Being a Paper presented by: Toyin Bashorun

At the ANNUAL General Conference

of the Nigeria Bar Association.

August 2015

CORPORATE SOCIAL RESPOSIBILITY (CSR)

CSR remains a management concept whereby companies and

businesses integrate social and environmental concerns in their

business operations and interactions with their stakeholders. CSR is

understood as the way by which a company achieves a balance of

economic, environmental and social imperatives (“Triple Bottom-line

Approach”) whilst ensuring that the expectation of their shareholders

and stakeholders are not compromised. There is the ISO 26000 guide

by the International Standard Organization, which provides a code to

assist in achieving the CSR objectives. It came into force in 2010.

IMPORTANT FACTS to bear in mind:

CSR is a strategic business management Concept. It

is not about charity, sponsorship or philanthropy.

At times strategic business management (CSR) may

include charities, sponsorships and philanthropy, it

is only added so as to strengthen the company’s

brand.

Apart from the triple bottom approach, there is the 5s methodology for enhancing work place, and process efficiency ( i.e. productivity upgrading)

These 5s methodology are:

1. Seiri (Sort): Sort out all unneeded items in the workplace;

2. Seiton (Set in order): Set all items that remain, in proper place(s) for quick retrieval;

3. Seiso (shine): Keep the workplace clean;

4. Seiketsu (Standardize): Create rules and standard operating procedures for maintaining cleanliness;

5. Shitsuke (sustain): Maintain the system and continue to improve it.

The third approach will be the Total Employee Involvement (TEI) Concept which makes for continuous improvement of both the human resource and company growth.

The United Nations now added its UN Global Compact 10

principles of responsible business conduct to the pack of

approaches above. This is where Human Rights labour standards,

Environment and Anti-Corruption are insisted upon.

These ten principles are that:

1. Businesses should support and respect the protection of

internationally proclaimed human rights.

2. Businesses should make sure that they are not complicit in

human rights abuses.

3. Businesses should uphold the freedom of association and the

effective recognition of the right to collective bargaining.

4. Businesses should uphold the elimination of all forms of forced

and compulsory labour.

5. Businesses should uphold the effective abolition of child labour.

Principles contd.

6. Businesses should uphold the elimination of

discrimination in respect of employment and

occupation.

7. Businesses should support a precautionary approach

to environmental challenges.

8. Businesses should undertake initiatives to promote

greater environmental responsibility.

9. Businesses should encourage the development and

diffusion of environmentally friendly technologies.

10.Businesses should work against corruption in all its

forms, including extortion and bribery.

The topic I have been asked to discuss is the incidence of Tax Relief as it impacts on CSR. Can it be an incentive?

Tax Relief:

It is understood that taxation is a process whereby communities, groups and individuals are expected to contribute a part of their income for the purpose of societal administration and development.

Black’s law dictionary 8th edition, defines tax as a charge by government on the income of an individual, corporation or trust as well as the value of an estate or a gift.

The objective here is the generation of revenue to be used for the needs of the public.

If one were to compare both concepts, one will see that the

concept of Taxation unlike CSR carries with it a legislative force

which makes its payment mandatory and in fact it carries with it

the backing of the law as well. As such fines and imprisonment

follow, should the law be infringed or disobeyed. That is why the

incidence of avoidance and evasion are strenuously scrutinized.

CSR on the other hand is an agreed standard of doing business

which companies and SMEs willingly agree to employ to guide their

business practices.

When the concept was evolving, it was decided at the United

Nations Assembly that business management has come of age,

hence it does not need a legal regime to guide them as to how to be

responsible. This was a major after math of the Enron saga prior to

year 2010.

Seeing the anxiety of business managers and chief executives the international standard organization then, came up with the ISO 26000 Standard of corporate social responsibility. Interestingly, Nigeria has remained at the nursery stages of imbibing this culture into its businesses and social outlook. In other developed countries this standard has formed the bedrock of the campaign against of corruption, bribery and unfavorable environmental business policies etc. which is now becoming a globally accepted phenomenon.

There are times when the government feels generous and makes for allowable deductions and holidays in the modern tax code. These are generally termed tax reliefs. A list of allowable deductions (tax reliefs) are codified in Section 24 and 25 of the companies Income Tax Act cap C1 LFN 2004 and Section 20 of Personal Income Tax Act Cap p8 LFN 2004 where personal income are concerned.

The old case of FRA Williams Vs. Regional Tax Board (1963) involving Chief Williams of Blessed memory should readily come to mind here. Section 13 of the Income tax law at the time is an equivalent of section 20 of PITA today.

This with respect cannot be incidental to the concept of CSR as envisaged by the United Nations and the International Standard organization.

With these background can tax relief be an incentive to CSR?

My respectful submission here is that incidence of taxation and the concept of CSR are two parallels serving different purposes. At the onset of this presentation I noted that CSR is about methodology and strategy; therefore whether or not you get tax relief, is immaterial where the concept of CSR is concerned. If anything maintaining a healthy tax regime by prompt payment of taxes and other sociological obligation is in itself the social responsibility the concept of CSR seeks to imbibe in corporate citizens.

It is only when CSR is confused with philanthropy, charities etc. that you begin to wonder whether, the reliefs gained from allowable deductions from taxation can be channeled to the company’s or organization’s brand enhancement (i.e. their philanthropic or charitable ventures).

The theme of our conference remains Lawyers and National

Development. Our President, was gracious enough to appeal to us to

ensure that we are not unwittingly drawn into using the law and its

machinery to protect crooks. Mr. President in fact went on to

elaborate that “Nigeria needs Lawyers who take the ethics of the

profession very seriously; Lawyers who will not frustrate the

course of justice even though they defend their clients with all

legitimate means and reasons”. He went on to make clear that

“Nigeria needs ethical Lawyers who always keep the ends of

justice in mind and will never sacrifice the integrity of the legal

system to cover the misdeeds of their clients, no matter how

lucrative the brief may be”.

This in my humble view is how CSR impacts on today’s Lawyer for

the achievement of the desired national development.

The Federal Inland Revenue Service has recently revolutionized

the tax regime in the country by creating a friendlier tax regime.

They have been bitten by the CSR bug.

The FIRS now represents a voluntary tax compliance system

which makes for efficient tax payment and appeals. Hence as a

company or law firm you are allowed to approach the tax

authorities directly and set up your own convenient tax

incidence. This , of course must be within the confines of the law.

Going back to our first six slides, one can safely conclude that for the Lawyer, CSR, as far as national development is concerned, is the practice of the profession in a decent environment where the ethics of the profession and the respect for rights of the citizenry as whole is assured, through the enhancement of the rule of Law without ‘let or hindrance’.

25/08/15.