September 25, 2026
Nigeria Ties Late Tax Interest To Market Rates From October 1
From October 1, interest on unpaid naira tax will be set at the CBN Monetary Policy Rate plus one percentage point, subject to a 364 day Treasury bill yield floor. The 10% late-payment penalty remains.
The Nigeria Tax Administration (Interest on Late Payment of Tax) Order, 2026, issued under Section 65 of the Nigeria Tax Administration Act, replaces the previous fixed spread with a market linked formula. For tax payable in a foreign currency, the order uses the Secured Overnight Financing Rate plus six percentage points.
The applicable rate will be set monthly using the benchmark on the last business day of the preceding month and published by the Nigeria Revenue Service by the third business day. Interest is calculated daily on a simple interest basis from the tax due date until payment. The order applies across federal, state and Federal Capital Territory tax authorities.
The new calculation applies to interest arising from October 1, including on tax that became due earlier. Interest accrued before that date remains governed by the rules that applied at the time. The order changes the interest formula; it does not cancel the underlying tax or the statutory 10% late-payment penalty.
For businesses managing cash flow, the monthly rate publication makes the cost of late payment move with market benchmarks. Finance teams will need to check the published rate and reconcile any outstanding liability with the relevant tax authority. The wider effect of reform on business resilience is also shaped by how higher global costs and domestic policy changes affect firms and households.
What KOKO is watching next: the Nigeria Revenue Service’s first monthly rate notice, how tax authorities apply the transition to older arrears and whether the new formula improves predictability for compliant businesses.