GLOBAL DIGITAL TAX REFORMS: HIGHLIGHTING POTENTIAL IMPACTS FOR MINING COUNTRIES

This briefing note examines the potential impacts of the OECD/G20 Inclusive Framework's two-pillar digital tax reform on the mining sector and resource-rich countries. While labeled as digital tax reform, the initiative has broad implications for the taxation of non-renewable resources and the ability of developing nations to collect revenues from multinational mining enterprises.

• The OECD's Pillar One proposal includes a new taxing right called 'Amount A' for market countries, but specifically excludes 'non-renewable resources'—including minerals and hydrocarbons—from this mechanism. This carve-out recognizes that the primary taxing right for minerals should remain with the resource-producing country because minerals are generic goods priced on inherent characteristics rather than marketing.
• The briefing argues that 'Amount B'—which allocates a fixed return on sales to entities with a physical presence in a market country—is inappropriate for the mining sector because marketing adds limited value to mineral products. The authors suggest that either extractives should be carved out of this rule or an industry-specific rule should be created to target profit shifting to marketing hubs in low-tax jurisdictions.
• Pillar Two aims to establish a global minimum effective tax rate to prevent profit shifting to low-tax jurisdictions. While this could help resource-rich countries combat aggressive tax avoidance, the current proposal presents several risks for developing nations: the EUR 750 million revenue threshold may exclude smaller companies, and the method for calculating effective tax rates may conflict with local rules allowing faster depreciation of exploration and development expenses, potentially forcing mines to pay taxes to foreign jurisdictions during cost-recovery periods.
• The briefing suggests that the current Pillar Two design favors wealthier countries where mining companies are headquartered. Specifically, the illustrative minimum tax rates of 7.5% to 17.5% mentioned in the blueprints are considered too low to prevent downward pressure on the statutory mining tax rates, which are typically around 30%.
• The 'Tax Certainty' section (formerly Amount C) emphasizes mandatory binding dispute resolution for all transfer pricing and permanent establishment adjustments. The document notes that this approach may undermine national sovereignty by moving international tax disputes outside of domestic law.

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} }