Tax Base Erosion and Profit Shifting (BEPS) in Mining
Tax base erosion and profit shifting (BEPS) through aggressive tax avoidance costs developing countries USD 200 billion in revenue annually, across all sectors. Resource-rich countries face unique BEPS risks and administration challenges that can prevent effective taxation of the mining sector and divert revenue from host governments. With a long list of Sustainable Development Goals (SDGs) to fund, it is more important than ever for resource-rich developing country governments to ensure existing and future mining projects fully contribute to public finances.
This is why the Intergovernmental Forum on Mining, Mineras, Metals, and Sustainable Development (IGF) has partnered with the Organisation for Economic Co-operation and Development (OECD) Centre for Tax Policy and Administration to deliver the BEPS in Mining Program. Combining their respective mining and tax expertise, the IGF and OECD will equip resource-rich developing country governments with the knowledge, skills and tools to build and administer robust mining tax systems.
The IGF and OECD also offer a range of implementation support for governments, including:
- Training and capacity building
- Legal and policy advisory services
- Experienced tax auditors to assist with mining tax audits via the OECD-UNDP Tax Inspectors Without Borders
Building on global efforts to combat corporate tax avoidance, the IGF-OECD BEPS in Mining Program aims to provide sector-specific solutions to some of the most pressing base erosion challenges facing resource-rich developing countries.
Some of these challenges include:
- Excessive interest deductions
- International tax treaties
- Mineral pricing
- Offshore transfer of mining assets
- Tax incentives
- Transfer pricing
- Undervaluation of mineral exports
The BEPS in Mining Program has funding from the UK's Foreign, Commonwealth and Development Office (FCDO) and the Ford Foundation.
What's the Outlook on Tax Certainty for MNEs Subject to Amount A?
Readers who follow international tax developments will be familiar with the political dynamic that led to last year's unprecedented agreement among 137 countries on the so-called two-pillar solution regarding taxation of business profits of multinational enterprises (MNEs). Numerous countries' piecemeal adoption of digital services taxes and other unilateral tax measures aimed at nonresident MNEs provoked retaliatory action by the US in the form of tariffs, or the threat of tariffs, on a wide range of exports to the US from those countries.
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