Voluntary tax transparency Some large multinationals have gradually increased their tax transparency disclosures to combat negative perceptions of their tax practices.
The Extractive Sector Transparency Measures Act (ESTMA) is the most recent example of transparency legislation that affects Canadian extractive companies. ESTMA came into force on June 1, 2015, and introduced new reporting and transparency obligations for Canadian companies operating in the extractive sector. Affected companies are required to report payments made to any local or foreign governments for the commercial development of oil, gas, or minerals. Reportable payments fall into any of the following categories: taxes, royalties, fees, production entitlements, bonuses, dividends, or infrastructure improvement payments. ESTMA reports must be filed within 150 days of the end of the financial year and must be made public via the Internet.
Companies should continue to monitor developments in this area and consider whether they’re currently prepared to be more transparent if tax transparency legislation is introduced in Canada.