On 12 June 2013 the European Parliament approved new legislation obliging large EU companies in the extractive industry and loggers of primary forests to disclose payments to governments on a country-by-country and project-by-project basis for any project worth more than 100,000 EUR, even if the host country’s criminal law bans such disclosure. Payments to be reported will include production entitlements; taxes on profits; royalties; dividends; signature, discovery and production bonuses; license fees, rental fees, entry fees and other considerations for licenses and/or concessions and payments for infrastructure improvements.
The EU legislation goes further than the US Dodd-Frank Act, which was adopted in July 2010, in that it applies not only to listed companies but also to large companies as defined in the Directive, and includes the logging industry.
Member States will now have two years in which to implement this Directive into national law. The European Commission has stated its interest in extending this transparency directive in the future to other industries, most notably banking, telecommunications and construction.
The approval of the EU Transparency Directive comes in the same week that Swiss lawmakers backed a transparency proposal for the extractives industry and for commodity trading companies and confirmation from Canada’s prime minister Stephen Harper that Canada will adopt similar legislation. These EU, Swiss and Canadian initiatives will highlight the extractive industries ahead of the G8 summit of June 17 and 18, 2013 in Northern Ireland that will focus on tax, trade and transparency.