PRESS STATEMENT: The fight against capital flight continues

imageTHE FIGHT AGAINST CAPITAL FLIGHT CONTINUES PRESS STATEMENT 6th of December On the evening of the 5th of December, the Norwegian Parliament passed a new legislation that can ensure more transparency on the operations of Norwegian companies' enterprises abroad. The new regulation on country-by-country reporting requires Norwegian companies in the extractive and forestry industries to report some essential accounting figures, among others: their tax payments. This is an important step in the right direction, as many countries that are regarded as poor in reality have an abundance of natural resources. Each year, developing countries lose approximately USD 1 200 billion in capital flight. A greater degree of financial transparency will enable countries in the South to better detect the value of their natural resources and to identify companies that avoid taxation in developing countries by placing their profits in tax havens. This transparency will also make it easier for civil society in the South to control whether governments are actually channelling the tax incomes to development. *PWYP Norway has however detected some serious weaknesses in the proposal that got the majority support from the Norwegian Parliament*: * The legislation requires Norwegian companies to report the accounting figures in a separate report. These figures are not connected to the annual financial statement, thus we have no guarantee that the companies will report the actual figures. * The legislation will not require companies to report on countries where they have placed subsidiaries with so-called “support functions”. In reality, these are often tax havens, to which Norwegian companies send their profits to reduce taxable income in poor, but resource rich countries. This legislation will be implemented on the 1st of January 2014. The Norwegian government has now been given the task by the Parliament to shape this legislation aiming at illuminating the extent of “undesirable tax adjustment”. A joint civil society, including PWYP Norway, will now follow the work of the government with great interest. We demand a strong legislation that illuminates Norwegian companies’ use of tax havens, and that requires audited accounting figures. For more background on the legislation, read the "recommendation from the Standing Committee on Finance and Economic Affairs": The view of the majority in the Standing Committee on Finance and Economic Affairs also got the majority in the Parliament voting. Hence, the proposal from the Ministry of Finance was accepted, but with the Government being requested to ensure that the regulatory framework governing country-by-country reporting incorporates the objective of highlighting undesirable tax planning. For further information, please contact: Mona Thowsen, secretary general of PWYP Norge Maria Lavik, communications officer of PWYP Norge Cell: 0047 41 50 71 31