The Federal Government (FG) has reduced the penalty interest rate for late settlement of tax liabilities, with the new regime taking effect from October 1, 2026.
Under the new arrangement, interest on tax liabilities payable in naira will be pegged to the Central Bank of Nigeria’s (CBN) Monetary Policy Rate (MPR) plus one percentage point, down from the previous five percentage point penalty.
The measure is contained in the Nigeria Tax Administration (Interest on Late Payment of Tax) Order, 2026, issued yesterday by the Minister of Finance and Coordinating Minister of the Economy, Mr Taiwo Oyedele, pursuant to Section 65 of the Nigeria Tax Administration Act, 2025.
According to the minister, the new Order will apply uniformly to taxpayers dealing with federal, state and Federal Capital Territory (FCT) tax authorities. However, the applicable interest rate on naira denominated tax liabilities will not fall below the yield on 364 day Treasury Bills, reflecting the Federal Government’s cost of borrowing when tax payments are delayed.