FG Cuts Interest Spread on Late Tax Payments Under New Regime

The Federal Government has introduced a new interest regime for overdue tax payments, effective October 1, 2026. For tax liabilities payable in naira, interest will now be tied to the Central Bank of Nigeria’s Monetary Policy Rate plus one percentage point, replacing the previous five-percentage-point spread. The rate will not be lower than the yield on 364-day Treasury Bills. It will apply across federal, state and FCT tax authorities, and the Nigeria Revenue Service will publish the applicable rate monthly. Interest will be calculated daily as simple interest from the due date until payment is made. The existing 10 percent penalty for late tax payment remains in force, although tax authorities may waive penalties or interest where a taxpayer shows good cause. The government said the change is intended to ensure that delaying tax payments does not become a cheaper alternative to commercial borrowing. Taxpayers with outstanding obligations have been advised to pay promptly or contact the relevant tax authority.

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