19 Aug

One of the areas of tax compliance that many businesses misunderstand is that making no profit does not automatically exempt your company from filing its tax return.

A company may have had a difficult financial year, recorded a loss, generated little or no revenue, or simply remained inactive. That does not by itself remove its obligations to file the required returns.

Under the Nigeria Tax Administration Act 2025, every company is required to file a self-assessment return with the Nigeria Revenue Service for a year of assessment, whether or not the company is liable to pay tax under the Nigeria Tax Act 2025 or any other applicable tax law.

The distinction is important. Filing a return is not the same as paying tax.

A company may have a filing obligation even where its tax computation results in no tax payable. The return provides the tax authority with information about the company’s financial position, income, expenses, taxable profit, and other relevant tax information.

For companies that have been in business for more than 18 months, the Nigeria Tax Administration Act provides that returns are generally due within six months after the end of the company’s accounting year. Different rules apply to newly incorporated companies and companies that permanently cease operations.

This means that a business should not wait until it becomes profitable before taking tax compliance seriously.

Failure to file such returns can create compliance issues, penalties, difficulties obtaining tax clearance, and complications during transactions such as investments, financing, restructuring, or due diligence.

For founders and business owners, the practical takeaway is simple. No profit does not necessarily mean no tax filing.

If your company is registered and operating, the tax position should be reviewed regularly and its applicable returns filed within the prescribed timelines.

At Greyline Legal, we help businesses review their tax compliance position, identify outstanding obligations, and put appropriate structures in place to remain compliant as they grow.

If your business made no profit last year, the question should not be, “Do we have to pay tax?” It should first be, “Have we fulfilled our filing obligations?”

This article is for general information and should not be treated as specific tax or legal advice. Businesses should assess their obligations based on their structure, activities, accounting period, and applicable tax laws.