The Future of Resource Taxation is a new initiative aiming to improve the way governments collect revenue from the mining sector, specifically in developing countries needing to rebuild public finances in the wake of COVID-19.
“The goal is to re-evaluate and improve the fiscal regimes governing the mining industry, which tend to be complex and difficult for governments to administer, especially in developing countries,” says Alexandra Readhead, Lead for Tax and Extractives with the Intergovernmental Forum on Mining, Minerals, Metals and Sustainable Development (IGF).
The International Monetary Fund estimates tax base erosion and profit shifting (BEPS) redirects more than $200 billion away from governments in the developing world annually.
“In the mining sector, aggressive tax avoidance practices such as transfer mispricing, distorted mineral valuations, excessive interest deductions, and treaty shopping have pitted governments against companies in often public clashes that harm the reputations of all stakeholders.”
“In recent years, we have seen mining tax conflicts from Australia to Zambia,” says Logan Wort, Executive Secretary of the African Tax Administration Forum (ATAF). “With governments looking to rebuild public finances post-COVID-19, ensuring that mining contributes its fair share will be crucial for many countries,” says Wort.
While emerging technologies can promote greener and safer operations, they also threaten to disrupt the distribution of economic benefits from the industry. For instance, automation will mean fewer jobs and lower government tax receipts from employees. As such, governments will look to tax reform to make up revenue shortfalls.
With a combined 87 member countries, IGF and ATAF say they are leading The Future of Resource Taxation and will leverage their complementary expertise and reach to research the existing problems, examine solutions, and then recommend the next generation of mining fiscal measures to policy-makers in countries seeking to maximise the benefits from their mineral wealth.
