CORPORATE SOCIAL RESPONSIBILITY; ITS CONSIDERATION IN TAX PLANNING.

Corporate social planning(CSR) are business practices that involve companies implementing programmes that contribute to the development of the community and create a social, economic and environmental stability for the society. Corporate Social Responsibility can also be called Corporate Conscience, Responsible Business of Corporate Citizenship. Although, some consider it as a marketing scheme, it is a practice that is well regulated and structured with rules and conditions. Corporate Social Responsibility is organized to impact many aspects of relevant life plan. the programmes are designed to improve health, safety, environment, human rights, waste management's, renewable energy. it also involves volunteering, setting up charities, organizing trade fairs e.t.c.

ADVANTAGES OF CSR



 

● It ensures community growth.

● It helps goods and services providers build the confidence of their customers.

 

● Increases business income.

● Increases the standard of living.

 

● Helps in the growth of the economy.

● Help stabilize the community in time of crisis.

 

● It can be a form of wealth creation.

●It creates a good working environment, introduces workers to new thing and is a welcome change to the daily routine.

 

● It encourages humanitarian acts.

●Enhances the interpersonal relationship amidst workers.

 

● Improves customer service.

● Improves business image.

● Encourages investors.

 

The Corporate social responsibility planned by a corporation must be accepted by the community as it must not violate their principles and ethics.
a violation of this affects the company and hinders the community from benefiting from the programme which forfeits the purpose of Corporate Social Responsibility.

 

 

The rules and regulations guiding Corporate Social Responsibility vary in different country. An organization must know the rules applicable to each region and abide strictly by it  prevent tax liability. the question of if the Corporate Social Responsibility should be considered during tax planning is subjected to the rules or company act in each region.

 

 

In some countries, the government state that the amount spent on Corporate Social Responsibility should not be calculated as a part of the business expenses therefore is not deductible for computing the taxable income. It can also be determined if the corporate social responsibility expenses should be deducted from the taxable income depending on the type of programme implemented by the corporation.

 

In some cases, it is not deducted at all, while in some it is deducted at a subsidized rate. The attempt of some corporation to avoid the payment of tax using the Corporate Social Responsibility as an excuse has not made the idea of deducting the expenses of Corporate Social Responsibility from the taxable income appealing.

Corporate Social Responsibility that is directed towards improving the corporation is considered unworthy of exclusion from tax because the company benefits from it. Any form of Corporate Social Responsibility that generates income or increases the company's asset is taxable dependent except in situations determined by the rule of government.

Companies have had tax liability as a result of improper research before selecting the type of Corporate Social Responsibility to operate. Corporations should participate in CSR after carefully examining the conditions involved. some CSRs are considered worthy of exclusion while calculating the taxable income, Corporate Social Responsibility like Sport development, academic scholarship, development of urban/ rural areas or programmes specially approved by the government.

A basic understanding of the operative tax law or company act in a region and enlisting the view of a tax agency before the commencement of a corporate social responsibility is a great advantage.

Corporations are often considered when the corporate social responsibility expenditure produces major assets like hospital and school building. Any contribution that does not belong to the corporation can also be considered. In the past companies have been free to carry out Corporate Social Responsibility but in recent times, the enactment of laws determining the scope of the relationship between tax and CSR has emphasized the need for proper and greater responsibility.

planning with care under strict rules the execution of a Corporate Social Responsible is indicated. Corporations should count the cost before embarking on corporate social responsibility. the Government can be consulted in some cases when the CSR is on a very large scale or its effects is bound to greatly contribute to national assets.

When considering the type of Corporate Social Responsibility to do, noting the present need of the people should come first and then a review of the laws and condition of conducting a CSR in your location , it is important to adhere strictly to the prescription of the government.

Corporations also need to be transparent on issues related to the ratio of the income that is taxable. this helps the tax authority have enough information which gives more insight on how things should be done.

Adequate time should be invested in the planning of a corporate social responsibility. a special board can be put in place who are majorly concerned with implementing the CSR and tackling any issue that may arise regarding taxation. the proper implementation of the CSR helps the corporation strike a balance between fulfilling their Corporate Social Responsibility and running a business without tax liability. a corporation under the pressure of the tax liability will not be able to give well as CSR is not just about catering for the physical and environmental needs of the community. it is also about caring for the emotional and psychological state of the people. a corporation in the best financial status free from pressure will be able to offer all these and more.

Subscribe to our news letter

Please contact us if you want to do work through the mailbox.