The European Parliament’s tightening-up of the accounting demands for the oil companies concerning their tax payments around the world is too extensive. So thinks the Danish Shipowners’ Association who is handling the interests of Maersk Oil in the situation at hand. The original proposal of an accounting directive first presented by the European Commission, since by the Council of Ministers, demanding more transparency from companies in the oil and mining industries following the new and tighter demands in American legislation has been tightened in a number of ways after being dealt with in the European Parliament’s JURI Committee (Committee on Legal Affairs).
Among other things, the committee proposes to lower the limit for a payment from an oil company being made public from EUR 500,000 in the original council proposal to EUR 80,000. Furthermore, the Parliament demands project-by-project reporting from companies instead of the original country-by-country reporting proposed by the Commission.
Chaotic for the reader
“We sympathise with the idea of making oil companies inform about the amounts they pay in taxes and tariffs. We just want it to be done in the right way. We find the European Parliament’s proposal of making companies report project by project completely chaotic for the reader. Furthermore it would pose an enormous administrative burden on e.g. Maersk Oil”, Head of Division and Lawyer, Dorte Rolff from the Danish Shipowners’ Association says.
The association also finds the proposal of lowering the limit of the payments being reported too extensive.
“Fundamentally, transparency in large tax payments to developing countries may be relevant but we find that a limit of EUR 80,000 is simply too low”, says Dorte Rolff.
The Council’s proposal does not force oil companies to publish information which are either forbidden or under special demands of discretion in some countries. Also here, the Parliament takes it a step further.
Open communication about tax conditions
The state-controlled Danish energy company, Dong Energy does not expect that the proposal will have any significant influence on the company. “We have not taken a position on the proposal which has still not been agreed upon but of course we will follow the regulation in place at any time. Already, we have an approach of being open about our tax conditions and therefore we are happy to publish this information. However, it is important that we may do so without too much bureaucracy and by taking competitive conditions and the relationship with e.g. our partners into consideration”, Head of Group Communication & Public Relations, Karsten Anker Petersen, says.
“At first glance we do not expect that the proposal will have any major consequences for Dong Energy as we already communicate openly about our tax conditions but if it will demand more transparency from us we are naturally prepared to meet these demands", he says.
The ambassadors from the EU countries and the European Parliament will shortly convene in order to reach a compromise about the proposal. The purpose of the proposal is to make sure that the companies’ oil and gas activities benefit the host countries just as it may be used to uncover corruption and make governments accountable that the money are used for the benefits of the country.