FG cuts margin on interest for late taxes

The Federal Government has implemented a new framework effective October 1, 2026, which links interest charges on unpaid taxes to prevailing borrowing costs in Nigeria. Under this new system, naira-denominated tax debts will carry interest at the Central Bank of Nigeria’s Monetary Policy Rate plus one percentage point, with a minimum rate tied to the yield on 364-day Treasury Bills.

Finance Minister Taiwo Oyedele explained that this link is crucial as unpaid taxes may force the government to borrow to cover revenue shortfalls. The government reduced the additional margin above the Monetary Policy Rate from five percentage points to one percentage point for naira taxes. However, interest on foreign currency taxes will still be charged at the Secured Overnight Financing Rate plus six percentage points.

The new framework aims to provide greater certainty for taxpayers, with rates to be published monthly on the Nigeria Revenue Service's website. Oyedele emphasized that clear rules would make compliance easier and support a fair tax system. The new rates will apply to both self-assessment and state and FCT internal revenue obligations.

The order supersedes previous notices on interest on unpaid taxes and does not change the 10% penalty for late payment. Taxpayers are advised to file returns and pay taxes on time to avoid penalties.