FG ties late tax payment interest to CBN’s MPR from October 1

From October 1, 2026, the interest charged on late naira tax payments will be linked to the Central Bank of Nigeria’s (CBN) Monetary Policy Rate (MPR), replacing the previous fixed interest formula.

Under a new order signed by the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, the interest on overdue naira taxes will be calculated at the MPR plus one percentage point. The order, issued under Section 65 of the Nigeria Tax Administration Act, 2025, is known as the Nigeria Tax Administration (Interest on Late Payment of Tax) Order, 2026.

The new formula replaces the previous five-percentage-point margin added to the benchmark rate. However, the applicable interest rate cannot fall below the yield on 364-day Treasury bills, meaning late-tax interest will remain above a minimum threshold tied to government borrowing costs.

That flooring rule matters more than it might appear. The CBN currently lists the MPR at 26.5%, while the 91-day Treasury bill rate sits at 16.3%. On today’s numbers, MPR plus one point comes to 27.5%. But because the CBN’s rate moves with monetary policy, and because Treasury bill yields shift at every auction, the figure is not fixed.

It will be recalculated every month and published by the Nigeria Revenue Service (NRS), meaning taxpayers will need to check the current rate rather than assume last month’s still applies.

Similar read: What CBN’s new 23% interest rate means for loans, savings and Nigerian businesses

For businesses and individuals who fall behind on their taxes, the change ties their penalty directly to the cost of money in the wider economy, a small technical shift in the tax rulebook, but one that will show up in every late-payment bill from October onward.

What does this mean for taxpayers?

The shift is simple to grasp: the government is moving from a fixed spread to a rate that moves with the market.

If you owe and pay after the deadline, interest starts running from the day the payment was due and keeps building until you settle. It is calculated daily on a simple interest basis, with the NRS publishing the applicable monthly rate by the third business day of each month.

Here’s what that looks like in practice. Say the applicable annual rate is 27.5%, and a taxpayer owes ₦1 million for 30 days; the interest alone would come to roughly ₦22,603, before any penalty. That last word matters.

The new order does not waive the 10% late-payment penalty under Section 65 of the Nigeria Tax Administration Act. Pay late, and you can still face the penalty on top of the interest.

Government officials frame the change as a matter of fairness. “If tax is due and paid late, government may have to borrow to fill the gap, and the cost falls on everyone,” Oyedele said.

The system will apply across the Nigeria Revenue Service, the State Internal Revenue Services and the FCT tax authority. It also reaches backwards in one respect: it covers interest arising from October 1, including interest on some liabilities that fell due earlier. Interest that had already accrued before October 1, however, stays under the old rules.

For taxes payable in foreign currency, the rate becomes Secured Overnight Financing Rate (SOFR) plus six percentage points. SOFR is the benchmark that reflects the cost of borrowing US dollars in global markets.

So this is not an invitation to pay late. The penalty stands, and interest piles up until the bill is cleared. What changes for businesses and individuals is predictability: one published rate for each calendar month makes the cost of delay far easier to work out in advance.

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