FOCUS 28 The US perspective
RATHER THAN ALLOWING AN OVER-SIMPLISTIC FOCUS ON THE HEADLINE CORPORATE TAX PAID, MANY ORGANISATIONS WILL SEEK TO EDUCATE CUSTOMERS, SHAREHOLDERS, GOVERNMENTS AND THE GENERAL PUBLIC ABOUT THE TOTAL TAX CONTRIBUTION.
In the US, the Dodd-Frank Act was passed in 2010, with new tax transparency requirements applying from October 2013 to SEC-registered companies in the extractive industries sector (section 1504).
Like the proposed EU rules, reporting is required by project and by country. The scope of payments includes profi t taxes, royalties, infrastructure improvements and licence fees – with a US$100,000 threshold.
In July 2013, a US District Court vacated the SEC rules that provided detailed guidance of the implementation of the section 1504 requirements. The court found that the Dodd-Frank Act did not require public disclosure of payments to governments and “set aside” the SEC rules. The decision demonstrates the complexity of tax transparency across jurisdictions. The SEC is reviewing this judgement, and it may go to a higher court or need further legislation before the matter is settled.
Going forward
Looking to the future, rather than allowing an over-simplistic focus on the headline corporate tax paid, many organisations will increasingly seek to educate customers, shareholders, governments and the general public about the total tax contribution, plus other non-tax investments that deliver wider economic benefi t.
The focus on tax transparency is likely to increase in the coming months and years. As a result, it will be more important than ever for oil and gas companies to be proactive and prepared for the challenges and opportunities ahead. Implementing robust processes to collate and analyse tax information in a meaningful way will be an essential prerequisite in order to seize the opportunity.
Andrew Lister Tax Partner, KPMG Tel:+44 (0)20 76943751
andrew.lister@
kpmg.co.uk
© 2013 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member fi rm of the KPMG network of independent member fi rms affi liated with KPMG International Cooperative, a Swiss entity. All rights reserved.
Iain MacIntosh Tax Director, KPMG Tel:+44 (0)20 73112158
iain.macintosh@
kpmg.co.uk
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TAX TRANSPARENCY
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