Federal Government changes rules on extra interest for late tax payment starting from October 1, 2026.
The Federal Government of Nigeria has made a major decision about how extra money will be calculated whenever people or businesses fail to pay their taxes on time.
Under this new system, the government announced that starting from October 1, 2026, any extra interest charged on late tax payments will no longer be fixed at a high rate like before.
Instead, the extra cost will now move up or down together with the main interest rate set by the Central Bank of Nigeria, which is called the Monetary Policy Rate.
The government introduced this new policy to make sure that people who delay paying their taxes do not use government money as a cheap loan.
The new rule was created through an official government paper signed by the Minister of Finance and Coordinating Minister of the Economy, Mr. Taiwo Oyedele.
The directive is called the Nigeria Tax Administration Interest on Late Payment of Tax Order of 2026. Under this new order, if someone pays tax late in naira, the extra interest charged will be the Central Bank rate plus just one additional mark on top, instead of the previous five marks added in the old system.
This new rule will affect all taxpayers across the country, whether they are paying through the federal tax office, state tax offices, or the tax department in Abuja.
Every month, the Nigeria Revenue Service will publish the exact extra interest rate on its main website by the third working day so that every citizen can see it clearly.
The interest will be counted day by day from the exact date the tax was supposed to be paid until the full amount is finally settled.
If someone pays in foreign currency like US dollars, the extra interest will be calculated using an international benchmark rate called the Secured Overnight Financing Rate plus six marks.
Explaining why the government decided to make this change, the Minister of Finance, Mr. Taiwo Oyedele, explained that late payments force the government to go and borrow money from banks to run the country.
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Explaining the public cost of delayed tax, Mr. 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”.
Highlighting how the new rate works, the minister stated, “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”.
The government also made it clear that changing the extra interest rate does not remove the normal ten percent fine for late payment.
That means if a person pays tax late, they may still pay the ten percent penalty together with the daily interest added.
However, the law still allows tax authorities to reduce or forgive the charges if a taxpayer gives a very good reason for paying late.
Jennifer Baba is a journalist, international news correspondent, and writer at Moderncrux, where she covers artificial intelligence, fintech, emerging technologies, global politics, and international affairs. Based in Nigeria, she is passionate about transforming complex global developments into clear, engaging stories that inform and inspire readers.
