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.
Guidance on subnational payments (4.6)
In some countries, companies make direct payments to subnational levels of government (e.g. regional governments, municipalities and chiefdoms).
The Standard requires that the multi-stakeholder group establish whether direct payments, within the scope of the agreed benefit streams, from companies to subnational government entities are material.
In its 2015 EITI Report, Mongolia included reporting by companies that made payments to subnational government, as well as 21 subnational government entities that received payments from companies. Detailed results from reconciliation can be found in appendices 9 and 10 of the report.
As part of the chapter on State participation, the report under point 3.7.8 lists the payments the SOE made locally (pp. 78). Section 126.96.36.199 on budget process illustrates the revenue centralisation and distribution (to national and local funds) - see pp. 82.
Subnational direct payments exist in the mining sector, and the 2014 EITI Report adequately explains direct payment of property rates by mining companies to District Assemblies. See pages 92, 93 and 96.
The EITI Report covering 2014 includes a chapter - IV. LGU (Local government units) in focus - summarising direct subnational payments, disaggregated by region, province and municipality.
In accordance with requirement 4.6, data from companies and LGUs is disclosed and also reconciled by individual revenue stream where possible. In some cases, reconciliation has been hampered by lack of LGU records. Although arguably immaterial representing only 0.6% of total government revenues, the data is reported to be useful to stakeholders at local level. (from initial assessment, p. 75)
Peru has published two subnational EITI Reports:
Peru does not have direct subnational payments from companies to the regions, but significant payments from the central government to the regions.