Nigeria Introduces New Tax Penalties Effective October 2026

Finance Minister Taiwo Oyedele has signed the Tax Administration (Interest on Late Payment of Tax) Order, 2026, which will take effect on October 1, 2026. This order introduces new penalties for late tax payments, maintaining a 10% one-off penalty while changing how interest on overdue naira-denominated liabilities is calculated.

The interest will now be charged at the Central Bank of Nigeria's Monetary Policy Rate (MPR) plus one percentage point, a reduction from the previous five percentage points above the MPR. Additionally, a minimum rate tied to the yield on 364-day Treasury Bills will be published monthly by the Nigeria Revenue Service.

Interest will accrue daily as simple interest from the due date until the tax liability is settled. For foreign currency liabilities, the rate will be the Secured Overnight Financing Rate (SOFR) plus six percentage points.

Oyedele stated that the order aims to align the cost of delayed tax payments with government borrowing costs, addressing previous incentives for taxpayers to delay payments.