An analysis of the possibility to implement a CSI tax levy in South Africa: Lessons from Mauritius

• Jurisdiction: South Africa
• Date: 01 June 2023
• Pages: 280-308
• Author: Margaretha J Preston,Swaleha Peeroo
• Published date: 01 June 2023
• DOI: 10.17159/2225-7160/2023/v56a19

280 2023 De Jure Law Journal

An analysis of the possibility to implement

a CSI tax levy in South Africa: Lessons from

Mauritius

Margaretha J Preston

BCom, Hons. BCom, LLB, LLM

Senior Lecturer, Faculty of Law, North-West University

Swaleha Peeroo

MSc, PhD

Senior Lecturer and Head of the Doctoral School, Université des Mascareignes

SUMMARY

“The voluntary approach to corporate social responsibility has failed in

many cases.”1 The Mauritius corporate social responsibility (CSR)

landscape changed profoundly in 2009 with the addition of sections 50K

and 50L to the Income Tax Act 16 of 1995 (Mauritius), making

contributions to a CSR fund mandatory. Before 2009, the Mauritius

government repeatedly called on the private sector for assistance to

overcome unemployment, poverty, and other challenges in their country.

Due to an unsatisfactory response to their request and factors such as

poverty, and high unemployment levels, the government made the drastic

decision to implement mandatory CSR legislation. The main objective of

this study was to investigate the factors contributing to the enactment of

mandatory corporate social responsibility (CSR) legislation in Mauritius

and the possibility to implement similar legislation in South Africa. An

analysis of the Mauritius tax legislation and relevant government

publications scrutinised, by way of a literature review, revealed that what is

referred to as mandatory CSR, is in fact mandatory corporate social

investment (CSI). The study further indicated that the same socio-

economic factors as those present in Mauritius prior to 2009 and worse

apply to South Africa. An analysis of South African CSI practices and

contributions indicated that an additional R3.111 billion could have been

raised if a 2 per cent CSI levy was applied to after-tax profits of certain

categories of companies, as in Mauritius. This represents 1.2 per cent of

the South African Department of Social Development’s 2022/2023 budget.

It is recommended that similar legislation should be considered for South

Africa. It will ensure that all profitable companies in South Africa

contribute to CSI and that more funds will be available to address some of

the socio-economic needs. The study addressed the gap in empirical

research done in Mauritius after 2018 and 2020 and is also the first

comparative study conducted on this topic regarding South African law.

1 Suzuki “corporate social responsibility” https://www.quotemaster.org/

corporate+social+responsibility (last accessed 2022-10-29); David T

Suzuki is a Canadian scientists, environmental activist, etc.

How to cite: Preston & Peeroo ‘An analysis of the possibility to implement a CSI tax levy in South Africa:

Lessons from Mauritius’ 2023 De Jure Law Journal 280-308

http://dx.doi.org/10.17159/2225-7160/2023/v56a19

Possibility of a CSI tax levy in South Africa: Lessons from Mauritius 281

1Introduction

“We all have different inspirations, but one goal: a better world”.2 This

statement is perhaps now, more than ever, a desperate sigh in the hearts

of many South Africans.

On 11 March 2020, the World Health Organisation3 declared the so-

called Covid-19 outbreak, a global pandemic. “South Africa had to

contend with a massive loss of life and livelihood, increased hunger,

poverty and inequality, and many other challenges”,4 such as a sharp

increase in unemployment,5 high government debt,6 and deteriorating

infrastructure.7 Ramaphosa8 stated that the government should

create an environment in which the private sector can invest and unleash the

dynamism of the economy … [and] embraces our shared responsibility to

one another and acknowledges that we are all in this together ... [as] social

partners – government, labour, business and community.

Corporate social investment (CSI) is one option whereby the private

sector can fulfil this shared responsibility.9 CSI is a component of

corporate social responsibility (CSR)10 and links, according to Carroll,11

with the fourth expectation of stakeholders, namely that a company

2 Argüello “We all have different inspirations, but one goal: a better world.”

2013 https://theclickbook.wordpress.com/tag/quotes/ (last accessed 2022-

02-21).

3 World Health Organisation (WHO) “A year without precedent: WHO’s

COVID-19 response” 2020 https://www.who.int/news-room/spotlight/a-

year-without-precedent-who-s-covid-19-response (last accessed 2022-02-

21).

4 Trialogue The Trialogue Business in Society Handbook (2021) 1; “Trialogue is

a niche corporate responsibility consultancy with more than two decades of

industry research and experience”. The different publications by Trialogue

are also available as pdf downloads at https://trialogue.co.za/publications/

(last accessed 2020-02-15).

5 Department: Statistics South Africa “Media Releases 1 June 2021” https://

www.statssa.gov.za/publications/P0211/Media%20release%20QLFS%20Q1

%202021.pdf (last accessed 2022-02-21) (hereafter Stats SA (2021));

Department: Statistics South Africa “Media Release 31 May 2022” https://

www.statssa.gov.za/publications/P0211/Media%20release%20QLFS%20Q1

%202022.pdf (last accessed 2022-06-02) (hereafter Stats SA (2022)).

6 National Treasury (South Africa) “Budget Review 2021” http://

www.treasury.gov.za/documents/National%20Budget/2021/review/

FullBR.pdf (last accessed 21-02-2022).

7 Ramaphosa “State of the Nation Address” 2022 https://www.gov.za/

speeches/president-cyril-ramaphosa-2022-state-nation-address-10-feb-

2022-0000 (last accessed 2022-02-21) (hereafter Ramaphosa (2022)).

8 Ramaphosa (2022) 3 (own emphasis).

9 Trialogue The Trialogue Business in Society Handbook (2019) 79.

10 As a bove.

11 Carroll “The Pyramid of Corporate Social Responsibility: Towards the Moral

Management of Organizational Stakeholders” 1991 Business Horizons 41;

Carroll “Carroll’s pyramid of CSR: taking another look” 2016 International

Journal of Corporate Social Responsibility 4-5, and 7.