Recommendation from the Standing Committee on Finance and Economic Affairs concerning direct taxes, indirect taxes and customs duties for 2014 – Legislation proposals* *30.1 Summary of Proposition No. 1 (2013-2014) to the "Storting" (Norwegian Parliament)* The Ministry of Finance proposes that accounting entities classified as «large» on the basis of new thresholds in anticipated EEA provisions that are expected to match those of Directive 2013/34/EU, as well as issuers of listed securities, which are active in the extractive industries and/or the logging of primary forests, shall prepare and publish an annual report on their activities, including payments to governments, at the country and project level. The Ministry is of the view that there should be scope for expanding the content requirements applicable under such disclosure obligations, relative to those expected to be applicable under the anticipated EEA provisions, such as to include investments, sales income, production volumes, purchases of goods and services, as well as the number of employees in each country, although the detailed content requirements should be stipulated in the form of administrative regulations. Provisions on exemptions from the disclosure obligation are also proposed. The Ministry does not propose that the report be subjected to external verification, proposing instead that the board of directors and the chief executive officer shall confirm that the report has been prepared in accordance with the requirements laid down by legislation and appurtenant regulations, and that it shall be specified in the directors’ report where such disclosure report can be accessed. *The proposed effective date of these provisions is 1 January 2014*. Reference is made to the proposed new Section 3-3d of the Accounting Act and the proposed amendments to Sections 3-5 and 8-2 of the Accounting Act. Reference is also made to the proposed new Section 5-5a of the Securities Trading Act and the proposed amendments to Sections 5-12 and 5-13 of the Securities Trading Act. See the Proposition for further details on the background (20.2), applicable law (20.3), international developments (20.4), objective (20.5), scope (20.6), specific requirements as to the contents of reporting (20.7), exemptions from, and limitations of, the disclosure obligation (20.8), form of reporting (20.9), verification of reporting (20.10), format and publication (20.11), financial and administrative implications (20.12), as well as comments on the individual provisions (20.13). *30.2 The observations of the Committee* The Committee endorses the Government’s proposition. A majority of the members of the Committee, comprising the members from the Conservative Party, the Progress Party, the Christian Democratic Party and the Liberal Party, refer to the *budget compromise concluded between these parties and to the Government being requested to ensure that the regulatory framework governing country-by-country reporting incorporates the objective of highlighting undesirable tax planning*. ? The members of the Committee from the Labour Party, the Centre Party and the Socialist Left Party refer to the presentation of the country-by-country reporting proposal in Proposition No. 1 (2013-2014) to the Storting, and would like to emphasise the importance of increased transparency with regard to cross-border corporate cash flows. The country-by-country reporting proposal represents an important initiative in this regard. These members note that combating tax evasion and highlighting undesirable tax planning are not included in the objective behind the country-by-country reporting proposal. Moreover, the proposal envisages that companies will only report on their activities where the extraction of natural resources is taking place. The legislation would be further enhanced by improving the proposal in these respects. It should therefore be examined whether the objective behind the legislation should be broadened to also include the combating of tax evasion and the highlighting of undesirable tax planning. Besides, it should be examined whether the legislation should be amended such as to also oblige the affected companies to report on their activities in countries where they maintain support functions, including tax havens. These members would like to emphasize the need for stepping up efforts to combat tax evasion and the extensive use of tax havens to avoid taxation. It will be appropriate, when evaluating the regulatory framework, to examine the scope for including all Norwegian companies with activities abroad, as well as for requiring the reporting to be incorporated into the annual financial statements of companies, thus implying that it will be subject to auditing. *These members submit the following proposal*: «The Storting requests the Government to examine the potential expansion of the legislation on country-by-country reporting such as to also oblige the affected companies to report on their activities in countries where they maintain support functions, including tax havens, and to submit a proposal with regard thereto no later than upon the submission of the Revised National Budget for 2014.» «The Storting requests the Government to examine whether the objective behind the country-by-country reporting legislation should be broadened to also include the combating of tax evasion, and to submit a proposal with regard thereto no later than upon the submission of the Revised National Budget for 2014.» The member of the Committee from the Christian Democratic Party refers to the budget agreement between the Government parties, the Christian Democratic Party and the Liberal Party. This member is satisfied that the agreement implies that the four parties are requesting the Government to ensure that the regulatory framework governing country-by-country reporting incorporates the objective of highlighting undesirable tax planning. The undesirable tax planning of multinational companies is a major problem that is undermining the revenue base of poor countries, and hence their scope for developing good health and education services. "Source document":http://www.stortinget.no/no/Saker-og-publikasjoner/Publikasjoner/Innstillinger/Stortinget/2013-2014/inns-201314-004/30/#a2 *Outcome*: On the 5th of December, the Norwegian Parliament passed new legislation on country-by-country reporting. The view of the majority in the Standing Committee on Finance and Economic Affairs also got the majority in the Parliament voting. Hence, the proposal from the Ministry of Finance was accepted, but with the Government being requested to ensure that the regulatory framework governing country-by-country reporting incorporates the objective of highlighting undesirable tax planning.