EITI Chair: EU disclosure rules will complement EITI and improve governance

EU landed a deal on Tuesday requiring EU companies to disclose tax payments.

European Union reached a deal on Tuesday on a law to require oil, gas, mining and logging companies to disclose all payments they make to foreign governments.

Commenting on the decision, EITI Chair Clare Short said:

The EU's move to require EU extractive companies to disclose taxes will complement the work of EITI and its 37 member countries that are committed to transparent reporting of company payments and government receipts in country. International transparency is a very good development but it will only lead to better accountability if the figures are made available to the people of the countries concerned.

Any media enquiries can be directed to Communications Manager Anders Kråkenes.

 

From the FAQ for countries considering the EITI:

What is the difference between the EITI and the other efforts to improve revenue transparency?

The US recently enacted mandatory disclosure legislation as part of the US Dodd-Frank Financial Reform Act, requiring that all companies listed in the US disclose their payments to governments in all countries where they operate. The European Union has passed similar legislation for companies listed in the EU. 

In short:

  • If a country decides to implement EITI, all companies operating in the country are required to publish what they have paid to the government.
  • If a country decides to implement country-by-country reporting requirements for companies listed in the country, these companies are required to publish what they paid to foreign governments.

There are four key ways in which the EITI differs from these complementary efforts to improve revenue transparency:

  1. the EITI is not only about publishing the numbers. Countries implementing the EITI have a multi-stakeholder platform for dialogue about all aspects of the use of their country's natural resources.
  2. the EITI is not only about companies being required to report their payments to government. Governments also have to report on revenues received. Then there is an independent reconciliation of what the companies say they paid and what the government says it received. In doing this independent reconciliation, discrepancies and inaccuracies are uncovered and can be acted upon. In Nigeria, US$5 billion was uncovered in unpaid taxes through their EITI process.
  3. a significant proportion of natural resources are exploited by companies that are not listed in the US or the EU, especially by state-owned companies. The EITI requires disclosure of all companies' payments in a country.
  4. the EITI upholds an international standard, but is implemented nationally. This means that the national multi-stakeholder group determines how to adapt the EITI implementation process to reflect local circumstances, needs or preferences. Examples would be a specific legal environment, or the detail of the payments to be published.

See: “A false dilemma: the complementarity of new disclosure requirements and the EITI”