EFFECT OF CORPORATE SOCIAL RESPONSIBILITY (CSR) EXPENDITURE ON INCOME TAX COMPLIANCE AMONG LISTED NON- FINANCIAL SERVICES COMPANIES IN NIGERIA

Authors

  • MAHMUD LABARAN Author

Abstract

This study examines the effect of Corporate Social Responsibility (CSR) expenditure on income tax compliance among listed non-financial services companies in Nigeria. It specifically investigates whether CSR investments and company employment size influence tax compliance behavior. The research adopts a quantitative approach using pooled panel data analysis, which enables the exploration of both cross-sectional and time-series variations across firms. The sample comprises 103 listed non-financial companies, with data spanning 11 years (2012–2022), providing a robust basis for empirical analysis. The study's model incorporates CSR investment and employment size as key independent variables, while firm size and profitability serve as control variables. The findings reveal a significant negative relationship between CSR expenditure and income tax compliance, suggesting that firms with higher CSR spending tend to exhibit lower levels of tax compliance. This raises critical concerns about the potential misuse of CSR initiatives as a strategic tool for tax avoidance, where companies may enhance their public image through CSR while simultaneously reducing their tax obligations. Profitability also shows a negative association with tax compliance, indicating that more profitable firms are less likely to fully adhere to tax regulations.

Conversely, employment size and firm size do not significantly affect tax compliance, implying that these structural characteristics may not be reliable predictors of tax behavior. The presence of heteroskedasticity, as revealed by the Breusch-Pagan test, further suggests variability in the influence of these factors across firms.

The study concludes that while CSR can be a force for social good, it may also be exploited for less altruistic purposes. It recommends stronger regulatory oversight, tax policy reforms, improved corporate governance, and enhanced transparency in CSR and tax reporting to ensure that CSR activities genuinely reflect corporate accountability and do not undermine fiscal responsibilities.

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Published

2025-10-01

How to Cite

MAHMUD, L. (2025). EFFECT OF CORPORATE SOCIAL RESPONSIBILITY (CSR) EXPENDITURE ON INCOME TAX COMPLIANCE AMONG LISTED NON- FINANCIAL SERVICES COMPANIES IN NIGERIA. ANUK College of Private Sector Accounting Journal, 2(2), 215-223. https://anukpsaj.com/psaj/article/view/132