Guidance note 10 on subnational reporting
Guidance note 10 - Requirements 4.6 and 5.2
In some countries, companies make direct payments to subnational levels of government (e.g. regional governments, municipalities and chiefdoms). In addition, some governments also have formal or informal revenue sharing mechanisms that stipulate that a share of revenues collected by the central government from the extractive sector is transferred to subnational government entities.
These payments and transfers are often of great interest to stakeholders, particularly in discussions regarding the benefits that accrue to local communities, even if these payments may represent only a portion of total revenues at the national level. Revenues captured at local levels or mandated revenue transfers are often an important source of income for provincial or local governments. Transparency regarding these payments and transfers can be useful in checking whether transfers have indeed occurred and in holding provincial and local authorities to account.
This note provides guidance to multi-stakeholder groups (MSGs) and independent administrators on addressing these issues in accordance with the EITI Standard. It has two parts. Part 1 provides guidance on direct payments by companies to subnational entities. The EITI Standard requires that, where these are material, direct company payments to subnational government entities and the receipt of these payments are disclosed and reconciled in the EITI Report (Requirement 4.6). Part 2 provides guidance on transfers of revenues from extractive industries between central and subnational levels of government. Where transfers between national and subnational government entities are mandated by a national constitution, statute or other revenue sharing mechanism, material transfers must be disclosed in the EITI Report (requirement 5.2).
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