The Corporate Affairs Commission (CAC) has clarified that paying taxes does not exempt Nigerian business owners from filing annual returns, warning that failure to comply could result in penalties or even deregistration. In a video shared on its official X account on Thursday, the commission stressed that annual returns and tax payments are distinct legal obligations.
Annual Returns vs Tax: What CAC Says
The CAC's message was direct: "Annual returns is not tax, know the difference!" The commission explained that annual returns are documents filed with the CAC to keep the commission updated about a registered business or organisation. It is also how businesses confirm they are still operating and should remain on the commission's register.
Unlike tax, annual returns are generally expected even if the business made no money or was inactive during the period being reported. Taxes are payments made to the government based on a business's income or activities, while annual returns are compliance filings submitted to the CAC to update the status of the business.
Who Must File Annual Returns
The requirement applies to more than just limited liability companies. According to the CAC, the following entities must file annual returns:
- Registered business names
- Companies
- Incorporated trustees, including churches, mosques, NGOs, foundations, cultural associations and similar organisations
The commission reminded business owners that paying tax does not automatically tell the CAC that a business is still active.
Consequences of Not Filing
Ignoring annual returns can become an expensive mistake. Businesses that fail to file may face penalties and other compliance problems. If the default continues for a long period, the CAC says the business could even be removed from its register in line with the law.
For many businesses, that could create problems when trying to access loans, bid for contracts, open corporate bank accounts or carry out other official transactions that require an active CAC status.
How to File Annual Returns
The filing process is done through the CAC's online portal. Depending on the type of registration, business owners may be required to:
- Update their business information.
- Provide details such as turnover and net assets where applicable.
- Upload financial statements or audited accounts if required.
- Select the relevant financial year before submitting the return.
The exact requirements may differ depending on whether the entity is a company, business name or incorporated trustee.
The CAC's reminder serves as a crucial warning for Nigerian entrepreneurs who assume that paying taxes covers all compliance obligations. Keeping annual returns up to date helps businesses remain compliant, avoid unnecessary fines and reduce the risk of deregistration.
