Various ministers from EU member countries, the European Commission and the EU Parliament on the 9 April 2013 finalised negotiations on the Accounting Directive for the oil and gas industry, and agreed on a proposal, after fierce lobbying from both the industry and the NGO sector.
The deal, requires European companies to report payments of more than €100,000 made to the government in the country they are operating in, including taxes levied on their income, production or profits, royalties, and license fees.
The EU executive will force companies to disclose the payments they make at project level as opposed to government level only, and to reveal the sources of taxable income.
In theory meaning that citizens in the European Union will know what their country’s resources are really worth. The agreement will also cut red tape for small and medium-sized enterprises by simplifying accounting rules.
Michel Barnier, the European commissioner for the internal market, who oversaw the proposal, said: "The agreement will bring in a new era of transparency to an industry which is far too often shrouded in secrecy and help fight tax evasion and corruption as well as create the framework so both companies and governments can be held to account on the use of revenues from natural resources."
For Barnier, project-level disclosures will ensure that people living near extraction sites are aware of how much they government earns from the presence of foreign and national companies in their communities.
"Local communities in resource-rich countries will finally be better informed about what their governments are being paid by multinationals for exploiting oil and gas fields, mineral deposits and forests", he said in a statement.
This is particularly important in countries where tax evasion laws are not particularly strong. Analysts also hope the rules will pave the way for better rewards for local communities in the form of tax redistribution. But without the disclosure of further information - such as turnover, profits, employee numbers, operating costs and assets - regulators may struggle to work out if companies are paying the full amount of tax they owe.
“Information on payments alone is not enough to show that companies pay their fair share of tax," according to Catherine Olier, an EU development analyst for Oxfam. "This means that the information on payments can be used to hold the government accountable for the use of this income, but that neither governments nor companies can be held accountable for whether the correct amount was paid."
The move follows leaks showing that a number of politicians, tycoons and companies have used tax havens such as the British Virgins Islands, Licheistein and Madeira to hide funds. The European Commission estimates that the EU economy loses about €1 trillion from tax evasion by both private persons and companies.
THE BOTTOM LINE FOR PORTUGAL
How does one actually separate the payments from governments versus payments from the oil industry? How can we tell if the Portuguese government get payments = bribes from the oil industry? And does the oil industry get any payments in the form of grants, incentives, etc from our government?
In our opinion “Multinationals will continue plundering countries like Portugal until they are obliged to report information such as sales volumes, assets, staffing and profits. In addition, Portugal is no different than the rest of the world and with so much focus on the “good” that oil and gas companies do in the countries they are in, we have to ask … how valuable are multinational oil and gas companies Corporate Social Responsibility initiatives in these countries and especialy in Portugal?