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OECD Releases Mining Sector BEPS Guidance For Developing States

Friday, October 26, 2018

The OECD and the Intergovernmental Forum on Mining, Minerals, Metals, and Sustainable Development have finalized three practice notes intended to support resource-rich developing countries to protect their tax bases from erosion and profit shifting.

The first practice note is on limiting the impact of excessive interest deductions on mining revenue, which includes specific recommendations for the mining sector, building on the OECD's guidance on Action 4 of its BEPS Action Plan. It is intended to support government policymakers to strengthen their country's defenses against excessive interest deductions in the mining sector.

The second practice note concerns tax incentives for mining companies. Supplementing wider work undertaken by the Platform for Collaboration on Tax on tax incentives, the practice note focuses on the use of tax incentives in mining specifically, examining the tax base erosion risks they can pose.

The final practice note concerns monitoring the value of mineral exports. The paper puts forward policy options for developing countries to better price mineral exports, considering the type of mineral, the risk of undervaluation, existing government capacities, and developing countries' available budgets.