Tax Incentives in Mining

This practice note provides guidance for governments in resource-rich developing countries on designing fiscal regimes for the mining sector. It specifically examines the use of tax incentives to attract investment and the associated risks of revenue loss due to overly generous terms or unintended behavioral responses from investors.

• Developing countries frequently use tax incentives to attract investment, but their effectiveness is questioned in the mining sector because the resources are location-specific and cannot be moved.
• Overly generous tax incentives can lead to significant losses in tax revenue and may cause conflicts between governments and investors.
• Tax incentives can trigger unintended behavioral responses from taxpayers that further reduce government revenue; for instance, a time-limited tax holiday may encourage a mine to accelerate production to maximize tax-free revenue, leaving less ore for extraction after the holiday ends.

APA

Readhead,, A. (2018). Tax Incentives in Mining. International Institute for Sustainable Development. https://www.iisd.org/publications/report/tax-incentives-in-mining-minimising-risks-to-revenue

Chicago

Readhead,, Alexandra. Tax Incentives in Mining. International Institute for Sustainable Development, 2018. https://www.iisd.org/publications/report/tax-incentives-in-mining-minimising-risks-to-revenue.

Wikipedia

{{cite report |last1=Readhead, |first1=Alexandra |title=Tax Incentives in Mining |publisher=International Institute for Sustainable Development |date=1 October 2018 |url=https://www.iisd.org/publications/report/tax-incentives-in-mining-minimising-risks-to-revenue |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{readhead2018tax, author = {Readhead,, Alexandra}, title = {{Tax Incentives in Mining}}, institution = {International Institute for Sustainable Development}, year = {2018}, month = oct, url = {https://www.iisd.org/publications/report/tax-incentives-in-mining-minimising-risks-to-revenue}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }