Par Ignatius Mvula, Directeur adjoint, Unité de vérification dans le secteur minier, Administration fiscale de la Zambie, Mary Baine, Directrice, Programmes fiscaux, Forum de l’administration fiscale africaine, et Ben Dickinson, Chef de la Division des Relations internationales et du développement, Centre de politique et d’administration fiscales, OCDE
En mai 2020, l’administration fiscale de la Zambie (ZRA) a remporté une victoire fiscale historique devant la Cour suprême contre Mopani Mining Copper plc. Le Tribunal a condamné l’entreprise à payer 240 millions de kwacha (13 millions USD) d’impôts supplémentaires. La décision tenait au fait que la Zambie devait baser la partie technique de son dossier en apportant la preuve de l’évasion fiscale par des stratégies de l’érosion de la base d’imposition et du transfert de bénéfices, ou BEPS.
By Ignatius Mvula, Assistant Director – Mining Audit Unit, Zambia Revenue Authority,Mary Baine, Director – Tax Programmes, African Tax Administration Forum, and Ben Dickinson, Head of the Global Relations and Development Division, Centre for Tax Policy and Administration, OECD
In May 2020, the Zambian Revenue Authority (ZRA) won a landmark tax case against Mopani Copper Mining plc in the Supreme Court. The Court ordered the company to pay additional tax of 240 million Kwacha (USD 13 million). The judgement hinged on Zambia making a technical case showing evidence of tax avoidance through base erosion and profit shifting or BEPS strategies. In countries around the world multinational enterprises (MNEs) exploit gaps and mismatches between different countries’ tax systems, costing countries up to 100-240 billion USD in lost revenue annually, the equivalent to 4-10% of the global corporate income tax revenue. Moreover, developing countries’ higher reliance on corporate income tax means they suffer from tax base erosion and profit shifting disproportionately. Zambia and many African tax administrations report that the abuse of transfer pricing rules – the pricing of goods and services between related parties of a multinational enterprise – represents one of the highest BEPS risks to their tax bases.
By Stephen E. Shay, Lecturer at Harvard Law School; Iain Steel, independent economics consultant; Gabrielle Beran, Governance and Program Manager, International Senior Lawyers Project-UK (ISLP-UK); Olumide Abimbola, Business Development Lead, CONNEX Support Unit.
Countries often collect royalties on the sale of their natural resources, but how can they be sure that the price is right when a mining company sells iron ore to its own steel mills? This was the problem faced by Liberia with its largest iron ore mine – and a common problem around the world in mining and many other sectors.
Sales between “related parties”, where the companies share a common owner and are therefore not independent of each other, use a “transfer price[i]” that is supposed to reflect fair market value – the price two independent firms would have agreed transacting at arm’s length. In this article, we describe how governments can make use of pricing agreements with companies to determine transfer prices by reference to international benchmarks, and the importance of reviewing these agreements to ensure they remain fit for purpose over time. We also draw lessons for revenue authorities, host governments and donor partners from the recent renegotiation of a pricing agreement in Liberia. Continue reading “Negotiating a royalty pricing agreement: lessons from Liberia”
Par Nava Touré, Conseiller principal auprès du Ministre des Mines et de la Géologie, République de Guinée, et Ruya Perincek, Analyste des politiques, Ressources naturelles pour le développement, Centre de développement de l’OCDE
Alors que les pays à travers le monde, connaissent des réponses diversifiées à la pandémie de COVID-19 et anticipent des conséquences économiques sévères, la Guinée s’appuie essentiellement sur l’organisation qui a fait ses preuves pendant l’épidémie d’Ébola de 2014-2015 : des structures institutionnelles pour répondre aux crises sanitaires, en collaboration avec les partenaires internationaux et le secteur minier qui joue un rôle important dans l’économie nationale. Cette expérience dans la réponse aux crises sanitaires et les mécanismes établis dans les contrats et conventions minières pour le contrôle des revenus tirés par l’État pourraient mettre le pays dans une meilleure position par rapport à d’autres pays en développement pour la riposte au COVID-19 et à la crise économique.
How do mining companies spend their money? If you didn’t know and listened only to the media, you might think such companies spend the most on taxes and royalties. However, you’d be wrong.
When minerals or metals are monetised, the revenue is shared between four main stakeholders in the following ways:
50–65% of mining revenue goes to operating and capital expenditure, such as the suppliers who are paid for their inputs.
15–20% goes to government, which receives its share through royalties and taxes.
15–20% goes to investors who receive profits, typically a residual after the other payments have been made.
10–20% goes to employees who are paid their wages.
A World Gold Council (WGC) study shows that out of the total annual spending in 2012 of USD 55 billion by the 15 WGC members studied, some USD 35 billion were payments to other businesses, mostly subcontracting and procurement. Less than USD 10 billion were royalty and tax payments to governments.
Chile is considered a success case, and Chileans today are much better off than a decade ago. However, inequality is persistent and the knowledge base of the country is still limited. What the country also faces is a productivity challenge. Chile’s total factor productivity growth has decreased from 2.3% per year in the 1990s, to a yearly rate of 0.3% from 2000 to 2009, and then to -0.2% after 2010. These trends lasted through several government terms. So, what needs to be done to sustain the country on its path towards development? Continue reading “What can governments do to harness the potential of new technologies?”