The Federal Government has revised the interest framework for overdue tax obligations, reducing the additional margin charged above the Central Bank of Nigeria’s Monetary Policy Rate from five percentage points to one percentage point.
The new framework will take effect from October 1, 2026, and is designed to link the cost of delaying tax payments more directly to prevailing borrowing conditions in Nigeria’s financial markets.
Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, issued the Nigeria Tax Administration (Interest on Late Payment of Tax) Order, 2026, according to a statement from the Federal Ministry of Finance.
Under the framework, interest on naira-denominated tax debts will be charged at the CBN’s Monetary Policy Rate plus one percentage point, subject to a minimum rate linked to the yield on 364-day Treasury Bills.
Government Links Tax Delay to Borrowing Costs
Oyedele said the policy was intended to prevent delayed tax payments from effectively becoming a cheaper source of financing than borrowing from the market.
“Tax that is due belongs to the public. When it is paid late, the government may have to borrow to fill the gap, and the cost falls on everyone,” the minister said.
He added that linking the charge to market rates would ensure that postponing tax payments did not become cheaper than obtaining credit elsewhere.
The measure effectively creates a floating cost for late tax payments because changes in the MPR or applicable Treasury bill yield could affect the interest imposed on outstanding liabilities.
Rule Applies Across Tax Authorities
The ministry said the order was issued pursuant to Section 65 of the Nigeria Tax Administration Act, 2025.
It will apply uniformly across federal, state and Federal Capital Territory tax authorities, according to the supplied report.
The reduction in the margin above the MPR could lower the additional penalty component facing businesses and individuals with overdue tax obligations.
At the same time, linking the rate to monetary and financial-market conditions preserves a cost for delaying payments.
The measure comes as Nigeria continues implementing changes to its tax system aimed at strengthening administration and improving government revenue mobilisation.
