FG cuts interest rate on late tax payment from Oct 1 - Punch Newspapers

File photo: The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele.

The Federal Government has reduced the interest rate applicable to late payment of tax, with the new regime taking effect from October 1, 2026. The Federal Ministry of Finance disclosed this in a press release issued in Abuja on Thursday, September 24, 2026, announcing 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. Under the new order, interest on tax payable in naira will be charged at the Central Bank of Nigeria’s Monetary Policy Rate plus one percentage point, compared with the five-percentage-point spread previously applicable. However, the rate will not fall below the yield on 364-day Treasury Bills. The ministry said the order was issued under Section 65 of the Nigeria Tax Administration Act, 2025, adding that it would apply uniformly across Federal, State and Federal Capital Territory tax authorities.See more Punch stories on Google.Add Punch on Google “For tax payable in Naira, interest is charged at the Central Bank of Nigeria’s Monetary Policy Rate plus one percentage point. This is a reduction from the spread of five percentage point previously applicable but the rate will not fall below the yield on 364-day Treasury Bills, which reflects what it costs Government to fund itself when taxes are paid late,” the ministry stated. For taxes payable in foreign currency, the ministry said interest would be charged at the Secured Overnight Financing Rate, the international benchmark for US dollar rates, plus six percentage points. It added that if SOFR is discontinued, its official successor rate would apply. The ministry said one rate would apply for each calendar month, with the Nigeria Revenue Service directed to publish the applicable rates on its website by the third business day of every month. FG links interest charges on unpaid taxes to borrowing costs NRS awards N5.75m to winners of tagline competition LCCI urges banks to lower lending rates after CBN cut According to the ministry, interest would be calculated as simple interest on a daily basis, from the due date until payment. Speaking on the order, Oyedele said, “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.” He added, “Just as important is certainty. Every taxpayer, whether dealing with the Nigeria Revenue Service or a State revenue service, will know the rate in advance, see it published every month, and be charged in the same way. Clear rules make compliance easier and support a fair, predictable tax system.” The ministry said the new rates would apply to interest arising from October 1, 2026, including interest on tax that became due before that date. It, however, stated that interest that arose before October 1 would not be affected to the extent that it was specifically provided for under the rules in force at the time. The order supersedes the 2017 notice on interest on unpaid taxes and any other earlier notices on the subject, the ministry said. The ministry clarified that the order does not change the 10 per cent penalty for late payment under Section 65 of the Act. It added that relevant tax authorities retain the power under Section 66 of the Act to waive penalty or interest where good cause is shown. The ministry advised taxpayers to file their returns and pay applicable taxes on time, while those with outstanding liabilities were advised to settle them promptly or engage the relevant tax authority. Tosin Oyediran Tosin Oyediran is a journalist at Punch Newspapers with over eight years of professional experience in reporting and storytelling. He is known for conducting incisive interviews and producing compelling human-angle stories that bring clarity and depth to the news. Tosin covers a broad range of beats including politics, health, advocacy, sports, and entertainment, with a strong focus on people-centred reporting. His work reflects firsthand newsroom experience, editorial insight, and a commitment to accurate, engaging, and trustworthy journalism.

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