Norway Takes Lead in Combating Tax Evasion in Developing Countries

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Poor countries need tax revenue to invest in health and education, says Development Minister Heikki Holmås.

Norway will introduce so-called country-by-country reporting (LLR). This means that companies must report to the authorities in the countries where they operate about their payments.

The purpose is to demonstrate cash flow and make the authorities in those countries where companies operate responsible for the use of revenues from their natural resources.

- I am proud that Norway is going ahead to combat tax evasion. Poor countries need tax revenue to invest in health and education. Therefore, the report also shows the relationship between paid taxes and the extraction of natural resources, says Heikki Holmås.

The European Commission proposed LLR legislation to be currently considered by the Council and European Parliament. Norwegian authorities will now work for adoption of LLR regulations by other European countries as  soon as possible.

Norway plans to introduce national rules on LLR from 1 January 2014, even if implementation in EU is done later.

About Tax Evasion

Despite unprecedented action from political leaders, and a blizzard of bilateral co-operation treaties entered into by offshore centres, deposit data from the Bank of International Settlements (BIS) shows bank accounts in tax havens still held $2.7tn (£1.7tn) last year – about the same amount as in 2007.

Tax Haven Countries are key in this problem. These places allow big companies and wealthy individuals to benefit from the onshore benefits of tax – like good infrastructure, education and the rule of law – while using the offshore world to escape their responsibilities to pay for it. The rest of us shoulder the burden.

Tax havens offer not only low or zero taxes, but something broader. What they do is to provide facilities for people or entities to get around the rules, laws and regulations of other jurisdictions, using secrecy as their prime tool.

In 2010, VG and E24 had revealed that the Norwegian state-owned investment company Argentum invested in 27 funds in the tax havens Jersey and Guernsey.  Politicians in opposition had protested Argentum's channeling of billions through tax havens, while Norway officially fights against tax heavens. The government spokesperson had argued that parliament did not know about the situation.