What Happens If You Don't File Tax Returns in Nigeria? (Penalties Explained)

A grounded guide to late and non-filing in Nigeria: what penalties can apply, how missed returns turn into assessments, and why 'no tax due' does not always mean 'nothing to file.'

Published: April 25, 2026 1:30 PM GMT+1

Author: Lukmon Isiaq

What Happens If You Don't File Tax Returns in Nigeria? (Penalties Explained)

Missing a tax return is not a small paperwork problem

Many founders assume that if the business made no profit, had a slow month, or had "nothing to pay," filing can wait. The law often asks a different question: was there still a return due?

For companies, section 55 of the Companies Income Tax Act says every company is to file a yearly self-assessment return whether or not it is liable to pay tax for that year. For individuals, section 41 of the Personal Income Tax Act says a taxable person is to file a yearly return of income without waiting for a notice.

So the first consequence of non-filing is simple: you are already in default before anyone starts debating the tax amount.

The penalty depends on the tax you skipped

There is no single late-filing figure for every Nigerian tax. The amount changes with the return involved.

If a company misses its annual CIT return

Section 55(4) of CITA says a company that fails to file on time is liable to:

N25,000 in the first month of default
N5,000 for each subsequent month the failure continues

That matters for small companies. A small company may be exempt from paying company income tax because of turnover, but it is not automatically exempt from the filing duty itself. No profit is not the same thing as no return.

If the filing workflow is still the real problem, start with our CIT filing guide before the penalties become the headline.

If a business misses VAT returns where VAT filing applies

VAT is narrower, because filing obligation depends on threshold and transaction type. But where VAT filing applies, the 2021 FIRS VAT clarification says section 35 of the VAT Act operates with:

N50,000 for the first month of failure
N25,000 for each subsequent month the failure continues

The same circular says monthly VAT remittance is due on or before the 21st day of the following month. That is why VAT defaults get expensive quickly. A monthly tax can produce twelve separate filing problems in one year.

If you are self-employed or freelancing

Personal income tax is usually handled by the relevant state internal revenue service, not by FIRS as the front desk for every case. But non-filing still carries consequences under PITA.

Section 94 says that where no other specific penalty is provided, a person who fails to comply with the Act can face a N5,000 fine on conviction, and where the offence is failure to furnish a return or keep required records, a further N100 for every day the failure continues after conviction. The same section also allows the relevant tax authority, in some non-employment income cases, to impose a penalty equal to the income tax chargeable for the preceding year where the person fails to comply with a section 41 notice.

So if you freelance, consult, or run an unincorporated business, being "not a company" does not make non-filing harmless. It simply moves you into a different statute and usually a different authority.

Non-filing does not freeze the tax clock

A missed return does not pause the system.

Under section 65 of CITA, where a company has not delivered a return and the Service believes it is liable to tax, the Service may determine the company's total profits to the best of its judgment and assess accordingly. The VAT Act works the same way in spirit. Section 18 says where a taxable person fails to render returns, or renders incomplete or inaccurate returns, the Board shall assess the amount of tax due to the best of its judgment.

That phrase matters. The tax story does not disappear because your own filing is absent. It simply stops being told on your terms.

When records are weak, turnover can become the fallback

Section 30 of CITA says that where the Service believes a trade or business produces no assessable profits, produces profits lower than expected, or where the true amount of profits cannot be ascertained, it may assess the company on a fair and reasonable percentage of turnover.

That is why non-filing becomes risky even where a business insists margins were low. If profit is not supported by proper books and returns, the argument shifts. The authority becomes more interested in the turnover it can see than the profit figure the business cannot prove.

VAT defaults can snowball fast

The FIRS VAT circular gives a useful illustration. It describes a company that approached the tax office in January 2021 after failing to submit VAT returns for all the 2020 months. Because each missed month's default kept running until filing, the cumulative penalty in the illustration reached N1,925,000.

That example is useful because it breaks a common assumption: a missed VAT return is not just one small fine. Monthly non-filing compounds by repetition and delay.

Late filing and unpaid tax are different problems

The late-filing penalty is one issue. The unpaid tax itself is another.

For company income tax, section 85 of CITA says that if tax is not paid within the prescribed period, 10% per annum is added to the tax payable and the tax also carries interest at the bank lending rate until it is paid. PITA takes a similar approach to unpaid assessed tax, and the FIRS VAT circular lists failure to remit VAT as tax due plus 10% of the tax and interest.

So a missed return can become three burdens at once: the filing penalty, the underlying tax, and interest or additional penalties for not paying that tax on time.

The authority can ask for records and explanations

Non-filing is not only a portal issue.

Section 60 of CITA allows the Service to require returns, books, documents, and other information. Section 61 allows information requests involving banks, and section 63 requires companies to keep books and records for at least six years after the relevant year of assessment. Section 64 allows entry and search of premises under warrant where there are reasonable grounds to suspect non-disclosure or tax irregularity.

The PITA side is not much gentler. Section 49 requires a TIN before opening or continuing a business bank account and allows the relevant authority to obtain specified information from banking institutions by notice.

In plain language, a missing return does not stay quietly in your inbox forever. It can become a records issue, a bank-information issue, an assessment issue, or an enforcement issue.

What usually happens in practice

The pattern often looks like this:

1. The filing date passes and the account becomes overdue.

2. Penalties begin to accrue under the relevant law or circular.

3. The authority may raise an assessment, sometimes on best judgment.

4. The business scrambles later when it needs financing, a contract, or a tax clearance certificate.

5. The cleanup costs more time and money than timely filing would have cost.

That last point is where the pain becomes real for most businesses. The tax issue turns into an ordinary commercial blockage.

What to do if you are already behind

Do not start with excuses. Start with scope.

Work out which taxes were missed, which periods were missed, whether tax was actually payable, and what records still exist to support a proper filing. Then rebuild the story month by month or year by year.

If the business needs fast credibility, reconcile the numbers before you submit anything. The VAT calculator, withholding tax calculator, and company income tax calculator are useful for rough checks, but the real work is getting the documents straight.

FAQs

Do I still need to file if my company made no profit?

Usually yes for company income tax. CITA requires companies to file whether or not they are liable to pay tax for the year.

If I had no sales, can I ignore VAT?

Not safely. You first need to know whether VAT filing still applied to you for that period. If it did, silence is not a filing method.

Can the tax authority estimate my tax if I do not file?

Yes. CITA and the VAT Act both allow best-judgment style assessment where returns are missing or unreliable.

Will non-filing affect tax clearance?

Often yes in practice. A business trying to obtain clearance while filings are missing usually discovers that the certificate is easier to request than to justify.

I am a freelancer. Is this still my problem?

Yes. Personal income tax is usually state-administered, but PITA still expects annual returns from taxable persons and provides for penalties where returns or required information are not furnished.

Final note

The expensive mistake is not just filing late. It is telling yourself late filing is harmless until the business suddenly needs something urgent.

In Nigeria, missing a tax return can trigger penalties, estimated assessments, interest on unpaid tax, record requests, and commercial delays. Filing on time is cheaper. Cleaning up later is usually noisier than people expect.