From 1 October 2026, interest on late tax payment in Nigeria is charged at the CBN Monetary Policy Rate (MPR) plus 1 percentage point, down from MPR plus 5. Naira tax cannot be charged less than the 364-day Treasury bill yield. The separate 10% late payment penalty has not changed.
That is the headline, and it is already being misread. Finance teams are treating the new Order as a discount on lateness. It is a cut in one charge, and two popular assumptions about it do not hold up against the text. This post sets each myth against the facts.
What did the late payment interest order change?
The Nigeria Tax Administration (Interest on Late Payment of Tax) Order, 2026 was issued by Finance Minister Taiwo Oyedele under section 65 of the Nigeria Tax Administration Act 2025 and takes effect on 1 October 2026. It replaces a 2017 notice. According to ThisDay and BusinessDay, the key terms are:
- Naira tax: MPR plus 1 percentage point, with a floor at the 364-day Treasury bill yield. The old rate was MPR plus 5.
- Foreign currency tax: the Secured Overnight Financing Rate (SOFR) plus 6 percentage points.
- Penalty: the 10% late payment penalty under section 65 stays.
- Mechanics: interest runs daily from the due date until payment. The rate is set monthly from the last business day of the preceding month, and the NRS publishes it by the third business day of each month.
- Reach: federal, state and FCT tax authorities, including self-assessment and NRS-administered assessments.
The Minister's stated reason: "Tax that is due belongs to the public. When it is paid late, the government may have to borrow to fill the gap, and the cost falls on everyone." The aim is to stop late payment from being cheaper than market credit.
Myth: late tax is now cheap enough to use as short-term funding
Fact: interest is only one of two charges, and the second is unchanged. Take N10 million of tax unpaid for a full year. The CBN cut the MPR to 23% on 22 September, so the new rate would be 24% (assuming the Treasury bill floor does not bite and the MPR does not move). That is N2.4 million of interest, against N2.8 million under the old formula. Add the 10% penalty of N1 million and the bill is N3.4 million on N10 million.
The rate also resets every month with the MPR and the Treasury bill yield, so you cannot lock in a cost. Compare N3.4 million with what your bank would charge on a facility of the same size. If the bank is cheaper, borrow from the bank and pay the tax. Our note on the CBN rate cut shows how fast bank pricing is likely to follow.
Myth: the new rate applies to all the tax you already owe
Fact: as reported by Pulse Nigeria, interest that built up before 1 October follows the previous rules, and the new rate applies to interest accruing from 1 October onward. An arrears balance therefore carries two calculations: old formula up to 30 September, new formula after. If an NRS statement shows one blended figure, ask for the workings.
Can you still get interest or penalty waived?
Yes, in principle. Section 66 of the Act keeps the power of the tax authority to waive a penalty or interest where you show good cause. The Order does not change it. Treat a waiver as a request that needs documents (bank records, correspondence, the reason for the delay), not as a right. If you dispute the assessment itself, the 30-day objection window runs on its own clock, and our step-by-step objection guide covers it.
What this means for your business
- Rebuild the late-tax line in your cash forecast. The cost now moves monthly, so check the NRS rate notice in the first week of each month.
- Have arrears split at 30 September and recomputed, so your numbers match what the NRS will assert.
- Model foreign currency tax separately. SOFR plus 6 is a different benchmark and matters most to oil and gas firms and shipping companies with dollar-denominated liabilities.
- Keep paying on time. A lower interest rate does not touch the 10% penalty, and it does not make a compliance record cheaper to repair.
FAQ
What is the interest rate on late tax payment in Nigeria from 1 October 2026? For naira tax it is the CBN MPR plus 1 percentage point, never below the 364-day Treasury bill yield. For foreign currency tax it is SOFR plus 6 percentage points. The previous naira rate was MPR plus 5.
Is the 10% late payment penalty still payable? Yes. The Order changes interest only. The 10% penalty under section 65 of the Nigeria Tax Administration Act 2025 remains, and it is charged separately from interest.
Who publishes the monthly rate? The NRS publishes it by the third business day of each month. It is based on the MPR and Treasury bill yield on the last business day of the preceding month.
Late tax interest is now a moving number tied to the MPR, and the 10% penalty sits on top of it. If you carry tax arrears, want them recomputed under the new Order, or need help preparing a waiver request, contact VOG Global Consult at Suite 060 to 061, Orago Complex, Area 10, Garki, Abuja.