For many resource-rich developing countries, mineral resources present an unparalleled economic opportunity to increase government revenue. Tax base erosion and profit shifting (BEPS), combined with gaps in the capabilities of tax authorities in developing countries, threaten this prospect. One of the ways multinational mining enterprises may seek to avoid taxes is through use of tax incentives.
Many governments of resource-rich developing countries are under pressure to offer tax incentives in order to attract mining investors. But, these incentives may significantly reduce government revenue, especially when investors use them in ways that exceed the tax benefit initially intended by government.
This toolkit has been prepared by the IGF, under a program of cooperation with the OECD, to help governments anticipate and limit the cost of mining tax incentives. It is part of wider efforts to address some of the challenges developing countries are facing in raising revenue from their mining sectors. This work also complements action by the Platform for Collaboration on Tax on options for more effective and efficient use of tax incentives by low income countries.
Comments on the draft are invited from interested stakeholders by July 6, 2018, with the aim of finalizing it in the coming months. Comments should be sent by email to secretariat@igfmining.org.
Please note that all comments received will be made publicly available. Comments submitted in the name of a collective “grouping” or “coalition”, or by any person submitting comments on behalf of another person or group of persons, should identify all enterprises or individuals who are members of that collective group, or the person(s) on whose behalf the commentator(s) are acting.
About the OECD-IGF Cooperation
The IGF and OECD Centre for Tax Policy and Administration have formed a partnership, combining the mining expertise of the IGF with the OECD’s knowledge of taxation, to design sector‑specific guidance on some of the most pressing base erosion challenges facing developing countries.
This practice note is part of a series of products expected in 2018 and beyond. It reflects 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 organization or of their member countries.