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BIS consults on draft guidance for country-by-country reporting by extractive industries

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25 Nov 2014

The Department for Business, Innovation and Skills (BIS) has today published draft guidance to help extractive industries meet the requirements for country-by-country reporting introduced by Chapter 10 of the EU Accounting Directive (Directive 2013/34/EU) and changes made by Directive 2013/50/EU to the Transparency Directive (2004/109/EC) (“the draft guidance”).

Chapter 10 of the EU Accounting Directive (Directive 2013/34/EU (link to European Commission website)) (and changes made by Directive 2013/50/EU (link to the European Commission website) to the Transparency Directive (2004/109/EC)) require extractive companies – those in mining, oil and gas sectors, as well as those who log primary forests – to prepare a report on a project-by-project basis of all payments to governments (including, but not restricted to, licence fees, taxes and royalties). Parent companies must prepare a report for the group which they head; subsidiaries are exempt if they are part of a larger EEA incorporated group which publishes a consolidated report including their payments. 

In the UK, BIS confirmed in August 2014 that Regulations (‘The Reports on Payments to Governments Regulations 2014’) will be laid before parliament detailing how the country-by-country reporting requirements will be implemented in the UK.  The Regulations will require extractives companies to prepare and file country-by-country reporting for financial years commencing on or after 1 January 2015, a year in advance of the EU deadline.

The draft guidance, which has been developed by industry associations, is intended to “help companies engaged in oil and gas, mining and logging of primary forest activities meet the requirements of the UK Regulations”.  It is not intended to be a binding set of rules.

The draft guidance will assist with answering the following:

Which entities are under an obligation to prepare and deliver a report?

Does every entity have to prepare a report or can a consolidated report be prepared for a group?

Are any entities exempted from preparing reports under the UK Regulations?

What are the reporting requirements for entities that are subject to equivalent disclosure regimes?

Do the reports only cover payments made by the entities that have to prepare reports or do the reports cover payments made by other group entities?

Which business activities are within the scope of the UK Regulations?

Which types of payment have to be included in the report?

Who has the obligation to include payment information in a report in situations where a payment is made on behalf of multiple parties?

Which government entities that receive payments have to be covered in the reports?

How should payments be attributed to projects?

When and how should reports be delivered?

Comments are invited on the draft guidance until 17 December 2014.

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