The current resolve and push by the group of extractive companies spearheaded by Shell, Eni, BHP and Rio Tinto for country by country tax reporting may be the needed impetus to scale up tax transparency and the eventual improvement in tax payments from the extractive sector to producing EITI member nations.
The country-by-country report will cover taxes on profit and key indicators related to the level of economic activity, such as revenue, profit/loss, stated capital and employment which are disaggregated by tax jurisdiction.
The information is contained in a news report on the EITI website. The report stated that Shell and Eni led other supporting companies to break new grounds and push for additional information on revenues, profits or losses, employment, assets and stated capital in each country of operation by multi-nationals companies.
The scope of the report according to the EITI will cover material payments in EITI countries, disaggregated by company, project, recipient agency and revenue stream. In addition, data on contracts, production, exports, beneficial owners and other areas covered in the 2019 EITI Standard will be reported.
These disclosures according to the report will also cover global operations and economic activities of multi-nationals and other extractive companies in both high and low tax jurisdictions and will also include disclosure of information on government payments which by implication will help put the level of payments in context.
The detailed country-by-country reporting pioneered by Shell and Eni is in recognition that detailed reporting is to inform stakeholders, build trust and contribute to a broader discussion on tax transparency while they also want to use the reports to demonstrate that they are living up to the commitments of transparency.
According to Eni's Head of International Tax, Giorgio Bigoni, "the Country by Country Report is a powerful instrument which enables stakeholders to acquire knowledge regarding the countries where Eni companies operate and the corresponding amount of taxes paid, consistently with the value of the extractive activities generated therein."
Shell’s Executive Vice President Taxation and Controller as well as EITI Board member Alan McLean highlighted the company’s commitment to the “B Team Responsible Tax Principles”. One of the principles focuses on being transparent about the company’s approach to tax and taxes paid. “Our Tax Contribution report aims to show how we are applying the B Team Responsible Tax Principles, an initiative Shell signed up to in 2018 to more closely align our tax strategy with emerging best practice.”
Stakeholders have welcomed the development and described it as possible catalyst that could carry the global tax transparency discussion forward with other companies, and contribute to fair, effective and stable tax regimes that benefit the society at large.
This new move will not only shore up tax revenues but will be a step ahead in the quest for openness and accountability in a sector that drives most countries’ economy.