Businesses Face 10% Penalty and Daily Interest for Late Tax Payment From October 1

• Finance Minister Taiwo Oyedele signed a new tax order setting fresh interest rates on unpaid tax liabilities starting October 1, 2026
• The order replaces rules from 2017 and changes how interest on overdue naira-denominated taxes is calculated across all revenue authorities
• Businesses that fail to settle tax debts on time will face both a statutory penalty and interest charged daily until the full amount is paid

Legit.ng journalist Dave Ibemere has over a decade of experience in business journalism, with in-depth knowledge of the Nigerian economy, stocks, and general market trends.

Finance Minister Taiwo Oyedele has signed the Nigeria Tax Administration (Interest on Late Payment of Tax) Order, 2026, which takes effect on October 1, 2026, and introduces new consequences for businesses and individuals who fail to pay their taxes on time.

The order, issued under Section 65 of the Nigeria Tax Administration Act, 2025, replaces the 2017 notice and earlier rules on tax interest.

It changes how interest on overdue naira-denominated liabilities is calculated but leaves the existing 10% one-off penalty for late payment intact.

New formula for overdue tax

Under the new framework, interest on naira-denominated tax liabilities will be charged at the Central Bank of Nigeria's Monetary Policy Rate plus one percentage point, down from the previous spread of five percentage points above the MPR.

A minimum rate tied to the yield on 364-day Treasury Bills will also apply.

The applicable rate will be set on the last business day of each preceding month and published by the Nigeria Revenue Service within the first three business days of every new month.

Interest will accrue as simple interest on a daily basis from the date a tax liability falls due until it is fully settled.

For taxes owed in foreign currency, the rate will be the Secured Overnight Financing Rate (SOFR) plus six percentage points.

Leadership reports that a taxpayer carrying an unpaid liability of N10 million, for instance, would immediately owe an additional N1 million as a statutory penalty, on top of daily interest until the debt is cleared.

Why the government changed the rules

Oyedele said the move was designed to tie the cost of delayed tax payments to what the government actually pays when it borrows to cover shortfalls.

He said:

"Tax that is due belongs to the public. When it is paid late, Government may have to borrow to fill the gap, and the cost falls on everyone."

The minister added that the previous interest spread created a situation where some taxpayers found it cheaper to delay payment than to borrow from commercial lenders. The revised order closes that gap.

Oyedele said:

"Every taxpayer, whether dealing with the Nigeria Revenue Service or a State revenue service, will know the rate in advance, see it published every month, and be charged in the same way."

The order covers all self-assessment taxpayers and applies across the Nigeria Revenue Service, state internal revenue services, and the Federal Capital Territory tax authority.

The new rates will govern interest that arises from October 1, including interest on liabilities that became due before that date.

NRS orders taxpayers to comply with new tax rule

Earlier, Legit.ng reported that the Nigeria Revenue Service (NRS) has ordered all large taxpayers to complete their adoption of the national e-invoicing and Electronic Fiscal System, with sanctions threatened against any company that fails to meet the deadline.

The directive came through a public notice personally signed by NRS Chairman Zacch Adedeji and was communicated to the public on Sunday in a statement by Dare Adekanmbi, the Special Adviser on Media to the NRS Chairman.

For the directive, large taxpayers are defined as companies with an annual gross turnover of N5 billion