On October 5, the Verkhovna Rada adopted a law on the implementation of international financial reporting standards, whi
On October 5, the Verkhovna Rada adopted a law on the implementation of international financial reporting standards, which should ensure greater transparency and accountability in extractive industries for investors and local communities.
In particular, the law introduces the concept of "payments to government report" - a detailed informative reporting on taxes, fees and other payments incurred by enterprises for the benefit of the government. This new procedure applies to enterprises engaged in the extraction of minerals of national importance, logging, and pipeline transportation of hydrocarbons and chemical products.
DiXi Group welcomes the adoption of the law as a first step towards meeting the requirements of the Extractive Industries Transparency Initiative (EITI) and implementation of the Directive 2013/34/EU on financial reporting. More than 600 companies in the UK, France, and Canada already report based on similar standards; soon hundreds more will join them.
At the same time, the full implementation of the new system will not be feasible without the adoption of the Draft Law No. 6229 "On Ensuring Transparency in Extractive Industries". The Draft Law No. 6229 complements current law by stating that companies must report at the project level – i.e., licenses for subsoil use in specific fields – as required by the EITI standard and the Directive 2013/34/EU.
The document contains a clear list of information for disclosure, sets the procedure for publishing reports and provides an open method for decision-making through the Multi-Stakeholder Group at the Ministry of Energy and Coal Industry, which brings together government, business and civil society.
Effective implementation of international reporting standards will necessitate effective sanctions, as required by the Directive 2013/34/EU. In addition, we are convinced that not only should extractive companies be required to report payments to the government, but also the public authorities should report any funds they have received to ensure they were allocated to the appropriate budgets.
The adoption of this special law regarding transparency in extractive industries is extremely important for the development of economy and energy security of Ukraine as a whole. Local communities, where exploration and production activities are underway, need this detailed information. Additionally, responsible businesses are also interested in obtaining a "social license" in the territories where they operate.
Considering this, DiXi Group calls for adoption of the Draft Law No. 6229 in order to fully transpose the provisions in the Directive 2013/34/EU into the Ukrainian law. This is a priority highlighted in the Action Plan to Implement the Open Government Partnership Initiative for 2016-2018, the Anti-Corruption Strategy for 2014-2017, as well as the Action Plan regarding implementation of the Concept for Development of Ukraine's Gas Production Industry.
