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The EITI is based on the principle that “a public understanding of government revenues and expenditure over time could help public debate and inform choice of appropriate and realistic options for sustainable development”. The EITI requires a comprehensive reconciliation of company payments and government revenues from the extractive industries. An understanding of company payments and government revenues can inform public debate about the governance of the extractive industries.
In a majority of the EITI countries, income from natural resource extraction is a crucial component of the government's finances. In four of the countries that have published EITI Reports to date, resource revenues comprise over 80%.
EITI Requirement 4 relates to the issues of revenue collection, defining what revenues to include, the level of detail required, and requirements for data quality and timeliness. The EITI provides guidance on revenue collection and defining what is meant by comprehensive disclosure of revenues, in the Guidance note on defining materiality, reporting thresholds and reporting entities.
Before embarking on the reporting process, the multi-stakeholder group has to agree which payments and revenues are "material" and therefore must be disclosed, including appropriate materiality definitions and thresholds.
Payments and revenues are considered material "if their omission or misstatement could significantly affect the comprehensiveness of the EITI Report". EITI Reports include a description of each revenue stream.
Types of revenue streams
The Standard provides some flexibility for multi-stakeholder groups in determining which revenues to include in their reports, but also explicitly describes certain revenues that should be included:
i. The host government’s production entitlement (such as profit oil)
ii. State-owned company production entitlement
iii. Profits taxes
vi. Bonuses, such as signature, discovery and production bonuses
vii. License fees, rental fees, entry fees and other considerations for licenses and/or concessions
viii. Any other significant payments and material benefit to government
The Standard also requires disclosure of infrastructure and barter arrangements (#4.3), transportation revenues (#4.4), transactions between state-owned enterprises (#4.5), and subnational payments (#4.6). The revenues are also required to be presented by individual company, government entity and by revenue stream.
The International Secretariat regularly collects revenue data and other summary data. The data is collected by using Summary Data Templates. The data is shared freely and publicly as per the EITI's Open Data Policy.
Implementing countries are required to submit these files to the International Secretariat, and are responsible for ensuring that they are accurate.
The files include a wide range of fiscal, legal and contextual data related extractive industries, including company-by-company revenue data. The revenue data is classified according to the Government Finance Statistics (GFS) Manual 2014 framework, to ensure comparability across both countries and time.