In the mining sector, corporate income taxes and royalties commonly use mineral product sales as a key component of the tax base, but like other sectors, there are base erosion and profit shifting (BEPS) risks present, which may reduce the revenue to developing countries.
Profit shifting via the pricing of mineral products in transactions between related parties is of particular concern. For developing countries, profit shifting risks are elevated where revenue authorities are still building their sector specific and transfer pricing expertise.
On 24 January 2017, the OECD, as part of the Platform for Cooperation on Tax, released the Discussion Draft of a Toolkit for Addressing Difficulties in Accessing Comparables Data for Transfer Pricing Analyses.
This toolkit included supplementary material on mineral product pricing (Addressing the Information Gaps on Prices of Minerals Sold in an Intermediate Form), which provides a systematic process that could be used by tax administrations to map the transformation chain for a particular mineral, identify key traded products and establish common industry pricing practices.
Detailed case studies for copper, gold, thermal coal and iron ore are also provided, providing greater detail on key mineral products and their international sale, including additional mining sector information and data sources on transactions to assist revenue authorities. This supplementary material is also available in French.
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