Country-by-country reporting (CBCR)

Without country-by-country reporting and with country-by-country reporting
Illustration: Roar Hagen - PWYP Norge

Corruption and capital flight are among the main reasons that more than one billion human beings continue to live in abject poverty in the world.  Demands for financial transparency can contribute to prevent this.

What is country-by-country reporting?

Statutory country-by-country reporting (CBCR) entails that companies must report specific financial information for each country in which they operate.  For example, how much they have paid in taxes and fees in each individual country.

Country-by-country reporting (CBCR) is a minimum transparency requirement.  Legislation on country-by-country reporting (reporting of tax payments for accounting purposes like the law in the USA and EU requires) is necessary in order to show potential corruption.

STATUS in Norway – Adopted 
Legislation on country-by-country reporting (CBCR) for activity within the extracting industries and forestry in non-planted forest was introduced in Norway on January 1, 2014.  The amendment in Norway was a copy of the amendment in EU.

This minimum version of country-by-country reporting (CBCR) cannot make visible unwanted tax adjustments, since it does not give insight in tax havens or expenses, and the companies` audited accounting numbers are not used.  Which is why companies can move significant profit out of a country before they are taxed.  Because the adjustment occurs before the company pays their taxes, it is insufficient to know which tax payments a company has made.  For this reason, PWYP Norway developed the idea and reporting solution for an extended country-by-country reporting (ECBCR).

Read more about extended country-by-country (ECBCR)

Why is simple country-by-country reporting important?

It is estimated that developing countries lose 2 dollars for every dollar they receive in investments as a result of illegal capital flight from their countries.  In 2013 Økokrim (Norwegian National Authority for Investigation and Prosecution of Economic and Environmental Crime) estimated that a total of 136 billion NOK evades taxation annually in Norway.  Assuming a corporation tax rate of 27 percent, 37 billion are lost in tax revenues annually.  OECD has estimated that as much as 60 percent of world trade occurs within multinational companies.  Developing countries annually lose enormous wealth because of capital flight.  In the period 2003-2012 developing countries and emerging industrial countries were drained of 6,600 billion USD.

Natural resources belong to the community and should benefit the community.  Two-thirds of the world`s poorest people live in resource-rich countries.  Extraction of natural resources is the greatest opportunity they have to mobilize equity, which can be invested in sustainable development and reducing poverty.  Nonetheless, their natural resources have not given them an economic basis for this.

Multinational companies in the petroleum and mining industry have for decades been given access to earn enormous sums of money by the extraction of non-renewable and limited natural resources in many of the world`s poorest countries.  It should be a matter of course that the companies are transparent in return on how they manage these resources.

But until recently the companies have not had any obligation to give key information concerning their activities to any of the countries in which they operate.

Instead the companies could build up and hide great values from the extraction of natural resources in tax havens, where information about actual owners, companies, accounts and transactions are concealed.  A lack of international regulations has made financial secrecy possible.  For more than 50 years this has assisted in robbing generations of citizens in resource-rich developing countries the economic basis that could have contributed to a positive development of their societies.

When authorities, investors, journalists, citizens, or others want insight, they are met with many impenetrable layers of secrecy. In the report  Piping Profits  PWYP Norway revealed that ten of the largest extracting companies in the world use at least 6,000 subsidiaries and have placed at least one third of them in tax havens.


    In February PWYP Norway wrote a letter to the Ministry of Finance where PWYP Norway points out four weaknesses in the formulation in the amendment on country-by-country reporting that came out right before Christmas in 2013.  In the letter PWYP Norway asked the Ministry of Finance to provide written clarifications on these four points:

    • The statute does not require that all expenses be reported, only purchases of goods and services.  PWYP Norway asks whether the Ministry of Finance truly wants total expenses to be reported according to the new lifestyle standard, or if this is not the case, asks the organization to provide a justification for this.

    • PWYP Norway has consistently emphasized that the reporting standard is only credible if it requires a connection to accounting numbers.  The legislation appears to add up to a group reporting that should be in line with the financial statements, PWYP Norway requests that the Ministry of Finance confirms that this is correct.

    • The amendment adds up to a “consolidated line-up” in the reporting, this unsettles PWYP Norway.  It means the companies must create two consolidated accounts – one consolidated account for total upstream activity and one which shows consolidated numbers for country-by-country reporting?  If this interpretation is correct, then this reporting does not include total upstream activity.

    • The amendment gives three evasion opportunities to except daughter subsidiaries from reporting.  PWYP Norway asks the Ministry to omit these opportunities for exception, so that all activities that are included in upstream reporting will also be reported country-by-country.

    Read the letter here.


    In January the legislation on country-by-country reporting (CBCR) for activity within the extracting industries and forestry in non-planted forest was adopted in Norway.   The amendment in Norway was a copy of the amendment in EU.


    On December 5. Parliament adopted the bill, and PWYP Norway promised to continue to fight for strong transparency legislation.

    Right before Christmas the Ministry of Finance established a new amendment on country-by-country reporting that complements the legislation.    


    The new government did not signal any change of course when they set forth their proposal for changes in the State budget.  The supporting parties Venstre and KrF still were able to achieve the goal of making transparent unwanted tax adjustments in the legislation, their budget bill on November 15.  This goal was also included in the Ministry of Finance`s recommendation to Parliament.


    On October 14. Finance Minister Sigbjørn Johnsen presented the bill on country-by-country reporting  lovforslaget om land-for-land rapportering (link is external) for Parliament.  The bill was presented along with the State budget.

    PWYP Norway was very disappointed with the bill, which had two large weaknesses:

    • It protects tax havens from insight
    • It does not require real, audited numbers

    PWYP Norway`s chronicle “Johnsen`s Broken Promise” was published in Dagens Næringsliv on October 31, and asks «Why does the Ministry of Finance protect tax havens?”


    In the wake of the hearing, Klassekampen ran an entry on Statoil`s attempt to water out the requirement in country-by-country reporting. In their consultation statement Statoil suggested that the legislation should be a recommendation for the companies, not a concrete requirement.  “Statoil has gone from being a driving force for transparency to a saboteur for the transparency we want”, states the Development Minister Heikki Holmås to the newspaper.  Dagsavisen confirmed in their lead editorial that the Government should have a talk with Statoil`s leadership. 


    In May the Ministry of Finance sent out a consultation letter  høringsbrev (link is external) with the working committee`s report.   arbeidsutvalgets rapport(link is external).

    The report contained rules that went further than what is proposed in the USA and EU, and that requires more factors to make it possible to see the tax payments in context.  PWYP Norway were positive to this.  The weakness in the report was that it did not propose connecting the reporting to the company`s annual accounts.  PWYP Norway viewed this kind of solution as crucial, it would make the reporting based on already audited and verifiable numbers, and there would be no need for additional auditing or drafting an additional report.  In a chronicle in Klassekampen PWYP Norway warned that Norway could get a Transparency Law without transparency. 

    In April agreement was reached in EU  oppnådd enighet i EU(link is external)  between the EU commission, the European parliament, and the Council on a compromise proposal for a new CBCR.  PWYP Norway called this a historical demand for transparency.   et historisk krav om åpenhet.  The Norwegian workgroup took this comprise text into account.

    On April 30. the Ministry of Finance`s workgroup published a report with a proposal as to what kind of country-by-country reporting Norway should adopt.  The workgroup recommended extended requirements for country-by-country reporting, requirements that include reporting of investments, sales revenue, production, purchases of goods and services, and number of employees.  These requirements went further than EU`s proposal, which only required reporting on payments to authorities.

    The workgroup gave these reasons for the extended requirements:

    “- An extended reporting like this will have greater value for the stakeholders since the payments to authorities are put in a greater context.  In addition, it is suggested that the reporting agents shall give information about their daughter subsidiaries, along with information on where the various daughter subsidiaries reside.  In the workgroup`s estimation this kind of reporting will contribute to increased transparency which is likely to assist tax authorities pertaining to their information needs.”

    ”The Foreign and Defence Committee supported the extended requirements for country-by-country reporting.  The Committee emphasized that:

    “Country-by-country reporting for multinational companies is a device to get insight into the cash flows in multinational groups (..).  A transparency guarantee would ensure that developing countries have adequate access to information from extracting companies, and the Government wishes to promote an initiative for development of a transparency guarantee for use by developing countries` authorities.”

    The Ministry of Finance`s workgroup wrote in their press release that:

    «CBCR shall contribute to make transparent extraction of natural resources in the extracting industries and the cash flows connected to such extraction and thereby create greater transparency and control of the cash flows.  The workgroup was asked to emphasize that requirements for CBCR should be formulated so that they relatively speaking get the best use in the work to fulfil the Government`s goal of fighting corruption, and later tax evasion, set up to the administrative burdens that such reporting requirements will result in for the businesses.”

  • PWYP Norway explains why Norway needs country-by-country reporting in Financial Transparency: Steps to strengthen democracy and fair distribution, a collection of articles published by Foreign Affairs.

    PWYP Norway registered their consultative input consultative input, along with a report with a concrete proposal on extended country-by-country reporting, and a short 3-minute briefing on how the reporting can be easily set up in one Excel spreadsheet.

    Towards the end of the year, the Ministry of Finance appointed a workgroup with a mandate to study country-by-country reporting (CBCR) in Norwegian legislation.  The workgroup was to be based on the EU commission`s proposal for rules on whether CBCR would be adopted and incorporated into the EØS agreement, and that the rules then would have to be implemented also in Norwegian law.

  • The Ministry of Finance sent EU`s proposal for country-by-country reporting to hearing in Norway.  EU proposed that large companies in the extracting and forestry industries must report their payments on an annual basis in the individual countries where the activity takes place.