interest rate being pegged to the Central Bank of Nigeria's Monetary Policy Rate (MPR) plus one percentage point. The rate will not go below the yield on 364-day Treasury Bills.
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 Minister clarified that the new order is intended to ensure that the cost of late tax payments is tied to real market rates, so that delaying tax payments does not become a cheaper alternative than the market itself.
The Nigeria Tax Administration (Interest on Late Payment of Taxes) Order, 2026, has been issued by the Minister of Finance and Coordinating Minister of the Economy, Mr. Taiwo Oyedele.
The new policy will apply to tax liabilities payable in Nigerian Naira, with the interest rate pegged to the Central Bank of Nigeria's Monetary Policy Rate (MPR) plus one percentage point. The rate will not fall below the yield on 364-day Treasury Bills.
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 Minister explained that the new order is intended to ensure that the cost of late tax payments is tied to real market rates, so that delaying tax payments does not become a cheaper alternative than the market itself.</<p><small>Source: Vanguard News — read the original story there.</small>
