Raising tax revenue is especially important for developing countries. Strong tax systems are central to financing development, and there is increased recognition of the importance of external support in building those systems.
While real progress has been made on increasing tax revenues in low income countries over the past two decades, in many countries revenue remains well below the levels needed to achieve the Sustainable Development Goals and secure robust and stable growth.
Like other sectors of the economy, there are tax base erosion risks in the mining sector that can hinder domestic resource mobilisation (DRM), particularly from the operations of multinational enterprises (MNEs).
Pricing Minerals Sold in an Intermediate Form
Profit shifting via the pricing of mineral products in transactions between related parties is of particular concern for many countries. For developing countries, profit shifting risks are elevated where revenue authorities are still building their sector specific and transfer pricing expertise.
As a response, the OECD led the development of material on mineral product pricing, published by the Platform for Collaboration on Tax in 2017 as a supplement to the Toolkit Addressing Difficulties in Accessing Comparables Data for Transfer Pricing Analyses.
Training on this toolkit is also available under the Global Relations Programme.
Co-operation with the Intergovernmental Forum on Mining, Minerals, Metals and Sustainable Development (IGF)
The OECD Centre for Tax Policy and Administration Secretariat has commenced a programme of co-operation with the IGF, as part of a wider effort to address some of the challenges developing countries are facing in raising revenue from their mining sectors. Under this co-operation, a series of practice notes and tools are being developed for governments. Three practice notes have now been finalised. In addition, interested parties were invited to provide comments on prelimary versions of these reports and are now publishing the public comments submitted. The OECD and IGF appreciate all feedback received.
The tools provided below reflect a broad consensus between the OECD Centre for Tax Policy and Administration Secretariat and the IGF, but should not be regarded as the officially endorsed view of either organisation or of their member countries.
Limiting the Impact of Excessive Interest Deductions on Mining Revenue
Building on BEPS Action 4, this practice note guides government policy-makers on how to strengthen their defences against excessive interest deductions in the mining sector.
Tax Incentives in Mining: Minimising Risks to Revenue
Supplementing wider work undertaken by the Platform for Collaboration on Tax on tax incentives, this practice note focuses on the use of tax incentives in mining specifically, examining the tax base erosion risks they can pose.
Monitoring the Value of Mineral Exports: Policy Options for Governments
Ensuring appropriate pricing of minerals relies on high-quality, accurate testing facilities and controls. This practice note helps governments choose the appropriate policy option for monitoring the value of mineral exports, considering the type of mineral, the risk of undervaluation, existing government capacities, and available budget.
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