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| EU seals deal to boost transparency of oil, gas and logging firms | EU seals deal to boost transparency of oil, gas and logging firms |
| (6 months later) | |
| The EU has adopted new laws aimed at increasing the transparency of government payments from the oil and gas industry, in a move hailed by U2 frontman Bono as a "gamechanging breakthrough" on corruption in resource-rich developing countries. | The EU has adopted new laws aimed at increasing the transparency of government payments from the oil and gas industry, in a move hailed by U2 frontman Bono as a "gamechanging breakthrough" on corruption in resource-rich developing countries. |
| Ministers, the European commission and parliament on Tuesday ended negotiations on the accounting directive by agreeing a compromise proposal, after fierce lobbying from industry and NGOs. The deal requires European companies to report payments of more than €100,000 (£85,000) made to the government in the country they are operating in, including taxes levied on their income, production or profits, royalties, and licence fees. | Ministers, the European commission and parliament on Tuesday ended negotiations on the accounting directive by agreeing a compromise proposal, after fierce lobbying from industry and NGOs. The deal requires European companies to report payments of more than €100,000 (£85,000) made to the government in the country they are operating in, including taxes levied on their income, production or profits, royalties, and licence fees. |
| The EU executive will oblige companies to disclose the payments they make at project level as opposed to government level only, revealing the sources of taxable government income from the extraction or logging industries. | The EU executive will oblige companies to disclose the payments they make at project level as opposed to government level only, revealing the sources of taxable government income from the extraction or logging industries. |
| Bono, the singer and co-founder of poverty campaign group One, said: "Europe's leaders have stepped up and delivered a gamechanging breakthrough tonight. Transparency is one of the best vaccines against corruption, and now citizens the world over will know what their country's resources are really worth." | Bono, the singer and co-founder of poverty campaign group One, said: "Europe's leaders have stepped up and delivered a gamechanging breakthrough tonight. Transparency is one of the best vaccines against corruption, and now citizens the world over will know what their country's resources are really worth." |
| The agreement will also cut red tape for small and medium-sized enterprises (SMEs) by simplifying accounting rules. | The agreement will also cut red tape for small and medium-sized enterprises (SMEs) by simplifying accounting rules. |
| The deal goes beyond disclosure rules adopted by the US last year by including the logging industry along with mining and petroleum operations. | The deal goes beyond disclosure rules adopted by the US last year by including the logging industry along with mining and petroleum operations. |
| "The agreement will bring in a new era of transparency to an industry which is far too often shrouded in secrecy, and help fight tax evasion and corruption, as well as create the framework so both companies and governments can be held to account on the use of revenues from natural resources," said Michel Barnier, the European commissioner for the internal market. | "The agreement will bring in a new era of transparency to an industry which is far too often shrouded in secrecy, and help fight tax evasion and corruption, as well as create the framework so both companies and governments can be held to account on the use of revenues from natural resources," said Michel Barnier, the European commissioner for the internal market. |
| Fair share | Fair share |
| For Barnier, project-level disclosure will ensure that communities living near extraction sites are rewarded through tax redistribution. "Local communities in resource-rich countries will finally be better informed about what their governments are being paid by multinationals for exploiting oil and gas fields, mineral deposits and forests," he said. This is particularly important in countries where tax evasion laws are weak. | For Barnier, project-level disclosure will ensure that communities living near extraction sites are rewarded through tax redistribution. "Local communities in resource-rich countries will finally be better informed about what their governments are being paid by multinationals for exploiting oil and gas fields, mineral deposits and forests," he said. This is particularly important in countries where tax evasion laws are weak. |
| But without the disclosure of further information – such as turnover, profits, employee numbers, and costs and assets – regulators may struggle to work out if companies are paying the full amount of tax they owe. "Information on payments alone is not enough to show that companies pay their fair share of tax," Catherine Olier, an EU development analyst at Oxfam, told EurActiv. | But without the disclosure of further information – such as turnover, profits, employee numbers, and costs and assets – regulators may struggle to work out if companies are paying the full amount of tax they owe. "Information on payments alone is not enough to show that companies pay their fair share of tax," Catherine Olier, an EU development analyst at Oxfam, told EurActiv. |
| "This means that the information on payments can be used to hold the government accountable for the use of this income, but that neither governments nor companies can be held accountable for whether the correct amount was paid." | "This means that the information on payments can be used to hold the government accountable for the use of this income, but that neither governments nor companies can be held accountable for whether the correct amount was paid." |
| Springboard | Springboard |
| Ministers agreed on a review clause to decide in 2015 whether to expand the laws to include other industries, such as telecommunications and construction. | Ministers agreed on a review clause to decide in 2015 whether to expand the laws to include other industries, such as telecommunications and construction. |
| "This will be a springboard for similar disclosures," said Joe Williams from Publish What You Pay, a campaign group focusing on the transparency of the oil and gas industry. "If it can be done with a dodgy industry like the extractives then it can be done with others. But extractives represent the greatest source of income for developing countries." | "This will be a springboard for similar disclosures," said Joe Williams from Publish What You Pay, a campaign group focusing on the transparency of the oil and gas industry. "If it can be done with a dodgy industry like the extractives then it can be done with others. But extractives represent the greatest source of income for developing countries." |
| The move follows leaks showing that politicians, tycoons and companies have used tax havens such as the British Virgins Islands to hide funds. It comes against a background of European-level crackdowns on the transparency of the banking sector (pdf). | The move follows leaks showing that politicians, tycoons and companies have used tax havens such as the British Virgins Islands to hide funds. It comes against a background of European-level crackdowns on the transparency of the banking sector (pdf). |
| The European commission estimates that the EU economy loses about €1tn from tax evasion by both private persons and companies. | The European commission estimates that the EU economy loses about €1tn from tax evasion by both private persons and companies. |
| Responses | Responses |
"It will better hold government to account, with some impact on rooting out tax evasion" | "It will better hold government to account, with some impact on rooting out tax evasion" |
| – Joe Williams, Publish What You Pay | – Joe Williams, Publish What You Pay |
"[The rules] mean citizens can know what companies paid for each project even in specific areas, so how much communities can get back" | "[The rules] mean citizens can know what companies paid for each project even in specific areas, so how much communities can get back" |
| – Catherine Olier, Oxfam | – Catherine Olier, Oxfam |
"Despite today's promising progress, there is still a long way to go to have EU legislation that properly fights tax dodging. While it is very important to know how much companies pay to governments, this figure alone does not give a clear picture of whether they pay their fair share of taxes. Multinationals will continue plundering developing countries until they are obliged to report information such as sales volumes, assets, staffing and profits. The currently negotiated EU banking sector reform is an example to follow in this regard" | "Despite today's promising progress, there is still a long way to go to have EU legislation that properly fights tax dodging. While it is very important to know how much companies pay to governments, this figure alone does not give a clear picture of whether they pay their fair share of taxes. Multinationals will continue plundering developing countries until they are obliged to report information such as sales volumes, assets, staffing and profits. The currently negotiated EU banking sector reform is an example to follow in this regard" |
| – Øygunn Sundsbø Brynildsen, senior policy officer at Eurodad, the European Network on Debt and Development | – Øygunn Sundsbø Brynildsen, senior policy officer at Eurodad, the European Network on Debt and Development |
"The priorities of the Irish presidency are stability, jobs and growth. At the heart of this directive is the drive to cut red tape and reduce the administrative burden on SMEs. That is why this agreement is so important. The more we can reduce red tape, the more we free up business to grow and create jobs" | "The priorities of the Irish presidency are stability, jobs and growth. At the heart of this directive is the drive to cut red tape and reduce the administrative burden on SMEs. That is why this agreement is so important. The more we can reduce red tape, the more we free up business to grow and create jobs" |
| – Irish minister for jobs, enterprise and innovation, Richard Bruton | – Irish minister for jobs, enterprise and innovation, Richard Bruton |
"Today's agreement is a major step forward in the fight against corruption. This law will shine a light on the often murky world of oil, gas and mining deals in Africa, helping ordinary people see where the money paid for their countries' natural resources is really going and potentially lifting millions out of extreme poverty" | "Today's agreement is a major step forward in the fight against corruption. This law will shine a light on the often murky world of oil, gas and mining deals in Africa, helping ordinary people see where the money paid for their countries' natural resources is really going and potentially lifting millions out of extreme poverty" |
| – Eloise Todd, Brussels director of ONE | – Eloise Todd, Brussels director of ONE |
"The UK has pushed hard for Europe to agree rules that will set a new global standard for transparency, working tirelessly with industry, civil society and European governments to achieve robust proposals. It is fantastic that the commission, council and European parliament have reached agreement on strong extractive reporting requirements that will ensure that those in the gas, oil and mining industry report the payments they make to governments in all the countries in which they operate. This is a priority for our G8 presidency and it's great that the EU is leading by example. We have succeeded in making sure that citizens can get access to the detailed information they need to be able to hold their governments to account" | "The UK has pushed hard for Europe to agree rules that will set a new global standard for transparency, working tirelessly with industry, civil society and European governments to achieve robust proposals. It is fantastic that the commission, council and European parliament have reached agreement on strong extractive reporting requirements that will ensure that those in the gas, oil and mining industry report the payments they make to governments in all the countries in which they operate. This is a priority for our G8 presidency and it's great that the EU is leading by example. We have succeeded in making sure that citizens can get access to the detailed information they need to be able to hold their governments to account" |
| – UK business minister Jo Swinson | – UK business minister Jo Swinson |
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