Socio-Political Determinants of Corporate Social Responsibility and Tax Avoidance in Nigeria’s Oil and Gas Industry: Towards the Development of a Monitoring Framework

Abstract

Recent debates surrounding the connection between corporate social responsibility (CSR) and tax avoidance have attracted significant interest globally, which is relevant to the oil and gas industry. This industry is leading in CSR performance but faces criticism for its environmental, economic, and social impacts on society. Although CSR is essential for societal acceptance, tax avoidance strategies undermine government revenue. Since previous studies have disclosed conflicts in results about the relationship between CSR and tax avoidance, further research is necessary to clarify the nature of these conflicts, which could be due to contextual differences, methodological variations, or other factors, particularly in the Nigerian context.

This study provides a deeper understanding of how specific socio-political factors, such as weak governance and corruption, impact CSR practices as tax avoidance schemes within the Nigerian oil and gas industry. It uses a mixed methods study design to explore the motivations and methods influencing CSR activities regarding tax avoidance strategies among upstream oil and gas corporations. Qualitative findings reveal the significant influence of these factors on upstream companies' CSR initiatives as tax avoidance schemes in Nigeria. These firms often engage in nonmandatory CSR activities to promote societal acceptance while inflating costs to reduce tax liabilities. Quantitative results corroborate the qualitative findings, emphasising the need for effective monitoring mechanisms to mitigate the influence of these factors.

The Delphi method findings not only unveil the crucial principles for mitigating the effect of socio-political factors but also propose a practical solution - an integrated tax and sustainable development monitoring framework (IT&SDMF). The IT&SDMF serves as this study's key recommendation, offering a mechanism for scrutinising CSR activities regarding tax avoidance strategies to optimise government tax revenue for sustainable development. This framework presents a tangible opportunity for real-world application and further research in the field of CSR and tax avoidance.

This study's findings contribute to understanding how socio-political factors affect CSR's impact on tax avoidance, providing insights for future research and policy development, especially within the CSR and tax avoidance phenomena domain. The findings suggest that effective monitoring mechanisms and stricter regulations are needed to prevent the misuse of CSR for tax avoidance purposes. This could inform future research on the effectiveness of such mechanisms and the potential for policy interventions to address this issue.

Date of Award	2024
Original language	English
Supervisor	Peter Cameron (Supervisor) & Stephen Dow (Supervisor)