Thursday, December 12, 2013

Norway adopts country by country reporting. But there's a catch

Guest blog by Sigrid Klæboe Jacobsen, director Tax Justice Network - Norway
The Norwegian Parliament on December 5th unanimously passed a law introducing country-by-country reporting for mining and forestry industries. This is a milestone in the fight for greater transparency in these companies.

What are the details?

The CbC law is based on the EU proposal – but with extra features. A reason to celebrate is that the Norwegian version makes companies also report on investments, sales revenue, production volumes, purchases of goods and services, and number of employees.

Which is excellent.

Even so - this is not at all a complete victory. Norway's then Finance Minister Sigbjørn Johnsen announced that Norway would introduce CbC back in June 2012, with several explicit statements in the media that CbC it is needed to combat tax dodging. But the Ministry of Finance proposals presented this October were met by disbelief from a united civil society.

The sole purpose of CbC, the proposals said, is to combat corruption - not tax evasion And there's more: the consequence of cutting out tax evasion as a purpose is that companies only need to report from countries where they have actual production operations. The countries where companies have so-called "support functions" -- that would be, ahem, tax havens -- would not be included!

Which raises an important question: WHAT?

Even if one were to accept the premise that fighting corruption is the purpose of this law -- then why on earth would one remove tax havens from the equation?

A baffled and angry civil society will not stand for this, and considerable pressure followed.

In the end, tax evasion was included as a purpose, alongside corruption. But several open questions remain, as the implementing regulations are formulated:
  • Will it be explicitly stated that companies must report from all countries?
  • Will reporting become mandatory for all sectors in coming revisions? 
  • In coming revisions, will CbC be connected to the companies’ financial statements so that the numbers can be verified and audited?
The chairman of the Finance Committee in Parliament, Hans Olav Syversen, has stated that:
"It is difficult to imagine that one can ignore tax havens in the flows of money. If one is to prevent tax evasion, one must know where the money ends up. . .  country-by- country reporting should apply to all sectors: I see that as a natural continuation."
This is a clear political signal to the Finance Ministry who now will start implementing the CbC in regulations. We will follow closely – based on the dog's breakfast the Ministry made of it the last time around.

Update 2014: for information on Country-By-Country Reporting see here.


Post a Comment

Links to this post:

Create a Link

<< Home