FG links interest charges on unpaid taxes to borrowing costs
The Federal Government has linked interest charges on unpaid taxes to borrowing costs, with a new framework taking effect from October 1, 2026. Read More: https://punchng.com/fg-links-interest-charges-on-unpaid-taxes-to-borrowing-costs/
The Federal Government has connected interest charges on outstanding taxes to prevailing borrowing costs, cautioning that tardy tax payments could compel the government to borrow to bridge revenue gaps. Effective from October 1, 2026, interest on naira-denominated tax debts will be calculated at the Central Bank of Nigeria’s Monetary Policy Rate plus one percentage point, but not below the yield on 364-day Treasury Bills.
This new framework, introduced by the Minister of Finance, Taiwo Oyedele, aims to link the cost of late payment to real market rates, ensuring taxpayers bear the financial impact of delayed tax payments. The order applies to federal, state, and FCT tax authorities and will reduce the additional margin above the Monetary Policy Rate from five percentage points to one percentage point for naira payments.
Foreign currency taxpayers will face the Secured Overnight Financing Rate plus six percentage points, with the applicable rate published monthly on the NRS website. The framework provides taxpayers with advance knowledge of interest rates, ensuring a fair and predictable tax system.
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