In this guide

You will understand the distinct roles of FIRS and CAC, what each compliance requires, and how to keep your business in proper standing every year.

The common confusion

Many business owners operate under the assumption that if they have paid their taxes to the Federal Inland Revenue Service (FIRS), they do not need to bother with the Corporate Affairs Commission (CAC) anymore. Conversely, some founders pay their CAC Annual Return and assume their company tax is officially sorted.

This is a very common but costly mix-up. FIRS and CAC are completely different regulatory bodies with different mandates. One wants to know if your business is still alive, while the other wants a share of the profit you made while being alive.

Key takeaway

FIRS handles your taxes based on profit. CAC handles your corporate existence based on the law. You must comply with both separately to avoid penalties or deregistration.

What is Company Income Tax (CIT)?

Company Income Tax (CIT) is a tax placed on the profits of registered companies operating in Nigeria. It is assessed, collected, and managed exclusively by the Federal Inland Revenue Service (FIRS).

FIRS uses your financial records to determine how much money your company made in a given year. If your company made a profit, you are required to pay a percentage of that profit as CIT. Even if you did not make a profit, or your business was inactive, you are still required to file returns with FIRS to prove your inactive status.

Note

CIT filings usually require audited financial statements. However, small companies with a turnover of less than ₦25 million are currently exempt from paying CIT, but they still must file their returns.

What is CAC Annual Return?

An Annual Return is a yearly statement filed with the Corporate Affairs Commission (CAC). Think of it as an annual census for businesses. It confirms to the government that your business is still active, operating, and located at the registered address.

Filing your Annual Return does not mean you are paying tax on your profit. It is simply a statutory compliance fee to keep your company's name on the active register of businesses in Nigeria.

CAC Status

Keeps your company listed as "Active" rather than "Inactive" on the public portal.

Company Updates

Confirms your current directors, shareholders, and registered office address.

Financial Summary

Requires a brief summary of your financial position, but it is not a tax payment.

Key differences to note

To ensure your business remains fully compliant, you must understand the distinctions between both obligations:

  • Regulator: CIT goes to FIRS. Annual Returns go to CAC.
  • Purpose: CIT is a tax on profit. Annual Return is a proof of life and existence.
  • Timing: CIT is generally filed within six months of your financial year-end. CAC Annual Return is filed mostly by June 30th every year (except the year of incorporation).
  • Penalties: Failure to pay CIT attracts heavy financial fines and interest from FIRS. Failure to file CAC Annual Returns attracts daily default fees and eventual delisting (striking off) of the company name.

Simple next steps

You do not have to manage these processes blindly. Start by verifying where your business currently stands with both regulators.

  1. Check your company status on the public CAC search portal.
  2. Confirm if you have a valid Tax Identification Number (TIN) linked to your company.
  3. Gather your basic income and expense records for the previous year.
  4. Consult a compliance partner or tax professional to help you align both filings without overlaps.
Compliance clarity checklist
I know my CAC registration date and anniversary
I have filed my CAC Annual Return for the past year
My company status shows "Active" on the CAC portal
I have my company Tax Identification Number (TIN)
I know my FIRS financial year-end and filing deadline
I separate my business tax records from personal funds

Frequently asked questions

Yes, but it is not advisable to ignore one for the other. They are separate obligations. You can file your CAC returns to keep your company active, but you must still file your CIT with FIRS to avoid accumulating tax penalties.

No. Company Income Tax (CIT) applies to incorporated Limited Liability Companies. A Business Name owner pays Personal Income Tax (PIT) to the State Internal Revenue Service where they reside, but they still must file Annual Returns with the CAC.

Ignoring FIRS will lead to massive accumulated penalties, frozen corporate accounts, or inability to get a Tax Clearance Certificate. Ignoring CAC will change your status to "Inactive" and your company name could be struck off the register entirely.

Yes. Omafix helps founders audit their current compliance status, understand their specific obligations, and file the appropriate returns to both the CAC and FIRS to ensure the business runs securely.

Sources checked

This guide was prepared with reference to public information from official and reputable sources. Business owners should still confirm their exact obligations before filing or making tax decisions.

  • Companies and Allied Matters Act (CAMA) 2020
  • Federal Inland Revenue Service (FIRS) Public Notices
  • Finance Act Provisions on Small Company Exemptions