FG links interest charges on unpaid taxes to borrowing costs - Punch Newspapers
File photo: The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele.
The Federal Government has linked interest charges on unpaid taxes to prevailing borrowing costs, saying delayed tax payments could force the government to borrow to cover revenue shortfalls. Under a new framework taking effect on October 1, 2026, interest on naira-denominated tax debts will be charged at the Central Bank of Nigeria’s Monetary Policy Rate plus one percentage point, subject to a minimum rate tied to the yield on 364-day Treasury Bills. The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, issued the Nigeria Tax Administration (Interest on Late Payment of Tax) Order, 2026, according to a statement released by the Federal Ministry of Finance on Thursday. Explaining the link between unpaid taxes and government borrowing costs, Oyedele said, “Tax that is due belongs to the public. When it is paid late, the government may have to borrow to fill the gap, and the cost falls on everyone. “This Order ties the cost of late payment to real market rates, so that delaying tax does not become a cheaper form of credit than the market itself.” The ministry said the order, issued pursuant to Section 65 of the Nigeria Tax Administration Act, 2025, would apply uniformly across federal, state and Federal Capital Territory tax authorities. For taxes payable in naira, the government reduced the additional margin above the MPR from five percentage points to one percentage point. However, the statement said the rate “will not fall below the yield on 364-day Treasury Bills, which reflects what it costs Government to fund itself when taxes are paid late.”See more Punch stories on Google.Add Punch on Google For taxes payable in foreign currency, interest will be charged at the Secured Overnight Financing Rate, the international benchmark for US dollar rates, plus six percentage points. If SOFR is discontinued, its official successor rate will apply. The government said a single interest rate would apply for each calendar month and would be set on the last business day of the preceding month. The Nigeria Revenue Service has also been directed to publish the applicable rates on its website by the third business day of every month. 2027: Moghalu rejects Atiku campaign appointment Money market rates ease as liquidity climbs to N7.45tn FG cuts margin on interest for late taxes Interest will be calculated daily on a simple-interest basis from the date the tax becomes due until payment. The rates will apply to self-assessment and tax obligations administered by the Nigeria Revenue Service as well as state and FCT internal revenue services. Oyedele said the framework would also give taxpayers greater certainty about the financial consequences of paying their taxes late. “Just as important is certainty. 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. “Clear rules make compliance easier and support a fair, predictable tax system,” he said. The ministry said the new rates would apply to interest arising from October 1, including interest on taxes that became due before the effective date. However, interest accrued before October 1 would remain subject to the rules applicable at the time. The order supersedes the 2017 notice on interest on unpaid taxes and other earlier notices on the subject. It does not alter the 10 per cent penalty for late payment provided under Section 65 of the Act. Relevant tax authorities will also retain their powers under Section 66 to waive penalties or interest where good cause is shown. The ministry advised taxpayers to file their returns and pay applicable taxes on time, while those with outstanding liabilities were urged to settle them promptly or engage the relevant tax authority. Sami Tunji Sami Tunji is a Senior Business Correspondent at Punch Newspapers with about five years of experience in data-driven reporting. He covers finance, ICT, and broader macroeconomic issues, combining analytical insight with clear storytelling. Sami’s work reflects strong editorial judgment, professional development, and a commitment to accurate and informative business journalism.
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