The Federal Government has reduced the interest spread applicable to late payment of naira-denominated tax liabilities, lowering it from five percentage points to one percentage point above the Central Bank of Nigeria’s Monetary Policy Rate (MPR).
The revised regime is scheduled to take effect on October 1, 2026, under the Nigeria Tax Administration (Interest on Late Payment of Tax) Order, 2026.
The order was issued under Section 65 of the Nigeria Tax Administration Act, 2025, according to the information provided on the government’s tax administration policy.
What the Revised Framework Means
The change links the additional interest charged on overdue tax liabilities more closely to the prevailing monetary policy rate.
Under the reported framework, the applicable spread above the CBN’s MPR will be reduced to one percentage point from the previous five-percentage-point spread.
The amount payable by a taxpayer will depend on the relevant monetary policy rate, the principal tax liability and the period for which payment remains outstanding.
Implications for Businesses and Individuals
The reduction could lower the additional financing cost associated with delayed tax payments compared with the previous interest spread.
However, taxpayers remain responsible for complying with their underlying tax obligations and applicable payment deadlines.
The revised interest calculation does not cancel the principal tax liability. Businesses and individuals with outstanding tax obligations should review the applicable provisions and seek professional advice where necessary.
Tax Administration and Market Conditions
The new framework links the late-payment interest calculation to a benchmark that can change with monetary policy decisions.
This means that the amount of interest applicable to delayed tax payments may vary when the CBN’s MPR changes.
The effectiveness of the revised regime will depend on clear implementation, accurate calculations and taxpayers’ understanding of their obligations.