CSR Practice and Tax Compliance: Is there a nexus between the two?

PhD Itotenaan Henry Ogiri and Hillary Ukachukwu Nosiri
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PhD Itotenaan Henry Ogiri: PlusTheory Consultants, Abuja, Nigeria
Hillary Ukachukwu Nosiri: Doctoral Student, Ignatius Ajuru University of Education, Port Harcourt, Nigeria

International Journal of Research and Innovation in Social Science, 2022, vol. 6, issue 9, 440-447

Abstract: Taxation and Corporate Social Responsibility (CSR) are two areas that require organizations to demonstrate responsibility to the government and society. While tax is a legal requirement by firms to comply with established obligations, CSR is largely a voluntary practice. This paper investigated the relationship between the level of CSR practice and tax compliance amongst firms in Lagos State, Nigeria. The Shapiro-Wilk’s Lambda estimate, Kruskal-Wallis estimates, and the bivariate pairwise correlational matrix were used in the study. Furthermore, the SPSS software was used to analyze the data, while the study adopts the descriptive statistics method in presenting the empirical findings. Our study reveals varying relationships between the level of CSR practice and firms’ tax compliance as revealed by the rate of aggressive tax avoidance strategies adopted by firms. Majorly, our study shows that a negative connection exists between tax compliance and CSR. More specifically, Pearson’s correlation estimation provided that there is a significant negative relationship between company income tax (CIT) and CSR. Also, the study indicates a negative and statistically significant relationship between CSR and withholding tax (WHT), while the association between value-added tax (VAT) and CSR is negative but statistically insignificant. The study has implications for public policy formulation and implementation and recommends that governments should employ some enablers like tax holidays, tax havens, and other incentives alongside stronger enforcement mechanisms to drive tax compliance.

Date: 2022
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