The Federal Government has introduced a new method for calculating interest on taxes that are paid late.
The Nigeria Tax Administration (Interest on Late Payment of Tax) Order, 2026, will take effect on October 1, 2026. It applies across federal, state and Federal Capital Territory tax authorities.
For taxes owed in naira, the interest rate will be the CBN (Central Bank of Nigeria) Monetary Policy Rate plus one percentage point.
However, the rate cannot fall below the yield on 364-day Treasury Bills. This replaces the previous system, which added five percentage points to the benchmark rate.
For taxes owed in foreign currency, the rate will be SOFR (Secured Overnight Financing Rate) plus six percentage points. SOFR is a benchmark commonly used for US dollar borrowing.
How it will work
The NRS (Nigeria Revenue Service) will publish the applicable interest rates by the third business day of every month.
Interest will then be calculated daily using simple interest from the date the tax became due until it is paid.
The new interest system does not remove the existing 10% penalty for late tax payment. A taxpayer who pays late may therefore face both the penalty and interest.
What this means for you
If you pay your taxes on time, nothing changes immediately.
But if you have an outstanding tax bill, delaying payment could become more expensive because the interest charged will move with market rates.
Businesses and individuals with unpaid taxes may also need to check the NRS rate each month rather than assuming the cost of late payment stays fixed.
What happens next
The new rates begin on October 1.
They will also apply to interest that starts accumulating from October on older unpaid taxes, although interest accumulated before October will remain under the previous rules.