Opinion piece: Still protecting the tax havens

The Ministry of Finance has not followed up on Parliament´s request, so Norwegian companies do not have to submit information from tax havens.​


This opinion piece is written by Mona Thowsen, General Secretary in PWYP Norway. It was published in DN (Dagens Næringsliv - a newspaper on business and economy) on March 24, 2017.

In 2013 Norway adopted "simple" country-by-country reporting for accounting purposes. The objective is to expose potential corruption in countries that are recipients of the income taxes. This is achieved by having the tax payer report submitted taxes and dues to each individual country. The report is fully transparent to the public.

We at PWYP Norway have analyzed Statoil´s reports for the fiscal years 2014 and 2015 and have documented the weaknesses with the amendment.

After implementing "simple" country-by-country reporting for accounting purposes, civil society and ministry worked to put in place "extended" country-by-country reporting (ECBCR).

The intention is to expose potential tax evasion in companies that pay the taxes.

The goal is reached in that already audited numbers for investments, production, revenue, expenses, and taxes are reported for all countries. The report is presented in complete transparency, and main numbers should be included in notes for the annual financial statement.

Extended country-by-country reporting is important, since it is very damaging when:

  • Societies lose income tax which is intended to finance the common good.
  • It is a competitive disadvantage for companies that prefer not to avail themselves of such techniques.
  • Building up financial clout in tax havens outside the transparent market often leads to political influence where special interests are protected at the expense of the common good.

For this reason, Parliament adopted a so-called request for decision on June 19, 2015 where the objective was "to expose unwanted tax adjustments and ensure that relevant information tied to CBCR reporting from daughter subsidiaries and support functions in third countries emerge in the accounting."  

Prior to Christmas the Ministry of Finance established the last changes thus far in the amendment for country-by-country reporting for accounting purposes (CBCR). The amendment, however, was formulated so that relevant information tied to CBCR reporting from subsidiaries and support functions in third countries do not emerge, resulting in the exact opposite of Parliament´s request for decision.  

According to the amendment´s paragraph 5, 3. subsection, additional information is mandatory "regardless of payment to authorities."

The problem is that the wording "regardless of payment to authorities" is not also used in paragraph 4, 3. subsection, which is the paragraph subsection which controls on what terms the information should be given in extended country-by-country reporting. There the Ministry of Finance uses the terminology "When it is a duty to give information about payments to authorities", then the companies are obliged to submit this information. In this way, the duty to submit extended information is "locked" to only apply to countries that have submitted payments to authorities of over NOK 800,000.  

The consequence is that companies are not required to give information from tax havens, because payments to such places will be less than NOK 800,000. The limit of NOK 800,000 is not a problem in and of itself. The problem is that the core information in country-by-country reporting is not required to be submitted "independent of whether there is a duty to report on payments to authorities."

Parliament can make the amendment watertight by requiring extended information to be reported regardless of this "materiality limit" and require that already audited accounting numbers be the source for the numbers.

Only then will pertinent information tied to CBCR reporting from subsidiaries and support functions in third countries emerge in the accounting. Only then will it be possible to expose potentially unwanted tax adjustments. Only then will Parliament´s objective be achieved.