ActionAid Nigeria, AAN and Oxfam, have called on the government to incentivise Corporate Social Responsibility, CSR actions to further encourage the continuity and sustainability of projects and programmes which could impact positively on community development.
David Nwachukwu, chairman, steering committee, Strengthening Public Finance in Nigeria, STREPFIN, disclosed this to newsmen at a press briefing recently in Lagos.
‘‘Many companies, because of government failings, spend a lot of resources in doing CSR. They build schools, hospitals, roads in the communities where they operate, not because it is their responsibility to provide that but because the government have failed and, to manage the restiveness in those communities, companies spend their resources, to do those things,’’ said Nwachukwu.
‘‘Now, those companies want to claim tax relief for such expenditures whereas the view of the taxman is that you can only claim tax relief if the expenditure is wholly, reasonably, exclusively and necessarily related to your operations.’’
The study on CSR, wages and taxes which was conducted by ActionAid and Oxfam in Rivers, Bayelsa and Delta State, is geared towards strengthening public financing management in Nigeria.
‘‘The first phase had focused on the expenditure side of revenue. What do we do to get more value for being expended by the government at different levels and ensure better coordination of expenditures? That arose because we discovered that government at different levels overlap each other in incurring expenditure on projects,’’ Nwachukwu said.
‘‘The second leg of the project on strengthening public finance focused on the revenue side and in identifying the potential source of revenue for the government.’’
Nwachukwu also called on corporate organizations to allow CSR actions be driven by community need assessment as well as national development agenda in order to foster cohesion in the pursuit of relevant national development agenda particularly as relates to citizens welfare.
‘‘CSR actions do not necessarily flow solely from the community needs but rather based on joint company and community needs. In a number of places, it is the companies that decided on what they thought is best suited for the communities where they operate’,’’ he said.
The chairman requested that the proposed CSR enabling policy should provide for professional bodies, independent validation of CSR expenditure on project and programme in order to promote transparency and accountability as well as ensure value for money in the reporting of CSR action.
‘‘There were concerns that some of the companies engaging in CSR activities could inflate the cost spent on CSR with the view of evading taxes. So, the intention is to prevent incidence of CSR related tax evasion,’’ said Nwachukwu.
‘‘Social audit of CSR should ensure that benefitting communities indeed get value for the money which are said to be spent on their behalf on CSR activities.’’
He called on government to formulate a comprehensive and detailed national policy framework in consultations with stakeholders in the public sector, private sector and CSR communities on the proper accounting for actions, sustainability of CSR related projects and actions to block leakages on account of CSR actions by companies.
‘‘There is a clear linkage between CSR and taxation in terms of social infrastructure development and citizen wellbeing but absence of policy framework on CSR actions could potentially create avenues for tax evasions by corporate organizations,’’ he said.
Continuing, Nwachukwu said, ‘‘ We also call on the tax authorities to embark on sensitization of tax payers, not just on their obligations under the law but as well as their rights in order to prevent the incidence of multiple taxation and remove all elements that tend to create challenging environment for businesses.
Oluwole Elegbede, director of finance, ActionAid Nigeria, who represented the country director, spoke about ActionaAid and their role in the project.
‘‘The innovation for our work is eradicating poverty and a study we conducted linked poverty to corruption. In the past 6-7 years, we were reporting high GDP but people are still living in poverty and our economy is saying that we are doing well. One of the aims of this project is to find out how we can finance our development. If we are able to do that, we will be able to report that Nigeria is not just growing but we are also developing,’’ Elegbede said.
Paul Akioyamen, the consultant who led the study stressed the need for cohesion in terms of the way CSR is being done adding that CSR projects be done with the communities’ best interest in mind.
Source: BusinessDay