A new report by Afrexim Bank says that a 5% tax on companies making over N100 million will make big businesses leave Nigeria. These companies will need to spend the money on community projects.
The report, called “Monthly Developments in the African Macroeconomic Environment”, points out that this idea is not popular with many private companies.
It says, “Nigeria’s National Assembly is thinking about making big companies pay 5% for community projects, even though companies don’t like it. Critics say these companies already pay 20-30% in taxes and might leave the country if this new tax happens.”
The report also looks at other things happening in Nigeria’s economy in June, like putting N2 trillion into the economy and higher mining fees.
Background Info
A House of Representatives member, Hon. Olumide Osoba, introduced the Corporate Social Responsibility Bill 2023. He wants companies to care for the environment and society while making money.
This bill wants to create a department in the Federal Ministry of Budget and National Planning. A commissioner, chosen by the president and recommended by the budget minister, will lead this department.
The commissioner will oversee CSR activities and ensure companies follow the rules.
Companies worth N500 million or making N100 million in a year must have a CSR committee. This group will have at least three directors, one being independent, to make sure the company follows its CSR policy.
Opposition to the Bill
But the bill is not liked by many private companies. The Manufacturers Association of Nigeria (MAN) said it’s a bad idea and not needed right now.
They think CSR should be a choice for each company and worry about too many taxes and high costs of running a business.
Similar Rules in Nigeria
This 5% tax for community projects is not new. The Petroleum Industry Act (PIA) already makes oil companies pay 3% of their costs to help local communities.
Also, the new Electricity Act of 2023 makes electricity companies pay 5% of their costs to a fund aimed at helping local communities and dealing with environmental issues.