Overview

This bill mandates increased transparency for companies involved in oil, gas, and mineral extraction. It requires these companies to publicly disclose payments made to national governments and government-owned entities, along with detailed financial information about their operations in each country where they work.

Description

Reporting of Payments

Resource extraction companies (RECs), defined as UK-incorporated or UK-listed companies involved in extraction or holding relevant licenses, must detail all payments to governments and government agencies in their annual audited accounts. This includes the total amount, currency, payment period, business segment, recipient government and country, and related project. Failure to comply results in civil penalties under the Companies Act 2006.

Transparency Requirements

RECs must also publicly disclose comprehensive financial data for each country of operation, including sales, purchases, labor costs, financing costs, pre-tax profits, tax charges (current and deferred, actual payments, liabilities), asset details (fixed assets, investments, disposals), gross and net assets, and estimated reserves data.

Definitions

The bill clearly defines "resource extraction company," specifying the types of companies covered and clarifying the types of payments to be disclosed. It aligns payment categories with Extractive Industries Transparency Initiative guidelines and defines "country of operation" based on subsidiary locations and OECD definitions.

Government Spending

The bill is not expected to directly increase or decrease government spending. Its impact relates to improved transparency and potential for increased tax revenue if it leads to better tax collection and reduced tax evasion by resource extraction companies.

Groups Affected

• Resource Extraction Companies (RECs): These companies face increased reporting burdens and potential penalties for non-compliance.
• National Governments and Government-Owned Entities: Increased transparency of payments received from RECs.
• Investors and Stakeholders: Improved access to information for informed decision-making.
• Civil Society Organisations: Enhanced ability to monitor and hold RECs accountable.

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