GLOBAL DIGITAL TAX REFORMS: HIGHLIGHTING POTENTIAL IMPACTS FOR MINING COUNTRIES

The document examines the OECD's global digital tax reforms, noting that while labeled as 'digital,' the scope extends to the mining sector. It analyzes Pillar One's allocation of taxing rights and Pillar Two's global minimum tax, highlighting risks for developing countries such as the potential for revenues to flow to headquarters jurisdictions and the misalignment of effective tax rate calculations with mining-specific depreciation rules.

• Pillar One's 'Amount A' specifically excludes 'non-renewable resources,' including minerals and hydrocarbons, from the new taxing right for market countries. This ensures the primary taxing right remains with the resource-producing country, although gemstones are noted as a possible exception because they may benefit from marketing.
• The document argues that 'Amount B'—which provides a fixed return on sales for marketing activities—is inappropriate for the mining sector because minerals are physical assets with limited value generated from marketing intangibles. It suggests that extractives should be carved out or subject to an industry-specific rule to counter profit shifting to low-tax marketing hubs.
• Pillar Two aims to establish a global minimum effective tax rate to reduce profit shifting to tax havens, which could help resource-rich countries combat aggressive avoidance. However, the proposal may favor wealthier countries where mining companies are headquartered, as they would collect the difference when a company's tax is below the minimum rate.
• Several technical aspects of Pillar Two could negatively impact developing countries: the EUR 750 million revenue threshold may exclude smaller significant companies, and the method for calculating effective tax rates may conflict with local rules allowing faster depreciation of exploration and development expenses. This could lead to mines paying taxes to foreign jurisdictions during cost-recovery periods.
• The proposed minimum tax rates in the OECD blueprints, ranging from 7.5% to 17.5%, are considered too low to prevent downward pressure on statutory mining tax rates, which are typically around 30%.

APA

Readhead, A., & Lassourd, T. (2021). GLOBAL DIGITAL TAX REFORMS: HIGHLIGHTING POTENTIAL IMPACTS FOR MINING COUNTRIES. International Institute for Sustainable Development. https://www.iisd.org/system/files/2021-03/digital-tax-reforms-mining-en.pdf

Chicago

Readhead, Alexandra, and Thomas Lassourd. GLOBAL DIGITAL TAX REFORMS: HIGHLIGHTING POTENTIAL IMPACTS FOR MINING COUNTRIES. International Institute for Sustainable Development, 2021. https://www.iisd.org/system/files/2021-03/digital-tax-reforms-mining-en.pdf.

Wikipedia

{{cite report |last1=Readhead |first1=Alexandra |last2=Lassourd |first2=Thomas |title=GLOBAL DIGITAL TAX REFORMS: HIGHLIGHTING POTENTIAL IMPACTS FOR MINING COUNTRIES |publisher=International Institute for Sustainable Development |date=March 2021 |url=https://www.iisd.org/system/files/2021-03/digital-tax-reforms-mining-en.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{readhead2021global, author = {Readhead, Alexandra and Lassourd, Thomas}, title = {{GLOBAL DIGITAL TAX REFORMS: HIGHLIGHTING POTENTIAL IMPACTS FOR MINING COUNTRIES}}, institution = {International Institute for Sustainable Development}, year = {2021}, month = mar, url = {https://www.iisd.org/system/files/2021-03/digital-tax-reforms-mining-en.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }