Nigeria is one of Africa’s leading oil and gas producing countries that is heavily dependent on its upstream oil and gas sector for revenues. For example, the petroleum profits tax significantly contributes to the country’s gross domestic product and sustainable development financing [1]. However, the oil- and gas-producing region in Nigeria is plagued with environmental, economic, and social concerns caused by the operations of the oil companies impacting on societies. While the oil and gas companies in the Nigerian upstream sector tend to mitigate the negative effects of their operations including oil spill and environmental degradation, these companies claim to implement various corporate social responsibility (CSR) initiatives by providing schools, hospitals, and roads [2]. Yet, the implementation of CSR initiatives has tax implications likely to reduce government tax revenue collection such as in Nigeria. Prior to the legislation of the Petroleum Industry Act (PIA) that was signed on 16 August 2021 [3], many stakeholders have expressed concerns on how the upstream sector oil and gas companies appear to neglect the development of the oil and gas host communities. The PIA is a great effort initiated to support transparency, accountability, and sustainable practices; also, it repeals the Petroleum Profits Tax Act (PPTA) for directing the activities of the upstream sector oil and gas companies in Nigeria ^[4][5][6][4,5,6]. It is hoped that the PIA can inspire a responsible social behaviour of the companies towards CSR and taxation to drive sustainable development in Nigeria. CSR helps companies to think beyond maximizing profits only, displaying commitment to economic, environmental, and social concerns caused by their operations in society [7]. The government should ensure effective and fair taxation of activities of the oil and gas companies since taxation transparency is intensified by the PIA [3] to obtain revenue for financing sustainable development. Whereas some provisions in the PIA are related to CSR and taxation with likely social, economic, and environmental impact, there is a lack of information and research on how the Act may affect the practices of both the CSR and taxation in Nigeria’s upstream oil and gas sector.

The upstream oil and gas sector in Nigeria comprises the activities linked to crude oil exploration, drilling, and production. It includes the processes that happen before the extraction of crude oil such as the detection of oil and gas reserve, exploratory well drilling, and reservoir management. While the sector continues to play a key role in the general value chain of petroleum operations, it is affected by the provisions of the PIA mainly on CSR and taxation. However, the origin of the oil and gas industry dates back to August 27, 1859, when Edwin Drake found crude oil in the region of Pennsylvania, USA. In Nigeria, crude oil exploration commenced in 1908, during the colonial administration, but it was disrupted by the World Wars in 1914 and 1939. In 1947, exploration returned, and a commercial oil quantity was first found in January 1956 with the first supply in February 1958 by the Shell Business Group [1]. While Nigeria’s upstream sector has over 70 (international and local) upstream oil and gas companies ^[8][13], again, their activities are linked to economic, environmental, and social issues against expected sustainable development solutions by governments and societies in the oil- and gas-producing countries such as Nigeria ^[9][14]. While the oil and gas sector transactions yield large economic rents with corruption antics, the quantity of oil and gas reserves and production activities in the sector might have changed Nigeria from an agrarian economy to one dependent on crude oil for revenues [1]. But this success is accompanied by several challenges comprising environmental degradation and tax non-compliance which the PIA is expected to address ^[3][4][10][3,4,9], in meeting the expectations of society, such as the oil host communities in Nigeria [6].

In recent years, the concepts of CSR and taxation have received huge interest in the oil and gas sector in Nigeria. For example, CSR is linked to the abilities of companies to manage the social, economic, and environmental impacts of their operations in society [7]. Meanwhile, CSR is relevant in Nigeria’s oil and gas sector, maybe, because the sector seems to be dominating the country’s economy, with its activities having great implications for the environment, local communities, and general society ^[8][9][13,14]. Previous studies have examined the link between CSR and taxation in many jurisdictions including Nigeria. While such studies explored the extent that companies participate in CSR activities, equally, the motivations for such activities and the impact of CSR initiatives on taxation applicable to the oil and gas sector have been explored. For example, one study emphasized the importance of CSR in extractive industries due to their impact on the communities, though the roles of government agencies in CSR are unknown. Public administrators in Nigeria can impact CSR in extractive industries to help community projects. Public bureaucracies in Nigeria impact on CSR performance [7]. This suggests that CSR and taxation practices by companies in Nigeria’s oil and gas sector may pose challenges, and that legislation is needed to regulate their performance.

Also, the important roles of CSR activities in the form of community development by extractive multinational companies in both developed and developing countries were studied, with a focus on the impact of CSR on community development for sustainable development in the extractive mining sector in Africa. Findings reveal that CSR efforts are in health, education, employment, sanitation, water, and skills in improving community interactions ^[11][15]. This implies that CSR helps business and community relationships for harmonious coexistence. Also, the COVID-19 pandemic asked the governments and mining companies to prioritize CSR needs bordering on environmental and human rights issues ^[12][16]. While COVID-19 has hugely affected companies in the extractive sector in developing countries, the pandemic has caused global economic and social suffering, and CSR prompted questions on morality regarding community and employee welfare priorities ^[13][17]. Whereas environmental and investment concerns have sparked debates on CSR in the extractive industry; a study reported that mines’ closure has adverse effects including environmental and job damage. This affects local communities, initiating insecurity and termed challenges of CSR in the extractive industry ^[14][18]. When responsible leadership was explored regarding sustainable development of a community, extractive industries’ CSR effectiveness was emphasized, although little attention is given to the antecedents of CSR plans in developing countries. Responsible leadership plays a key role in CSR implementation for sustainable development ^[15][19].

Lately, climate change and global warming imply environmental concerns mainly in extractive industries including oil, gas, and mining. These industries greatly contribute to environmental degradation, resource depletion, and pollution; but CSR seeks to safeguard the environment. While technological adoption, 4IR namely AI, IoT, machine learning, and robotics can reduce environmental impact, integrating technologies by 4IR in the extractive industry can promote CSR and sustainable development ^[16][20]. Like in Nigeria, in Kenya, the extractive companies engage in CSR to gain social legitimacy to develop the community, with legislations including the Petroleum Act 2019, Mining Act 2016, and Mining Policy 2016 enacted to provide support for CSR implementation ^[17][21]. Another study considered CSR practice in Nigeria’s oil and gas sector and focused on maladministration and violence. While oil companies adopt voluntary CSR activities in addressing these issues, mandatory CSR by definite CSR rule is requested to help a framework for CSR implementation. The government and nongovernment organizations are asked to work together to reduce negative environmental impacts such as in the Niger Delta region of Nigeria [2]. Weak government regulations and multinational companies’ challenges including human rights abuses, environmental degradation, and weak transparency complicate development strategies in the Niger Delta. Thus, a whistleblowing system should be reinforced to promote accountability and transparency help for eliciting corporate responsible behaviour by reporting and reducing corruption and other malpractices in the Nigerian oil and gas sector ^[18][22]. A study revealed poverty and environmental ruin in the oil-producing communities are propelled by corruption in the Nigerian oil sector, despite the interventions by governments and companies. While CSR aims to bridge developmental gaps mainly in the oil host communities, corruption antics weaken CSR strategic efforts ^[19][23]. As corruption and CSR are contested in the Niger Delta of Nigeria, institutional corruption is linked to the faulty CSR framework in the oil and gas sector with global implications too ^[20][24].

The resource control demands mainly by the oil and gas host communities relate to insufficient revenue derivation and environmental damage due to oil and gas mining activities in Nigeria. So, oil host communities always hold the oil companies responsible for increased CSR towards satisfying their needs for sustainable development. With agitations argued to be genuine, there is a call for institutionalizing and formalizing it by governments and companies through CSR, improving investment for actually addressing the concerns of the oil communities ^[21][25]. Perhaps, this is due to the prevalence of insufficient CSR projects, driving conflicts in the oil and gas host communities such as in the Niger Delta region of Nigeria ^[22][26]. Nevertheless, the upstream oil and gas companies fulfil various CSR initiatives in addressing the economic, social, and environmental concerns due to their operations in the Niger Delta region of Nigeria. It is claimed that such CSR projects are ineffective, thereby, not contributing to the development needs of the oil host communities, despite the fact that environmental degradation, insecurity, and poverty persist in seemingly prompting violence in the oil-producing region ^[23][27]. But a study revealed two views about CSR projects in the oil host communities. First, companies believe they provide adequate infrastructure and scholarship, for example, to address the socio-economic development of the Niger Delta area. Second, oil host communities prefer receiving a revenue share against CSR projects implementation. Thus, it was suggested that a threshold of a minimum uniform CSR investment based on the percentage of revenue should be set and reported yearly to ensure transparency and socio-economic growth in oil communities ^[24][28].

In addition, some studies have linked CSR to taxation based on data from the stock exchange that include various companies like the oil and gas companies. For example, one study explored the relationship between corporate governance, tax avoidance, and CSR disclosure in developing markets (Nigeria) and a frontier market (Pakistan). Findings disclose that in Nigeria, CSR is positively significant and linked to tax avoidance. In Pakistan, CSR and tax avoidance link is positive but insignificant. The impact of board characteristics on CSR varies with a mixture of positively insignificant relationships in Nigeria and negatively insignificant relationships in Pakistan. But the study highlights the implication of CSR for companies and governments ^[25][29]. A study used stock exchange secondary data and revealed that when CSR is based on environmental remedy, corporate tax complements are positively complementary but substitutive for poverty relief and promoting education depending on a company’s size. Whereas complementary CSR should be encouraged, aggressive tax planning must be controlled because tax allowances and incentives are provided to improve CSR participation ^[26][30]. Another study has examined CSR execution impact on tax aggressiveness using companies’ data (2007–2013) in Nigeria. While company performance and size are reported to influence tax aggressiveness, a negative relationship between CSR performance and tax aggressiveness is reported, and tax authorities are advised to address it ^[27][31]. In addition, a study showed that CSR and tax planning are negatively related for companies with complementary and substitutive orientations ^[28][32]. Contrary to the negative findings above, a study reported a significant relationship between CSR (community and environment) components and tax aggressiveness. Companies are encouraged to align their CSR initiatives and tax compliance to promote sustainable development ^[29][33].

Furthermore, another study has examined the influence of corporate social responsibility disclosure (CSRD) on listed banks’ financial performance (FP); this was an empirical study of the Palestine Exchange and Amman Stock Exchange from 2010 to 2019. CSRD was measured, employing a 30-item disclosure index, and FP was assessed utilizing indicators like the return on equity (ROE), return on assets (ROA), and Tobin’s Q. While the results of the regression analyses were mixed, a statistical connection between CSRD and FP was observed when utilizing Tobin’s Q, but absent when using ROE or ROA. Also, no significant differences were found between listed banks on the Palestine Exchange and Amman Stock Exchange. Authors recommend that CSR and its related disclosures should be enhanced by conducting education programmes while urging policymakers to improve requirements for reporting CSR ^[30][34]. It can be argued that thE study indirectly contributes to the CSR and taxation literature by investigating the effect of CSRD on financial performance in the context of two stock exchanges. In addition, the study’s findings and recommendations can reinforce discussions on the link between financial performance, CSR, and taxation rules regarding the companies.

When the link between corporate governance mechanisms and corporate failure prediction was studied in the Palestinian context, some governance variables such as institutional ownership, board of directors’ independence, and external audit value were reported to have a positive and significant relationship, reducing corporate failure predictability. But other variables including CEO duality, board size, and board meeting frequency reveal no significant impact on corporate failure decline ^[31][35]. While the study’s main focus is corporate governance and corporate failure prediction, it indirectly links to CSR and taxation aspects. Successful corporate governance is linked to ethical behaviour and considered a key element of CSR. Moreover, the study highlights the need for companies to fulfil regulatory and legal requirements including taxation policies as a sign of good corporate governance. Companies that grasp the connection of these factors are likely to operate more ethically, responsibly, and in compliance with tax laws, contributing to both their sustainable development drive and positive economic, environmental, and social impact within society.