Payments to Governments (PtG) XML Filing Requirement For UK Mining Companies

Payments to Governments

What Is The Payments To Governments XML Conversion Requirement For Mining Companies?

Since January 1, 2015, companies incorporated in the UK, with tradable securities on a regulated market, and part of the extractive or mining industry have been required to make an annual disclosure of the payments they make to various governments.
Under new rules that came into force on August 1, 2016, those companies are required to file their Payments to Governments reports through the Financial Conduct Authority’s (FCA’s) National Storage Mechanism (NSM) in the eXtensible Markup Language (XML) format.

Rules Governing Payments To Governments XML Conversion For Mining Companies

Payments to Governments’ requirements are set out in the Financial Conduct Authority’s Disclosure Guidance and Transparency Rules (DTR) 4.3A. After the Brexit transition period that began on February 1, 2020, and ended on December 31, 2020, UK companies need to comply with the DTR 4.3A if…

  • They are active in the extractive or primary forest logging industries
  • They have transferable securities trading on a UK-regulated market

The FCA says: “Certain listed companies (premium-listed companies other than open-ended investment companies and companies with a standard listing of shares or depositary receipts) which are not already required to comply with the Transparency Rules are also required to comply DTR 4.3A as if they were an issuer for the purposes of the Transparency Rules.”

Companies In The Scope Of Payments To Governments XML Conversion Requirements

Payments To Governments XML Conversion Requirements

What Data Does A Payments To Governments Report Contain?

A Payments to Governments report must have the following information:

  • A breakdown of extraction companies’ payments based on type.

For instance, the category to which those payments belong: Taxes on income or profit; dividends; licenses, rental, and entry fees; production entitlements, among others.

  • A breakdown of extraction companies’ payments on the basis of projects.

The payment made for each project a company is involved with and the type of payment made for each project.

  • A breakdown of extraction companies’ payments on the basis of governments.

Any national, regional, or local authority; department, or agency.

Why Talk About Payments To Governments XML Conversion Requirements Now?

In 2019 and 2020, the FCA conducted a review of extraction companies’ compliance with DTR 4.3A and set forth its concerns through Primary Market Bulletins. Some of the main requirements where the FCA saw companies deviating from the rules are mentioned below.
Payment Threshold:A payment made either as a single payment or as part of a series of payments within a financial year need not be covered in the Payments to Governments report if it is less than £86,000. However, a company is not exempt from preparing a Payments to Governments report in the absence of any qualifying payments in the relevant period.
Report Production, Publication & Filing: Listed companies that fall under the purview of DTR 4.3A must disclose their Payments to Governments in a standalone report made public not later than 6 months after the end of a financial year. The report needs to be filed in XML format.
Equivalence: According to the FCA, “No determinations of equivalence have been made by the FCA in respect of the rules in DTR 4.3A for the purposes of DTR 4.4.8R in relation to any non-EEA State or a third country, either before or following the end of the transition period. Therefore, the exemption in DTR 4.4.8R is not available in relation to the rules on reports on payments to governments set out in DTR 4.3A, and all issuers within the scope of DTR 4.3A are therefore required to comply with those rules.”
The FCA made the following findings based on its review:

  • XML reports were located for only a minority of companies in the scope of DTR 4.3A
  • Breakdown of payments on the basis of projects was missing in a fifth of the reviewed reports
  • Over 10% of the reports were not filed with the national storage mechanism in the review period
  • Several companies disclosed the data in annual reports and did not prepare a standalone report
  • Several companies failed to furnish the report, saying no payments were made or that they were below the threshold. However, this does not exempt them from PtG disclosures
  • Several companies failed to furnish the report, saying they had filed similar prior reports

The Right Way For Companies To Comply With Payments To Governments XML Conversion Requirements For Mining Companies

UK-incorporated companies in extractive industries need to file the report on Payments to Governments with the FCA by uploading it to the national storage mechanism. They need to ensure Payments To Governments XML Conversion compliance using the XML schema provided below:

  1. the Extractive Report Schema Definition;
  2. the ISO Country Code Schema; and
  3. the ISO Currency Codes

The above requirements are in addition to the requirements for the disclosure, dissemination, and filing of regulated information in DTR 6. As reports on payments to governments are regulated information for the purposes of DTR 6, issuers must file the report in XML format and in human-readable format (PDF/HTML).

Introducing A Payments To Governments XML Conversion Solution – IRIS iDEAL®

UK-incorporated companies may comply with the Payments to Governments XML Conversion requirement through a simple four-step process if they use the IRIS iDEAL® solution.
Step 1:Use an MS Excel file with all Payments to Governments data points for 2020/2021
Step 2: The data will be mapped with the XML schema defined by the FCA within IRIS iDEAL®
Step 3: The solution will provide the final validated XML output along with a human-readable file
Step 4:Companies may submit the report to the FCA and confirm a successful submission
IRIS iDEAL® is a digital transformation engine that has been meeting the regulatory compliance needs of over 50 banks, credit institutions, and investment firms worldwide for over a decade now. The solution facilitates high-quality, granular data submissions to regulators.
IRIS iDEAL® is brought to you by Fin-X Solutions®, which is a trusted name in tax filings with the HMRC and annual financial reports prepared in accordance with the FCA’s ESEF/UKSEF requirements. Fin-X Solutions® is a leading regulatory compliance and report authoring solutions provider in the UK since 2010.

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