I am 90% sure that why you are reading this article is because you want to benefit from the New Tax Law in Nigeria, with Business Name Upgrade to Limited (Small Company) on CAC.
The New Tax Law in Nigeria states the following, but not limited to:
- Zero CIT for Small Companies: Small companies (turnover not more than ₦100 million and total fixed assets not more than ₦250 million) pay 0% tax.
- Development Levy – Exempt: Small companies are exempt from 4% development levy.
- Withholding Tax – Exempt: Small companies, manufacturers and agricultural businesses are exempt from withholding tax deduction on their income. Small companies are exempt from deduction on their payments to suppliers.
- Abolition of Minimum Tax: The new regime eliminates the minimum tax on loss-making companies; companies are only taxed on actual profits.
- Lower Taxes on Dividends: As a director, you can take income as a combination of salary and dividends, with dividends often taxed at a lower rate than personal income tax rates applied to sole traders.
- Zero-Rated VAT: Small companies (≤ ₦100m turnover) are exempt from charging VAT. Also essential items like food, medical services, and education remain zero-rated, aiding companies in these sectors.
The major one that made me make the decision for the business name upgrade was the 0% tax payment for Small companies with turnover not more than ₦100 million.
But guess what! I made mistakes in the past that cost me considerable amount of money, which I will share with you so you can avoid or rectify them.
Before I list out the mistakes, let me tell you, briefly, my story.
As a startup, as far back as 2013, I registered my company with CAC. In 2018, I wanted to ensure I was compliant with the State, even though businesses in my category were not paying taxes, so I got in contact with a tax consultant, that was referred to me, who helped me register with LIRS, get my Tax ID, file my taxes and pay the outstandings from when the business was fully operational.
In 2019, I paid him to file and pay my taxes, with his professional fees, of course, but he didn’t pay and stopped picking my calls (no need to go through the details). Since then I started filing and paying my taxes myself.
Mistake #1
Using someone who was referred to me, without doing my own due diligence. The good thing is that he did the registration and started the process.
Mistake #2
I was not aware that I needed to carryout filing with CAC.
Mistake #2 was the major one because without it I could not start the process of the business name upgrade.
Process I had to go through for the Business Name Upgrade to Limited
- I watched video instructions from an accredited agent on how to carry out the business name upgrade to Limited through the CAC portal.
- I needed to file my CAC from 2013 and since I didn’t there were penalties.
- In order to file I needed an accredited agent, who will collect his/her professional fees.
- I had to pay the lump sum of filing fees, penalties and professional fees from 2013 to 2025. You can imagine the total, in this “Emilokan” era, not to talk of other expenses that were waiting for me, which I would rather keep private.
- I had to, constantly, send emails and occasionally call the CAC contact line to follow up with issues encountered on the CAC portal.
I am, sha, happy to say that I completed the business name upgrade, though it took a while (close to 3 months), due to issues on the CAC portal. I would say that my persistence paid off. Thank God, with His grace.
The fees for filing going forward, are:
- Filing fee: N5,000
- Accredited Agent Fee: N6,200 and above, depending on who you are using
- Total for the year for CAC filing: N11,200 and above
Next Steps after Business Name Upgrade to Limited
- Change Bank Account Name to reflect the upgraded business. These may be required (and not limited to):
- Copy of New CAC Certificate
- Letter written on company letterhead instructing the bank to effect the change of name
- NIN or any other relevant means of identification
- Utility Bill
- Filled reference forms
- Formal notice signed by the proprietor or personal representative of Notice of Cessation of the Business Name to CAC. This is done with the help of an accredited agent. The cost of the application of the business name Cessation is about N10,000 (excluding the charges of the accredited agent).
If you have any question or you would like to share your experience on Business Name Upgrade to Limited, kindly make a comment below.
Reference: fiscalreforms.ng
