FG cuts margin on interest for late taxes

The Federal Government has implemented a new framework on October 1, 2026, linking interest charges on overdue taxes to prevailing borrowing costs. Under the new rules, naira-denominated tax debts will accrue interest at the Central Bank of Nigeria's Monetary Policy Rate plus one percentage point, with a minimum rate based on the yield of 364-day Treasury Bills.

This change aims to prevent the government from having to borrow to cover revenue shortfalls resulting from delayed tax payments. The Minister of Finance, Taiwo Oyedele, explained that taxpayers should recognize the financial implications of late payments, as the cost of such delays now aligns with market rates. The new rates apply to all tax authorities at the federal, state, and Federal Capital Territory levels.

While the additional margin above the Monetary Policy Rate is reduced from five percentage points to one percentage point for naira payments, foreign currency taxes still incur interest at the Secured Overnight Financing Rate plus six percentage points. The government encourages taxpayers to file returns and pay taxes on time, while those with outstanding liabilities are urged to settle them promptly or engage their respective tax authorities.