FEDERAL GOVERNMENT REDUCES INTEREST RATE FOR LATE PAYMENT OF TAX FROM 1ST OCTOBER

The Federal Government has announced a reduction in the interest charged on overdue tax liabilities, as part of efforts to make the tax system more predictable and better aligned with prevailing market conditions.

Under a new Order issued by Finance Minister and Coordinating Minister of the Economy, Taiwo Oyedele, interest on late payment of taxes denominated in naira will now be calculated at the Central Bank of Nigeria’s Monetary Policy Rate (MPR) plus 1 percentage point, compared with the previous MPR plus 5 percentage points.

For tax liabilities payable in foreign currency, the applicable rate will be SOFR (Secured Overnight Financing Rate) plus 6 percentage points.

The new rates will take effect from October 1, 2026, and will apply consistently across federal, state and FCT tax authorities.

According to the Minister, the reform is intended to tie the cost of late tax payments more closely to prevailing market rates while giving taxpayers greater certainty about the financial consequences of delayed payments. The government also wants to ensure that taxpayers do not find it financially more attractive to delay paying their taxes than to obtain financing through the market.

Under the new arrangement, the Nigeria Revenue Service (NRS) will publish the applicable interest rates monthly, by the third business day of each month.