The Federal Government has linked interest charges on unpaid taxes to prevailing borrowing costs, saying delayed tax payments could force government to borrow to cover revenue shortfalls.

The Minister of Finance and Coordinating Minister of the Economy, Mr Taiwo Oyedele, issued the Nigeria Tax Administration (Interest on Late Payment of Tax) Order, 2026, which will take effect from October 1.

Under the new framework, 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 order applies uniformly to federal, state and Federal Capital Territory tax authorities.

For taxes payable in foreign currency, interest will be charged at the Secured Overnight Financing Rate plus six percentage points.

The government said the applicable rate would be set monthly and published by the Nigeria Revenue Service by the third business day of each month.

Interest will be calculated daily on a simple-interest basis from the date the tax becomes due until payment.

Oyedele said the framework was designed to ensure that delaying tax payments did not become a cheaper source of credit than borrowing from the market.

He said taxes due to government belonged to the public and that delays could compel government to borrow to cover revenue gaps, with the resulting cost ultimately affecting the wider economy.

The new rates will apply to interest arising from October 1, including interest on tax liabilities that became due before that date. However, interest accumulated before October 1 will remain subject to the rules applicable at the time.

The order replaces the 2017 notice on interest on unpaid taxes and other earlier notices, but does not change the 10 per cent penalty for late payment provided under the Nigeria Tax Administration Act, 2025.

The ministry urged taxpayers with outstanding liabilities to settle them promptly or engage the relevant tax authority.