Determining the Price of Minerals
A Transfer Pricing Framework
In the mining sector, government revenue is typically generated by levying royalties
and income taxes on the value of the mineral extracted. However, due to the frequency
and scale of related party transactions, the potential risk to tax revenues posed
by transfer pricing non-compliance can be high, particularly around the value of the
extracted minerals. This toolkit provides practical and meaningful guidance for developing
countries to determine the price of minerals sold to related parties using the arm’s
length principle. It offers a framework on how to use transfer pricing principles
to apply the Comparable Uncontrolled Price method, including identifying the primary
economic factors that influence the price of minerals (“mineral pricing framework”)
to ensure that developing countries are able to tax mineral exports appropriately.
It also includes simplified administrative approaches to pricing mineral sales that
could reduce the administrative burden for developing countries.
Published on November 06, 2023Also available in: Spanish, French