The Nigerian government's decision to introduce a CSR Tax is being opposed by business groups. The government is considering a CSR bill which proposes a levy of 3.5% on gross profits.
The proposal also includes setting up a CSR Commission which will supervise CSR programs, prepare a CSR ranking of companies, develop standards, engage in research and development and international trade talks involving social responsibility.
Business groups are worried that the new tax will increase the cost of doing business in the country. The president of Lagos Chamber of Commerce and Industries has said that CSR is not an issue for legislation, but for voluntary action by companies.
But their critics say that companies in Nigeria have not voluntarily adopted CSR and a legislation is the only way to make them do their part toward society. Even those few companies which have done something in the name of CSR have restricted their activities to mere charity.
There is a growing trend among governments of developing countries to slap "CSR Tax". A couple of years ago, Indonesia introduced a law asking companies in environmentally sensitive industries to pay 5% environment tax. India imposed a 2% education levy on top of income tax a few years ago saying the money will be used on beefing up the country's educational infrastructure.
If companies wish to avoid CSR legislations, they need to take a convincing voluntary action. And their CSR program should be broadbased and aligned with business operations.