EXPLAINER: What every business should know about CAC annual returns

Annual returns and tax payments are distinct obligations for businesses registered with the Corporate Affairs Commission (CAC) in Nigeria. While both are essential compliance requirements, they serve different purposes. Annual returns involve filing updated information with the CAC to confirm an entity's continued status on the commission's register.

This obligation applies to various registered entities, including companies, business names, and incorporated trustees, even if the business was inactive during the specified period. Tax payments, however, are related to the business's tax obligations and income, and paying taxes does not fulfill the requirement to file annual returns.

The CAC emphasizes the distinction between the two matters, stating that settlement of tax liabilities does not constitute the filing of annual returns. Entities required to file annual returns include companies, business names, and incorporated trustees, which may encompass non-governmental organizations, churches, mosques, and cultural associations.

Non-filing of annual returns can lead to penalties and compliance issues. Prolonged failure to submit these filings may result in the entity's status on the CAC register being affected and potentially lead to deregistration, as per applicable rules. Filing annual returns can be done through the CAC's online platform. Businesses must update their details, provide relevant information such as turnover and net assets, attach financial statements or audited accounts when required, select the appropriate financial year, and submit the return.

Maintaining timely annual returns is crucial for an entity to preserve its compliance status with the CAC and avoid penalties or other consequences associated with prolonged default.