The European Parliament has accepted proposals for the new Accounting Directive which includes disclosure requirements for the extractive and forestry industries and new simpler accounting requirements for the preparation of financial information.
The proposals will require European companies to report payments of more than €100,000 (£85,441.83) made to the government in the country they are operating in, including taxes levied on their income, production or profits, royalties, and license fees. These companies will have to disclose the payments they make at project level as opposed to government level only.
The agreement on the proposals follow up on commitments agreed under the Single Market Act I with the aim of fostering a sustainable and inclusive growth model. The agreement on disclosure requirements is also in line with the commitments made at G8 level in May 2011.
Michel Barnier, the European commissioner for the internal market, who oversaw the proposals comments:
'The agreement on the disclosure requirements for the extractive and forestry industries shows how EU legislation can be a catalyst for change in developing countries. Local communities in resource-rich countries will finally be better informed about what their governments are being paid by multinationals for exploiting oil and gas fields, mineral deposits and forests. The agreement will bring in a new era of transparency to an industry which is far too often shrouded in secrecy and help fight tax evasion and corruption as well as create the framework so both companies and governments can be held to account on the use of revenues from natural resources'.
The new directive will also require the European Commission to review the possibility of extending the disclosure requirements to other sectors.
In addition, new, simpler accounting requirements for the preparation of financial information have been agreed on which the EU Parliament says will result in a reduction in the administrative burden for SMEs. This includes introducing smart regulation and the creation of an eco-system conducive to the development of social entrepreneurship. The new directive will also ensure that small companies will be protected against obligations to produce onerous information in their financial statements. This will mainly be relevant to the notes and statements to be prepared. Simplification will vary between small companies depending on their size and on the jurisdiction in which they are located.
The new Directive will repeal and replace the Accounting Directives 78/660/EEC and 83/349/EEC.
