Non-Metallic Mining
Building the case for tailored tax and royalty regimes
This report analyzes the economics of non-metallic mining and the challenges of designing taxes and royalties for the industry. The report makes recommendations on how governments can tax the industry, focusing on royalty administration and addressing transfer pricing risks and questions around tax incentives and export taxes. It provides data for individual countries on value chains for specific non-metallic minerals.
Key Messages
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The right tax and royalty policies for non-metallic minerals may depend heavily on the economics of each mineral.
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Revenue maximization is not always the priority in fiscal policies for non-metallic minerals.
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Unit-based royalties can be a good option for some non-metallic minerals. These simple royalties may be appropriate for keeping the cost of tax administration at a minimum, where the potential of these minerals to provide government revenue is limited.
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When using fiscal policies to attract investment or spur development, governments should apply the principles of effective industrial policy. They should also use tax incentives with caution, given their poor track record in promoting investment.
Non-metallic materials—that is, minerals that are neither metals nor fuels—are present in every country and are essential for people’s daily lives. We estimate that over USD 217 billion of such minerals are produced annually in 66 countries around the world; the global total is likely to be much higher.
In this context, how can governments design tax and royalty policies for non-metallic mining that achieve the right balance of mobilizing tax revenues from non-metallic mining; facilitating production, which may boost competitiveness and create jobs in downstream industries; and other objectives? This is the focus of the present study. Much of the existing analysis of mining tax and royalties is focused on higher-value, metallic minerals and may not be appropriate for non-metallic minerals.
This report, therefore, proposes a framework for governments to design tax and royalty policies for non-metallic minerals. It focuses on the issues of royalties, export taxes, corporate income tax (especially transfer pricing challenges), tax incentives, artisanal mining taxation, and environmental taxation.
Participating experts
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