Tools & Resources

Tools and resources to assist government officials, parliamentarians and policy makers in the planning, preparation for, negotiation, monitoring, and implementation of large-scale investments

Limiting the Impact of Excessive Interest Deductions on Mining Revenue Go to resource

  • Date:  2018
  • Sector:  Extractive Industries Mining
  • Source:  IGF, OECD

Tax systems that provide income tax deductions for interest without making any similar provision for equity create an incentive for the use of debt. While this is true of all industries, this note examines the particular base erosion risks from the use of debt by mining MNEs.

This note responds to a concern of many developing countries that MNEs use debt “excessively” in mineral-producing countries (called “host countries” in this note for brevity) as a mechanism to shift profits abroad. This note is for policy-makers and tax authorities in capacity-constrained developing countries where mining is occurring. Its aim is to assist countries with very limited resources to combat tax BEPS. It prioritises simplicity and ease of administration as policy objectives. 

This issue was one of the focus areas of the BEPS process. It was also identified as being of high priority for developing countries at an informal workshop on DRM from mining, hosted by the OECD in October 2016.

 

Monitoring the Value of Mineral Exports: Policy Options for Governments Go to resource

  • Date:  2018
  • Sector:  Extractive Industries Mining
  • Source:  IGF, OECD

The practice note aims to increase policy-makers’ knowledge of the process of determining the value of exported minerals. The focus is determining the value (or quality) of mineral exports, not the quantity. While there is a risk that companies may underestimate both, verifying the value of minerals is more complex and requires more technical expertise. Additionally, most governments have some measures in place to verify quantity—for example, draft surveys to calculate the weight of a ship carrying minerals for export—whereas the skills, expertise and facilities to monitor mineral value are lacking.


Having laid the foundation, the practice note sets out three main policy options for improving government oversight of mineral product export valuation (hereinafter referred to as “export valuation”). These are: direct measurement of mineral value, monitoring companies’ own mineral export valuation processes and a hybrid approach. The goal is that policy-makers will be equipped to make informed, risk-based decisions on how best to monitor the value of mineral exports.

Tax Incentives in Mining: Minimising Risks to Revenue Go to resource

  • Date:  2018
  • Sector:  Extractive Industries Mining
  • Source:  IGF, OECD

This practice note looks at tax incentives in the mining sector. For many developing countries, receipts from mining are often a major source of revenue. The central task for policy-makers, therefore, is to design fiscal regimes for the mining industry that raise sufficient revenue, while providing adequate inducement to invest. Many times, governments have given tax incentives to mining investors that have turned out to be overly generous, forgoing significant tax revenues and sometimes resulting in conflict with investors. Preventing similar occurrences from happening again demands sector-specific guidance on the design and use of tax incentives.

The goal of this practice note is that governments of resource-rich countries are better equipped to identify and cost potential behavioural responses by mining investors to tax incentives.