The tax havens are now completely protected. The Ministry of Finance should be asked why.


Right before Christmas Eve, on December 22, the Ministry of Finance established changes to the amendment concerning country-by-country reporting (CBCR), without Parliament having dealt with the matter.

PWYP Norway has already pointed out that the hearing contained some marked improvements, but that the same improvements were pulverized - in the same hearing notes - by imposing limitations and using formulations and concepts which give a wide access to avoid said improvements. The consequence is that the Ministry of Finance proposed to protect tax havens.

Read: PWYP Norway´s consultation response concerning CBCR for accounting purposes: Hearing - changes in the amendment concerning country-by-country reporting. (In Norwegian)

Read: Adopted amendment concerning country-by-country reporting. (In Norwegian)

Massive support for arguments

PWYP Norway received massive support for their arguments in their submitted consultation response from a number of consultive bodies. PWYP Norway and other consultation parties thereby were able to strengthen the amendment by a very small amount through a demand tied to the use of exemption rules. The Ministry of Finance writes this on their webpage:

"According to the amendment paragraph 5., 2. subsection, subsidiaries can on certain conditions be exempted from the consolidated reporting. After response from some consultive parties, there is a definite claim concerning potential use that such exceptions be accounted for. An explanation duty in and of itself could have a preventative effect in using the exceptions, be enlightening for the users of the report, and not require much expense of those with a duty to report. Exceptions as a result of information that cannot be acquired from subsidiaries within a reasonable time-frame or without excessive expense, is limited to apply to only "very limited cases"."

PWYP Norway is not convinced that the explanation duty will act as a preventative in itself, but it is a step in the right direction.

Read: The Ministry of Finance proposes to protect tax havens.

Two great weaknesses remain.

There are still two large weaknesses with the amendment:

  1. The demand for information concerning paid taxes does not apply to payments of less than NOK 800,000 within the same fiscal year. This means that no tax havens need to be included in country-by-country reporting since the tax payment in these countries will be zero or less than NOK 800,000. The duty to give the other information concerning each country (investments, retail income, production volume, and costs) are directly linked to and dependent on a reporting of paid taxes. So for tax havens one would not get this other information. This is a big weakness with the stipulated amendment, because it means that investors, authorities, civil society, and other stakeholders will not acquire the information that has been the fundamental intent behind country-by-country reporting. The Ministry of Finance has thus not followed through with regard to the purpose of country-by-country reporting, something PWYP Norway believes should lead to the Committee on Scrutiny and Constitutional Affairs taking a closer look at the Ministry of Finance´s follow-up of Parliament´s resolution.  
  2. The reporting is still not "locked" into the financial statement, and this is also considered a great weakness with the stipulated amendment, because it means that no-one can control that all information that is used in a company´s financial statement is also illuminated in the country-by-country reporting. It will only be possible to expose that a discrepancy exists, and one has to trust the company´s explanation where discrepancies are concerned.

Why does the Ministry of Finance protect tax havens?

PWYP Norway believes Parliament´s request for decision nr. 792 (2014-2015), concerning making unwanted tax adjustments transparent, has not been sufficiently followed up concerning the existing changes in the amendment.

This means that it is incorrect that the Ministry of Finance, with this change, has followed up on Parliament´s request for decision. This is in contradiction with Parliament´s request for decision, especially where "support functions in countries that are not members of EU or EEA" (tax havens) are concerned.

Despite considerable work from the Committee for country-by-country reporting and civil society organizations like PWYP Norway, the Ministry of Finance has instead managed to make sure that the country-by-country amendment is a completely useless tool against tax havens in order to make their unwanted tax adjustments transparent.

The Ministry of Finance has a responsibility to implement the financial politics and monitor the financial markets. As a "watch dog" in the financial arena and top "protector" of the country´s income tax, this must now trigger an important debate about why the Ministry of Finance has gone to such lengths to protect these countries. There has been no lack of input, explanations, suggestions, debate and warnings from civil society. Now the Ministry of Finance needs to get with the program and explain exactly why it is so important to protect exactly those jurisdictions which are necessary tools for corruption and capital flight.  

Aside from the protection of tax havens, the country-by-country amendment (for accounting purposes) now is a good tool to seek more information about extracting companies activity in the various countries where they have investments and production.

The goal must be to work towards the same transparency rules being implemented in the EU, and that it is not limited by a partly open OECD reporting (for tax purposes). This is important in order to acquire the necessary insight into the extractive industry´s taxes to those countries where their production stems from, the correlation between investments, income/costs/profits and taxes to these countries, and the distribution of the profit between those countries where upstream activity occurs, including all the countries where support functions occur and which are included in the financial accounting numbers for the upstream activity.

PWYP Norway sent an open letter to the Committee on Scrutiny and Constitutional Affairs on January 6, 2017 where we warned that Parliament´s request for decision concerning "exposing unwanted tax adjustments" has not been adequately followed up by the Ministry of Finance.​

Read: "Open letter to the Committee on Scrutiny and Constitutional Affairs." (In Norwegian)