COVID-19 CHARITABLE DONATIONS AND TAX SHIELD OF DONORS IN NIGERIA

Cletus O. Akenbor ()
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Cletus O. Akenbor: Professor of Accounting and Taxation, Postal: Federal University Otuoke, Bayelsa State,, https://journal.citn.org/

Journal of Taxation and Economic Development, 2020, vol. 19, issue 2, 1-18

Abstract: This study aimed at investigating the extent to which covid-19 charitable donation affects tax shield of donors in Nigeria. The study adopted a survey research design, and the population of the study consisted of donors of the N500 billion covid-19 crisis intervention fund established by the Federal Government of Nigeria to contain the effect of corona virus pandemic as at 18th April, 2020.However, a sample of forty-six (46) donors/businesses was considered for this study. The data for the study were obtained from the Nairametrics Business News of 18th April, 2020. The data were analysed with mean, standard deviation, minimum and maximum values, and Ordinary Least Square (OLS) regression technique. Findings of the study showed that charitable donation made by Nigerians to combat covid-19 pandemic has a significant relationship with tax shield of the donors as such contribution has resulted in an average tax savings of N167.9 million and a maximum tax savings of N600 million. It was also gathered in this study that size moderates the association between covid-19 charitable donation and tax shield. Large companies tend to donate more to the covid-19 crisis intervention fund in a bid to reduce their higher tax burden. In view of the above, the following recommendations were made: an aggressive tax campaign should be made by the appropriate government agency to sensitize tax payers of the tax benefit of such donations so as to encourage more tax payers to contribute to the fund; donation of a capital nature should be considered as tax deductible; the Personal Income Tax Act should be reviewed to accommodate private individuals to make tax deductible donation to such a cause; and the provision of the Companies Income Tax Act, which states that donations should not exceed 10% of gross profit or income should equally be reviewed upward to encourage donors to contribute more to the fund to achieve the set target of N500 billion.

Keywords: Covid-19; charitable donation; tax shield; donors; Nigeria (search for similar items in EconPapers)
Date: 2020
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