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. It is also available in French and Spanish.
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)
Developing countries' revenue losses from tax base erosion and profit shifting (BEPS) is an estimated USD 200 billion annually, across all sectors.1 With a long list of Sustainable Development Goals (SDGs) to finance, it is more important than ever that resource-rich developing country governments ensure existing and future mining projects contribute their full share to government budgets.
The OECD Centre for Tax Policy and Administration has partnered with the Intergovernmental Forum on Mining, Minerals, Metals and Sustainable Development (IGF) to deliver the BEPS in Mining Programme. Combining their respective mining and tax expertise, the OECD and IGF will equip resource-rich developing country governments with the knowledge, skills and tools to build and administer robust mining tax systems.
2021 Online Training Course on International Taxation and the Mining Sector
The OECD together with the IGF and our regional partners, ATAF and CIAT, will deliver a five-month long online training course on international taxation and the mining industry which is comprised of eight modules, focusing on the most pressing international taxation issues in the mining sector. The training will touch on a range of BEPS issues in the mining sector including transfer pricing risks along the mining value chain (offshore marketing hubs, intercompany loans); verifying mineral product prices; double tax treaties; tax incentives including fiscal stabilisation; mining fiscal policy and administrative design.
The OECD and IGF are committed to a whole-of-government approach to addressing critical mining revenue issues. As such, we are inviting a delegation made up of representatives from the tax administration, ministry of finance, and ministry of mining from Latin America and the Caribbean, Africa and Asia-Pacific.
The Zambia Case Study - June 2020
The OECD in partnership with the IGF and regional partners has been working on the ground in resource rich countries around the world to support developing countries recover lost taxes arising from BEPS, close the tax gap in the extractive sector and to build a sustainable tax system. Zambia has proven to be an excellent case study of tangible outcomes arising from the multilateral cooperation between the Zambia Revenue Authority (ZRA), the OECD, the African Tax Administration Forum (ATAF) and the IGF. The long standing collaboration has helped the ZRA modernise its transfer pricing approaches and rules to address BEPS issues relating to base metal valuation.
The IGF and OECD also offer a range of implementation support for governments, including:
BEPS in Mining Training Testimonials
Claudia Vargas - DIAN Colombia
Loide Hamutumwa - Namibia
Ben Piu - Papua New Guinea