The cost of silence

In the vibrant markets of Onitsha and the high-energy tech hubs of Lagos, there is a common sentiment among business owners: if the bank account isn’t overflowing, the taxman shouldn’t be calling. It is a logical assumption on the surface. After all, why should a company that is barely breaking even or, worse, running at a loss be bothered with the complexities of the Nigeria Revenue Service? However, this is precisely where many Nigerian entrepreneurs fall into a dangerous trap. There is a profound difference between having no profit and having no tax obligation, and failing to understand this distinction is currently creating a silent financial crisis for thousands of small and medium enterprises across the country.

The biggest misconception in our business environment is the idea that company income tax (CIT) is only relevant when there is money to be paid. Many founders assume that being “not profitable” is an automatic hall pass from the tax office. In reality, the law separates the act of paying from the act of reporting. Even if your business qualifies as a small company and is technically exempt from paying tax, or even if you genuinely recorded a loss and are therefore not liable to pay, you are never exempt from filing.

Think of it like an annual health check-up. Just because you aren’t sick doesn’t mean you skip the appointment; you go to the doctor to confirm and document your good health. In the world of business, filing your tax returns is how you officially tell the government that you didn’t make enough to pay tax this year. If you don’t tell them, they don’t assume you made a loss; they assume you are hiding something or simply being defiant. This is where “real exposure” sits, quietly building up in the background like a hidden debt that eventually explodes.

To make matters more pressing, the Nigeria Tax Administration Act (NTAA) 2025 has introduced a very clear and expensive “running meter” for those who fail to file. Under Section 101 of the Act, non-filing is treated as a serious offence with immediate financial consequences. If you miss the deadline, the penalty is a flat ₦100,000 for the very first month of default. But it doesn’t stop there. For every single month that passes afterward without you rectifying the situation, an additional ₦50,000 is added to the bill.

Consider a young entrepreneur, let’s call him Emeka, who started a logistics firm. Business was slow in 2025, and he decided to ignore his tax filings because he “didn’t have the money anyway”. By the time he realises his mistake a year later, he isn’t just filing a zero-profit return; he is facing a bill of over ₦600,000 in penalties alone. That is money that could have bought a new delivery bike or paid for months of fuel. In this scenario, non-filing is not a neutral act; it is an expensive choice with a compounding cost.

For those who are unsure where they stand, the first step is to perform a simple “tax health check”. If you want to know if your business qualifies for the 0% CIT rate reserved for small companies, you must look at two specific numbers from your 2025 records. First, check your total turnover—the total amount of money that flowed into the business before expenses. Second, check the total value of your fixed assets, like machinery, computers, and furniture, as listed on your balance sheet. If these numbers fall within the statutory thresholds defined by the new law, you are indeed a small company, and your tax rate might be zero.

But—and this is the most important “but” in business—that 0% rate is only half the story. To enjoy that benefit, you must still walk through the digital doors of the tax authority and file your paperwork. Filing is your protection. It creates a clean record that allows you to apply for government contracts, secure bank loans, and prove your company’s legitimacy to international partners.

The broader message for every Nigerian business owner is that remote or local, profitable or struggling, documentation is not optional. In an era where the government is moving toward data-driven tax administration, your silence is interpreted as a default. Don’t let your business be choked by avoidable penalties. Whether you made a billion Naira or haven’t made a kobo since you registered the business, the rule remains the same: always file. It is the only way to ensure that your business stays alive to fight another day.

Dr Adeniyi Bamgboye, DBA, FCTI, FCA, FCCA, a dual-qualified chartered accountant, tax expert, and policy analyst, is the managing partner of Empyrean Professional Services, an audit, business, and financial advisory firm dedicated to enhancing its clients’ business value. 08060603156. [email protected]