The Corporate Affairs Commission used its official X account on Thursday to correct a mistake that many Nigerian business owners make: paying tax is not the same as filing annual returns.
"Annual returns is not tax, know the difference!" the commission said in a video posted to its page.
The clarification targets a widespread assumption among entrepreneurs that settling tax obligations automatically satisfies every government compliance requirement. The CAC said the two obligations are separate, and fulfilling one does not excuse a business from the other.
Annual returns are documents filed with the CAC to update the commission on a registered business. They confirm that a company, business name or incorporated trustee is still operating and should remain on the commission's register. The filing is required even if the business made no money or was inactive during the period being reported.
The requirement extends beyond limited liability companies. Incorporated trustees, including churches, mosques, NGOs, foundations, cultural associations and similar organisations, must also file.
The distinction matters. Taxes are payments to the government based on a business's income or activities. Annual returns are compliance filings submitted to the CAC to update the status of the business. Paying tax does not automatically tell the CAC that a business is still active.
The consequences of ignoring annual returns can be severe. Businesses that fail to file may face penalties and other compliance problems. If the default continues for a long period, the CAC said the business could be removed from its register in line with the law.
Deregistration creates practical problems. Businesses with an inactive CAC status may struggle to access loans, bid for contracts, open corporate bank accounts or carry out other official transactions that require proof of registration.
The filing process runs through the CAC's online portal. Depending on the type of registration, business owners may need to provide details such as turnover and net assets where applicable, upload financial statements or audited accounts if required, and select the relevant financial year before submitting the return. The exact requirements differ depending on whether the entity is a company, business name or incorporated trustee.
The commission's reminder comes as many Nigerian entrepreneurs operate under the impression that a clean tax record means every compliance box has been ticked. The CAC's message is that annual returns and tax payments are separate legal obligations, and keeping annual returns up to date helps businesses remain compliant, avoid unnecessary fines and reduce the risk of deregistration.
For business owners, the practical step is straightforward: check whether annual returns are current before assuming all government requirements have been met. The commission's video ends with the same warning it started with, that annual returns and tax are not the same thing.
According to Pulse.ng.
