The concept of Corporate Social Responsibility (CSR) in Nigeria is largely an unregulated area as there is no specific legislation or government policy expressly defining the subject matter. However CSR has been described as a moral obligation of corporate bodies to the promotion of viable societal values for the development and benefit of the community and or environment in which they carry out their businesses.  Nathan Hurst defines the concept as “ a corporate responsibility, but with greater stress upon  the obligations a company has to the community, particularly with respect to charitable activities and environmental stewardship. Corporate and social responsibility is sometimes described as being a tacit contract between a business and a community, whereby the community permits the business to operate within its jurisdiction to obtain jobs for residents and revenue through taxation. Additionally, the community expects the business to preserve the environment and to make the community a better place to live and to work through charitable activities”

Taxation on the other hand is a price that must be paid for modern civilization according to Oliver Wendell Holmes. It remains a veritable tool for national development. Economic and Social growth can be attained through enhanced domestic and foreign investment, participation of a large segment of the society (natural and in artificial persons) in some form of work, occupation, business or transaction who compulsorily and must bear the pecuniary burden. While incentives are payments or concession to stimulate greater output or investment. These concepts will guide the writer in an attempt to answer the question posed by this topic. It is pertinent to state that the concept of CSR has been largely abused by some corporations in Nigeria with the way and manner they carry out their negative campaign in the name of philanthropic services. The Pfizer case in Kano with respect to their clinical trial of their unregistered Trovan drug to treat meningitis in 1996 is a relevant case in point, the corresponding statement attributed to Pfizer CEO which resulted in a bloody outcome.   Not to mention the unholy practice of the IOCs in the Niger Delta by conniving with few elites within the community to impoverish the generality of the masses which they mischievously term CSR, that largely led to the militancy in the region.

It is pertinent to take a brief look at the history of CSR in order to create a context for the arguments for and against.


The Evolution of CSR started in India, and it has four phases. The first Phase which lasted around the pre-industralization period in 1960 was in relation to Charity and Philanthropy. The Second Phase was in relation to independence movement, the third phase which was between 1960-1980 had its relation to the element of mixed economy emergence of public sector undertakings (PSUs) and laws relating labour and environmental standards. The fourth phase which is the relevant phase to this discussion  started in 1980 until the present.  Indian companies started abandoning their traditional engagement with CSR and integrated it into a sustainable business strategy. In the 1990s the first initiation towards globalization and economic liberalization were undertaken. Controls and licensing system were partly done away with which gave a boost to the economy the signs of which are very evident today. Increased growth momentum of the economy helped Indian companies grow rapidly and this made them more willing. Globalization has transformed India into an important destination in terms of production and manufacturing bases of TNCs are concerned. As Western markets are becoming more and more concerned about labour and environmental standards in the developing countries, Indian companies which export and produce goods for the developed world need to pay a close attention to compliance with the international standards. CSR has now moved from ideology to reality and now considered necessary for organizations to define their roles in society and apply social and ethical standards to their businesses. Although some organizations are committed to Corporate Social Responsibility, many struggle with the effort.


Conceivably, while it is true that there are yet no specific legislation which cater for CSR in Nigeria, it can be argued that there are several Nigerian legislations that incorporate within their provisions certain underlining principles of the concept. Examples of these laws include the National Environmental Standards and Regulations Enforcement Agency (Establishment) Act, 2007 which provides for the Standards of compliance with environmental Protection; the Harmful Waste (Special Criminal Provision) Act, CAP H1, LFN 2004 which prohibits anyone from carrying, depositing and dumping of harmful waste on any land, terminal waters, etc; the Criminal code applicable in the Southern part of Nigeria contains provisions which guarantees the protection of public health, declares as an offence the corruption or fouling of the water, spring, stream, well, tank, reservoir or place and prohibition of noxious acts. Enforceability of these laws however remains a critical issue plaguing the Nigerian State, especially as there seems to be a lack of definition and or enlightenment as to the extent to which corporate bodies are permitted to perpetuate these acts before they become criminal in nature.  The international organization for standardization (ISO) launched an international Standard providing guidelines for social responsibility (SR) named ISO 26000  released on the 1st of November 2010. Its goal is to contribute to global sustainable development, by encouraging businesses and other organization to practice social responsibility to improve their impacts on their workers, their natural environments and their communities.

Within the context of this background can or should tax relief be given as an incentive to enhance the appetite and the thrives of organization towards CSR with defined ethical boundaries.


Several surveys have reveled that CSR is largely a moral obligation. However, there is flip side to the arguments by particular schools of thought trying to justify the need for it to be an incentive, the later seem to carry the popular voice. Tax incentives in Nigeria are largely statutory ranging from the pioneer status granted to companies embarking in a new area pursuant to the Industrial Development (Income Tax Relief) Act (last reviewed in 2004), to Incentives under the Fiscal Responsibility Act, 2007, to Companies Income Tax Exemption Order and a Value Added Tax (Modification) pursuant to the Companies Income Tax Act. Nigeria Export Processing Zones Act, Petroleum Income Tax Act, Venture Capital  (incentives) Act, all these statutes provides for certain reliefs in their respective sectors. It has been argued that cost-based incentives will better result in economic development of Nigeria. Howbeit, Profit-based incentives, particularly, for multinational corporations can neither result in any economic nor corporate responsibility of the corporations. Cost-based incentives involve specific allowances linked to investment expenses, for example, accelerated depreciation schemes and special tax deductions and credits. Nigeria should aim at lowering the cost of capital and so make a greater number of investment projects more profitable at the margin. On the contrary, profit-based incentives reduce the tax rate applicable to holidays, preferential tax rates or income exemptions. As research has shown, when profits are earned due to the presence of location-specific factors, such as national resources, agglomerations or local markets, profit based incentives tend to be associated with high redundancy rates and to be ineffective in raising investment. In addition to the tax incentives and waivers, avoid and invaded taxes by using interest deductions to shift profits to a low tax jurisdiction or round tripping of domestic investment using a foreign entity to take advantage of the tax incentive. This has resulted in the displacement of domestic investments. Accordingly, the issue of corporate responsibility activities proportional to the level of incentives and waives given become a ripe against the ordinary Nigerian and against the Nigerian treasury. The reason is that the foreign Direct Investment promoted by several of the multinationals are resource seeking meaning, they aim only to exploit national resources, such as Nigerian’s oil and gas. The others are market seeking, meaning, they only aim to penetrate Nigerian local market perceived to be the largest in Africa.  Research has also shown that FDIs that are resource seeking, market and asset seeking are less response to tax than FDI that is efficiency seeking (meaning, seeking to appoint cost advantage in production to the World market). Thus, Nigeria and other developing countries would have lost Billions of Dollars in tax incentives and other forms of waives to multinational corporations whose responsibility profiles cannot be justified by the quantum if these incentives and waives with the greatest, while reference to economic growth and efficiency as well as transparency accountability and fairness are very critical in making policies concerning tax incentives, the national tax policy needs to go beyond the general allusions to specific three core design issues.

Consensus of research opinion has shown that tax incentives ought to be abolished, particularly, in developing economies. Particularly, tax incentives do not top the list of investment factor in developing countries. In Nigeria, profit based incentives associated with high redundancy rates and ineffective in reducing investment. It could be stated that the practice in Nigeria is inconsistent with the rule of law and international best practices. By so doing, the tax reliefs as presently constituted in Nigeria are incapable of providing a significant degree of empirical outcomes of corporate responsibility efforts. The case of Nigeria and developing countries confirm the assertion that the fiscal cost of tax incentives can be high, reducing opportunities for much needed spending on infrastructure, education and health care thereby making the ordinary Nigerians to pay higher taxes on other activities to support the goal of taxation. It is submitted that tax incentives can only serve useful social purposes if the social benefits they generate exceed any social costs emanating from such incentives. Therefore, the writer will respectfully toe the line of the popular opinion that CSR should not be considered an incentive in this present state of being unregulated in Nigeria.