Global Tax Reforms Proceeding with Major Mining Implications

This briefing analyzes the potential impacts of the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (IF) on the mining sector, specifically focusing on the Pillar One and Pillar Two blueprints. While some extractive industries are excluded from certain new taxing rights, the document warns that other elements of the reform could undermine revenue collection in resource-rich developing countries and erode national sovereignty through mandatory binding dispute resolution.

• Pillar One's 'Amount A' proposal, which creates a new taxing right for businesses in 'market countries', explicitly excludes the extractive industries of mining and petroleum. This is based on the premise that minerals are generic goods priced on inherent characteristics rather than marketing, meaning the primary taxing right remains with the resource-producing country, though gemstones may be an exception.
• The 'Amount B' component of Pillar One, which allocates a fixed return on sales to entities performing basic marketing activities in a market country, currently lacks a carve-out for mining. The document argues this is inappropriate because minerals and metals generate limited value from marketing intangibles, and suggests that an industry-specific rule should be developed to target profit shifting to marketing hubs in low-tax jurisdictions.
• The 'Tax Certainty' section (formerly Amount C) emphasizes mandatory binding dispute resolution for all transfer pricing and permanent establishment adjustments. The document asserts that this mechanism removes international tax disputes from the jurisdiction of domestic law, thereby undermining national sovereignty.
• Pillar Two (GloBE) aims to establish a minimum effective tax rate to prevent profit shifting to tax havens, but it presents several risks for developing, resource-rich countries. These include a revenue threshold of EUR 750 million that may exclude smaller companies, and a conflict between GloBE's tax assessment methods and local rules that allow faster depreciation of exploration and development expenses. This discrepancy could lead to mines paying taxes to foreign jurisdictions during cost-recovery periods when they have financial profits but no taxable profit.
• The document suggests that the current GloBE proposals may not be ambitious enough to stop the 'race to the bottom' in tax competition between resource-rich countries, as illustrative minimum rates of 7.5% to 17.5% are significantly lower than the typical 30% statutory rates in the mining sector.

APA

Lassourd,, A. R. (2021). Global Tax Reforms Proceeding with Major Mining Implications. International Institute for Sustainable Development. https://www.iisd.org/articles/policy-analysis/global-tax-reforms-proceeding-major-mining-implications

Chicago

Lassourd,, Alexandra Readhead,Thomas. Global Tax Reforms Proceeding with Major Mining Implications. International Institute for Sustainable Development, 2021. https://www.iisd.org/articles/policy-analysis/global-tax-reforms-proceeding-major-mining-implications.

Wikipedia

{{cite report |last1=Lassourd, |first1=Alexandra Readhead,Thomas |title=Global Tax Reforms Proceeding with Major Mining Implications |publisher=International Institute for Sustainable Development |date=12 January 2021 |url=https://www.iisd.org/articles/policy-analysis/global-tax-reforms-proceeding-major-mining-implications |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{lassourd2021global, author = {Lassourd,, Alexandra Readhead,Thomas}, title = {{Global Tax Reforms Proceeding with Major Mining Implications}}, institution = {International Institute for Sustainable Development}, year = {2021}, month = jan, url = {https://www.iisd.org/articles/policy-analysis/global-tax-reforms-proceeding-major-mining-implications}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }