Calls for extractive companies to disclose the taxes, royalties and fees they pay to governments began in the mid to late 1990s. The aim of the Publish What You Pay campaign, as the movement became known, was to allow citizens from the countries in which oil, gas and mining projects were taking place to hold their governments to account for the money being paid to them.
In some cases, huge amounts of money were being paid by companies in taxes but the host country remained impoverished – and those living nearest the operations saw few, if any, tangible benefits. By disclosing taxes paid, mining companies empower citizens of resource-rich countries to ask difficult questions of their governments as to where the money has gone, what it has been spent on and who has benefited. This helps to crack down on government mismanagement and corruption, and provides a useful catalyst for citizens to understand how extractive industries can genuinely help social and economic development in their country.
The Extractive Industries Transparency Initiative (EITI) is a global standard, launched in 2003, to promote open and accountable management of natural resources. It seeks to strengthen government and company systems, inform public debate, and enhance trust.
While the scope of the EITI is now far broader than just revenue transparency, it was the first global standard to require revenue transparency in any industry and is widely seen as the forefather of the mandatory reporting laws that have since been passed by a number of countries.
Find out more about our work with EITI here.
Mandatory reporting of payments to governments
In 2010 the United States passed the Dodd-Frank Act, a major piece of financial reform legislation aimed at preventing future global recessions. Contained within the law was a small provision entitled 'Dodd-Frank 1504' which requires all US-listed oil, gas and mining companies to publish, on an annual basis, details of taxes, royalties and fees that they pay to a government. A lawsuit brought by the US oil and gas industry stalled the implementation of the law and in early 2017 the regulation that implemented the law was repealed by Congress. A new regulation is expected to be announced in 2018. In the meantime, the Dodd-Frank Act’s passing prompted the European Union, Norway and Canada to pass similar laws which have since been implemented in those jurisdictions.
The advantage of the mandatory reporting laws is that they create a level playing-field for industry. The vast majority of ICMM members are required to publish their payments to government, regardless of whether they are operating in a country that implements the EITI standard or not. Furthermore, the data required by the mandatory reporting laws will be much more up-to-date than the EITI data which can be two years old by the time it is published.
However, a disadvantage of mandatory reporting laws relative to the EITI is that they do not provide the wider contextual information that EITI reporting requires, and the flow of information is only ever one-way, from company to government. ICMM therefore considers the two approaches to be complementary.