Parliament asked for ECBC-reporting. The Ministry of Finance offered BEPS.


Parliament asked for extended country-by-country reporting (ECBCR). The Ministry of Finance sent out a hearing on BEPS.

A unified Parliament agreed to strengthen the country-by-country regulation. There is broad agreement that the current regulation does not function as intended. The regulation does not make transparent unwanted tax adjustments since there is no transparency into tax havens nor costs, and accounting figures are not used.

Parliament wanted to do something about that.

Read: "A united parliament wants to strengthen the country-by-country regulation"

The parliamentary proposal was introduced by The Standing Committee on Finance and Economic Affairs´ leader Hans Olav Syversen (KrF - Christian Folk Party) and states the following: "Parliament asks the Government to examine the effect of the regulation on country-by-country reporting (CBCR) measured against Parliament´s objective of making unwanted tax adjustments transparent and ensuring that relevant information connected to CBC reporting from daughter subsidiaries and support functions in Third World countries emerge in the accounting. Parliament is also asking the Government to consider how supervision of the reporting according to CBCR regulations can be established”. (Translated by PWYP Norway)

PWYP Norway then pointed out that the decision clears the way for getting an extended country-by-country reporting. That is an important step, but this is not enough.

It was necessary that Parliament followed up concerning how The Ministry of Finance will follow up the case.


The Ministry of Finance was vague in their follow-up

When Truls Wickholm (Ap - Labor Party) asked Siv Jensen (FrP - a far right-wing party) how the work would now be followed up by The Ministry of Finance, Siv Jensen´s answer made it seem as though The Ministry of Finance would only do an evaluation following two reporting years, and that they would send a suggestion to change the rule at a hearing in fall of 2015.

The Minister of Finance then wrote this in his reply:

"-How to assure that relevant information tied to country-by-country reporting (CBCR) from daughter subsidiaries and support functions for Third World countries will be apparent in accounting, and the question of supervising those reportable, has to be studied further. My aim is that the findings will result in a suggestion for necessary changes in regulations during 2016, after a common hearing." (Translated by PWYP Norway)

The Civil Society organizations therefore expected to have a hearing concerning CBCR in the fall of 2015, and a possible change in the regulations in 2016. But the hearing did not take place in fall. PWYP Norway then asked The Ministry of Finance on Twitter when the hearing would take place.

PWYP Norway asked The Ministry of Finance on Twitter when The Ministry of Finance will send out the hearing concerning CBCR reporting.

The Ministry of Finance then answered that they aim to send out a suggestion for a hearing concerning CBCR for tax purposes sometime in fall.


"CBCR" is not "CBCR for tax purposes"

It might appear that these are the same, but they are not.  "CBC reporting" is something other than "CBCR for tax purposes". These are two entirely different tracks and completely different bases for openness and transparency which in turn will have enormous consequences for the type of transparency the public will attain.

"CBC reporting" which PWYP Norway is requesting, refers to the existing regulation in country-by-country reporting in the accounting law § 3-3d. This is the regulation for CBC reporting as it stands today. This was the regulation which Parliament wished to change to make the regulation effective in doing something about unwanted tax adjustments, so that relevant information is transparent in the accounting.

It is this regulation which must be changed in order to include the demands in extended country-by-country reporting. In addition to the reporting applying to all countries, there must also be a requirement that only accounting should be reported and nothing else. In addition, it is necessary to report all expenses because it is easy for companies to manipulate their expenses by using financial instruments that the companies profit from, and the authorities lose insight and income tax.

The hearing The Ministry of Finance sent out on December 2, 2015 concerns Base Erosion and Profit Shifting (BEPS) and the recommendation in the BEPS project and in the Public Accounts Select Committee concerning country-by-country reporting for tax purposes in group relationships.


What is BEPS?

BEPS is a measure that the 44 countries who are members of OECD suggests should apply to the multi-national companies so that they cannot move their profit away from being taxed in the countries in which they operate.  PWYP Norway sent out consultative input for the BEPS process and invited to a debate concerning tax evasion where the second-in-command in OECD´s tax administration took part.

PWYP Norway opined that the suggestions in BEPS are an important step in the right direction, but that among other, there will be no requirement for companies to deliver audited figures, costs are not part of the reporting requirements, and there is room for exceptions, and most importantly, this information will not be made public.


How will The Ministry of Finance follow up Parliament´s desire for extended country-by-country reporting currently?

The Ministry of Finance refers to Prop. 1 S (2015-2016) which states the following: "The Ministry of Finance refers to new regulations in "country-by-country-reporting" ("CBCR") were agreed on by Parliament on December 10, 2013, with a call for having the CBCR regulations be incorporated with the goal of making transparent any unwanted tax adjustments. The call was followed up in the CBCR regulation which was established by The Ministry of Finance on December 20, 2014. The Government will seek to measure the effect of the CBCR regulation, as measured against Parliament´s objective to show unwanted tax adjustments, in connection with the evaluation notified in Prop. 1 LS (2013-2014). The Government thinks the evaluation ought to be based on CBCR reports from at least two accounting years, that is for the accounting years 2014 and 2015, and should be completed at the latest in spring of 2017. Further, the government will explain how relevant information tied to CBCR reporting from daughter industries and support to Third World countries should be revealed in the accounting, along with possible supervisory arrangements, with the goal of submitting statutory changes in the regulations during 2016." (Translated by PWYP Norway)

The Ministry of Finance has as a result not yet followed up Parliament´s goal of country-by-country reporting nor publishing information with this hearing.

The Ministry of Finance has instead followed up on a completely different basis, in fact the recommendations in the OECD´s BEPS process, which concerns not publishing information. The Ministry of Finance has thus with this hearing not taken the initiative this fall to follow up on necessary and relevant transparency demands which could be incorporated into existing country-by-country reporting so that it could effectualize the goal, which is to make unwanted tax adjustments transparent.


Siv Jensen and The Ministry of Finance want to wait two more accounting years and then evaluate the existing regulation

In 2015 Statoil delivered the world´s first country-by-country reporting. Statoil bragged about their own reporting. PWYP Norway then conducted their own evaluation of Statoil´s reporting from the first accounting year.

PWYP Norway did not think Statoil reported as they ought to have, and published an orientation concerning our opinion that Statoil had mixed upstream and downstream numbers in their reporting. PWYP Norway thinks the Norwegian regulation is clear that it is the extracting operations (upstream operations) which should be reported country-by-country. Our analysis shows that Statoil on the contrary mixes figures from their downstream operations in their reporting, thereby polluting the figures from the upstream operations.


Will Statoil make the same reporting mistake this year?

Knut Rostad, media contact for Statoil´s international operations, thinks Statoil created the world´s most transparent and detailed report that an oil company has ever made. There were no statements made that would indicate that Statoil will change its reporting after findings of its mixing up its figures.

Truls Wickholm (Ap) gave this commentary to Aftenposten (a major Norwegian newspaper):

-Upstream and downstream activities are quite different from each other. One concerns extraction, while the other concerns processing and resale - one must keep the extraction by itself against the inputs. That is why it is important not to mix these figures up, says Wickholm to Aftenposten. (Translated by PWYP Norway)

Extended country-by-country reporting will make unwanted tax activities transparent in that income, costs, taxes, production, and investments for all countries must be reported in notes in the annual accounting.

What remains is for The Ministry of Finance to follow up Parliament´s goal on how country-by-country reporting can be strengthened. Until The Ministry of Finance sends out this hearing, Parliament has not received what they requested.

Read the opinion piece: Siv Jensen's evasions