IDEAS home Printed from https://ideas.repec.org/a/bcp/journl/v6y2022i9p440-447.html
   My bibliography  Save this article

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

Author

Listed:
  • Itotenaan Henry Ogiri, PhD

    (PlusTheory Consultants, Abuja, Nigeria)

  • Hillary Ukachukwu Nosiri

    (Doctoral Student, Ignatius Ajuru University of Education, Port Harcourt, Nigeria)

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.

Suggested Citation

  • Itotenaan Henry Ogiri, PhD & Hillary Ukachukwu Nosiri, 2022. "CSR Practice and Tax Compliance: Is there a nexus between the two?," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 6(9), pages 440-447, September.
    • Handle: RePEc:bcp:journl:v:6:y:2022:i:9:p:440-447
    as

    Download full text from publisher

    File URL: https://www.rsisinternational.org/journals/ijriss/Digital-Library/volume-6-issue-9/440-447.pdf
    Download Restriction: no
    File URL: https://www.rsisinternational.org/virtual-library/papers/csr-practice-and-tax-compliance-is-there-a-nexus-between-the-two/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Jill Brown & William Forster, 2013. "CSR and Stakeholder Theory: A Tale of Adam Smith," Journal of Business Ethics, Springer, vol. 112(2), pages 301-312, January.
    2. Fátima David & Isabel Gallego, 2009. "The interrelationship between corporate income tax and corporate social responsibility," Journal of Applied Accounting Research, Emerald Group Publishing Limited, vol. 10(3), pages 208-223, November.
    3. Chen, Shuping & Chen, Xia & Cheng, Qiang & Shevlin, Terry, 2010. "Are family firms more tax aggressive than non-family firms?," Journal of Financial Economics, Elsevier, vol. 95(1), pages 41-61, January.
    4. An, Yahui, 2021. "Corporate social responsibility and overseas income," Finance Research Letters, Elsevier, vol. 39(C).
    5. Chih-Wen Mao & Wen-Chieh Wu, 2019. "Moderated mediation effects of corporate social responsibility performance on tax avoidance: evidence from China," Asia-Pacific Journal of Accounting & Economics, Taylor & Francis Journals, vol. 26(1-2), pages 90-107, January.
    6. Fátima David & Isabel Gallego, 2009. "The interrelationship between corporate income tax and corporate social responsibility," Journal of Applied Accounting Research, Emerald Group Publishing Limited, vol. 10(3), pages 208-223, November.
    7. Harjoto, Maretno A. & Hoepner, Andreas G.F. & Li, Qian, 2022. "A stakeholder resource-based view of corporate social irresponsibility: Evidence from China," Journal of Business Research, Elsevier, vol. 144(C), pages 830-843.
    8. Boubakri, Narjess & El Ghoul, Sadok & Wang, He & Guedhami, Omrane & Kwok, Chuck C.Y., 2016. "Cross-listing and corporate social responsibility," Journal of Corporate Finance, Elsevier, vol. 41(C), pages 123-138.
    9. repec:eme:jaar00:09675420911006415 is not listed on IDEAS
    10. Itotenaan Henry Ogiri & Martin Samy & Roberta Bampton, 2012. "Motivations of legitimacy theory for CSR reporting in the Niger Delta region of Nigeria: a theoretical framework," African Journal of Economic and Sustainable Development, Inderscience Enterprises Ltd, vol. 1(3), pages 265-283.
    11. Knudsen, Jette Steen & Moon, Jeremy, 2022. "Corporate Social Responsibility and Government: The Role of Discretion for Engagement with Public Policy," Business Ethics Quarterly, Cambridge University Press, vol. 32(2), pages 243-271, April.
    12. Chih-Wen Mao, 2019. "Effect of corporate social responsibility on corporate tax avoidance: evidence from a matching approach," Quality & Quantity: International Journal of Methodology, Springer, vol. 53(1), pages 49-67, January.
    13. Carol A. Tilt, 2016. "Corporate social responsibility research: the importance of context," International Journal of Corporate Social Responsibility, Springer, vol. 1(1), pages 1-9, December.
    14. Sikka, Prem & Willmott, Hugh, 2010. "The dark side of transfer pricing: Its role in tax avoidance and wealth retentiveness," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 21(4), pages 342-356.
    15. Richard M. Crossley & Mohamed H. Elmagrhi & Collins G. Ntim, 2021. "Sustainability and legitimacy theory: The case of sustainable social and environmental practices of small and medium‐sized enterprises," Business Strategy and the Environment, Wiley Blackwell, vol. 30(8), pages 3740-3762, December.
    16. Huseynov, Fariz & Klamm, Bonnie K., 2012. "Tax avoidance, tax management and corporate social responsibility," Journal of Corporate Finance, Elsevier, vol. 18(4), pages 804-827.
    17. Boubakri, Narjess & Guedhami, Omrane & Kwok, Chuck C.Y. & Wang, He (Helen), 2019. "Is privatization a socially responsible reform?," Journal of Corporate Finance, Elsevier, vol. 56(C), pages 129-151.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Brooks, Chris & Godfrey, Chris & Hillenbrand, Carola & Money, Kevin, 2016. "Do investors care about corporate taxes?," Journal of Corporate Finance, Elsevier, vol. 38(C), pages 218-248.
    2. Gavious, Ilanit & Livne, Gilad & Chen, Ester, 2022. "Does tax avoidance increase or decrease when tax enforcement is stronger? Evidence using CSR heterogeneity perspective," International Review of Financial Analysis, Elsevier, vol. 84(C).
    3. M.A. Gulzar & Jacob Cherian & Muhammad Safdar Sial & Alina Badulescu & Phung Anh Thu & Daniel Badulescu & Nguyen Vinh Khuong, 2018. "Does Corporate Social Responsibility Influence Corporate Tax Avoidance of Chinese Listed Companies?," Sustainability, MDPI, vol. 10(12), pages 1-12, December.
    4. Bohyun Yoon & Jeong-Hwan Lee & Jin-Hyung Cho, 2021. "The Effect of ESG Performance on Tax Avoidance—Evidence from Korea," Sustainability, MDPI, vol. 13(12), pages 1-16, June.
    5. Osman Issah & Lúcia Lima Rodrigues, 2021. "Corporate Social Responsibility and Corporate Tax Aggressiveness: A Scientometric Analysis of the Existing Literature to Map the Future," Sustainability, MDPI, vol. 13(11), pages 1-23, June.
    6. Ylönen, Matti & Laine, Matias, 2015. "For logistical reasons only? A case study of tax planning and corporate social responsibility reporting," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 33(C), pages 5-23.
    7. Christofer Adrian & Mukesh Garg & Anh Viet Pham & Soon-Yeow Phang & Cameron Truong, 2023. "Do Natural Disasters Affect Corporate Tax Avoidance? The Case of Drought," Journal of Business Ethics, Springer, vol. 186(1), pages 105-135, August.
    8. Hill, Matthew D. & Kubick, Thomas R. & Brandon Lockhart, G. & Wan, Huishan, 2013. "The effectiveness and valuation of political tax minimization," Journal of Banking & Finance, Elsevier, vol. 37(8), pages 2836-2849.
    9. García-Meca, Emma & Ramón-Llorens, Maria-Camino & Martínez-Ferrero, Jennifer, 2021. "Are narcissistic CEOs more tax aggressive? The moderating role of internal audit committees," Journal of Business Research, Elsevier, vol. 129(C), pages 223-235.
    10. Boubakri, Narjess & El Ghoul, Sadok & Guedhami, Omrane & Wang, He (Helen), 2021. "Corporate social responsibility in emerging market economies: Determinants, consequences, and future research directions," Emerging Markets Review, Elsevier, vol. 46(C).
    11. Feng, Zhi-Yuan & Wang, Ying-Chieh & Wang, Wen-Gine, 2024. "Corporate carbon reduction and tax avoidance: International evidence," Journal of Contemporary Accounting and Economics, Elsevier, vol. 20(2).
    12. Yuan, Na & Gao, Yihong, 2022. "Does green credit policy impact corporate cash holdings?," Pacific-Basin Finance Journal, Elsevier, vol. 75(C).
    13. Salihu, Ibrahim Aramide & Annuar, Hairul Azlan & Sheikh Obid, Siti Normala, 2015. "Foreign investors' interests and corporate tax avoidance: Evidence from an emerging economy," Journal of Contemporary Accounting and Economics, Elsevier, vol. 11(2), pages 138-147.
    14. Eva López‐González & Jennifer Martínez‐Ferrero & Emma García‐Meca, 2019. "Does corporate social responsibility affect tax avoidance: Evidence from family firms," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 26(4), pages 819-831, July.
    15. Haque, Tariq & Pham, Thu Phuong & Yang, Jiaxin, 2023. "Geopolitical risk, financial constraints, and tax avoidance," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 88(C).
    16. Roman Lanis & Grant Richardson, 2015. "Is Corporate Social Responsibility Performance Associated with Tax Avoidance?," Journal of Business Ethics, Springer, vol. 127(2), pages 439-457, March.
    17. Jones, Chris & Temouri, Yama, 2016. "The determinants of tax haven FDI," Journal of World Business, Elsevier, vol. 51(2), pages 237-250.
    18. Gillan, Stuart L. & Koch, Andrew & Starks, Laura T., 2021. "Firms and social responsibility: A review of ESG and CSR research in corporate finance," Journal of Corporate Finance, Elsevier, vol. 66(C).
    19. Khan, Majid & Lockhart, James & Bathurst, Ralph, 2021. "The institutional analysis of CSR: Learnings from an emerging country," Emerging Markets Review, Elsevier, vol. 46(C).
    20. Argilés-Bosch, Josep Mª & Ravenda, Diego & Garcia-Blandón, Josep, 2021. "E-commerce and labour tax avoidance," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 81(C).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bcp:journl:v:6:y:2022:i:9:p:440-447. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dr. Pawan Verma (email available below). General contact details of provider: https://rsisinternational.org/journals/ijriss/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.