Being a Paper presented by: Toyin Bashorun At the ANNUAL General Conference of the Nigeria Bar Association. August 2015

Transcription

1 Being a Paper presented by: Toyin Bashorun At the ANNUAL General Conference of the Nigeria Bar Association. August 2015

2 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 guide by the International Standard Organization, which provides a code to assist in achieving the CSR objectives. It came into force in 2010.

3 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.

4 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.

5 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.

6 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.

7 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 8 th 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.

8 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 SME s 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.

9 Seeing the anxiety of business managers and chief executives the international standard organization then, came up with the ISO 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.

10 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.

11 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).

12 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.

13 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.

14 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.

15 25/08/15.