Corporate Social Responsibility and Tax Strategies: An Analysis of Nigerian Public Companies

Abstract

In recent times, the study of factors that affect tax strategies of companies has gained a huge research attention due to its relevant in determining the success of nation. However, this study broadly investigated the impact of corporate social responsibility on tax strategies in Nigerian public companies. This study specifically examined; the effect of employee social welfare, environmental maintenance cost and firm donation cost on tax strategies measure by effective tax rate in Nigerian Public Companies. This study was anchored on corporate culture theory and agency theory and adopted ex-post facto research design by employing secondary data collated from the annual reports and accounts of a sample size of fifty-four (54) Nigerian Public Companies from 2013-2022. Data were analysed with descriptive statistics and correlation. It was found that employees’ social welfare cost had negative and significant effect on tax Strategies (t-val.= -7.074, P-val. < 0.05) which suggested that increase in employee social welfare cost exhibited significant decrease in tax strategies. Environmental maintenance cost had negative and significant effect on tax strategies (t-val.= -12.559, P-val. < 0.05). This finding further suggested that increase in environmental maintenance cost exhibited significant decrease in tax strategies. Donation cost had negative and insignificant effect on tax strategies (t-val.= -18.996, P-val. < 0.05). This finding suggested that increase in donation cost exhibited significant decrease in their tax strategies. This study concluded that increasing the costs of investments in corporate social responsibility through employee social welfare costs, environmental maintenance costs, and donations, have a significant negative effect on tax strategies in Nigerian Public Companies. It was recommended among others that the Nigerian public companies should actively invest in corporate social responsibility by increasing employee social welfare costs, environmental maintenance costs, and donations costs in order to minimise tax strategies.