FG’s tax interest cut is simple money news to watch

The Federal Government has lowered the interest charged on late tax payments. The change starts on 1 October 2026. It is straightforward money news with a clear real-life effect for anyone who sometimes pays tax after the deadline.

What changed and when it starts

Under the new Nigeria Tax Administration (Interest on Late Payment of Tax) Order, 2026, signed by Finance Minister and Coordinating Minister of the Economy Taiwo Oyedele, the interest rate on overdue naira tax drops from the Central Bank of Nigeria’s Monetary Policy Rate (MPR) plus five percentage points to MPR plus one percentage point. The rate cannot fall below the yield on 364-day Treasury Bills.

For taxes owed in foreign currency, the rate becomes the Secured Overnight Financing Rate (SOFR) plus six percentage points, or whatever official rate replaces SOFR if it is discontinued.

Interest is calculated every day on a simple-interest basis from the day the tax falls due until it is fully paid. The Nigeria Revenue Service will publish the exact monthly rate on its website by the third business day of each month so everyone can see the figure in advance.

The separate 10 percent late-payment penalty stays in place. Tax authorities can still waive interest or the penalty when there is a genuine reason for the delay. Any interest that already built up before 1 October 2026 keeps the old rules. Only new interest that starts from that date follows the lower rate.

You can read the original report here: FG cuts late tax payment interest.

Who this may matter to most

This change matters most to:

• Individuals and businesses that carry tax balances past the due date
• Cash-flow-tight households and freelancers
• Traders and companies that deal with both naira and foreign-currency obligations

Because the new rate is tied more closely to everyday market numbers and is published every month, the cost of being late becomes clearer and more predictable.

Why small business readers may care

Small-business owners have special reason to pay attention. Many SMEs stretch tax payments when sales are slow or when money is tied up in stock and receivables. The old wider spread made late payment expensive. The narrower spread lowers that extra cost, but it does not remove it.

Knowing the exact monthly rate in advance helps owners:

• Plan better
• Talk to their accountants earlier
• Decide whether to settle outstanding tax before extra daily interest starts adding up

The rule applies the same way at federal, state and FCT tax offices, so the same numbers apply no matter which authority is involved.

In plain terms, the government is saying that tax money belongs to the public. When it arrives late, the government may have to borrow to cover the gap, and that cost is shared by everyone. The new formula simply links the charge for delay to real market rates so that holding back tax does not become cheaper than normal borrowing.

For small businesses watching every naira, that is useful information. The lower rate starts on 1 October 2026. Checking the Nigeria Revenue Service website each month for the published figure and settling any overdue tax sooner rather than later remains the simplest way to keep costs down.