LIMITER L’IMPACT DES DÉDUCTIONS D’INTÉRÊTS EXCESSIVES SUR LES RECETTES DE L’EXPLOITATION MINIÈRE

This practical guide, developed by the OECD and the Intergovernmental Forum on Mining, Minerals, Metals and Sustainable Development (IGF), provides guidance for developing countries on limiting excessive interest deductions used by multinational enterprises (MNEs) in the mining sector to erode tax bases and shift profits abroad.

• Multinational enterprises (MNEs) often centralize financing through a "trésorerie du groupe" (group treasury) located in jurisdictions with low or no corporate income tax and withholding tax, a strong network of tax treaties, and skilled financial labor.
• Developing countries face significant tax base erosion when MNEs allocate disproportionate debt to host countries, use interest rates that do not comply with the arm's length principle, or employ complex structures to obscure financial transactions.
• The guide identifies several high-risk practices, including Leveraged Buy-Outs (LBOs) where debt is shifted to the acquired company to reduce its tax burden, and the use of hybrid financial instruments that may be treated as debt in the host country (allowing deductions) but as equity in the home country (allowing tax exemptions on dividends).
• Action 4 of the BEPS Project recommends limiting net interest deductions based on a fixed ratio of EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), with a suggested range between 10% and 30%.
• To accommodate the mining sector's specific needs, such as high initial capital requirements and revenue volatility, the guide suggests allowing the carry-forward of disallowed interest deductions, provided the loans are justified by legitimate business considerations.
• Beyond Action 4, other direct measures to limit interest use include thin capitalization rules (restricting debt-to-equity ratios), withholding taxes on interest payments to foreign entities, and interest rate capping to prevent excessive internal margins.
• The 'Uruguayan rule' is mentioned as a method to counter profit shifting by limiting interest deductions proportionally based on the difference between the local corporate tax rate and the foreign tax rate of the lender.
• For developing countries with limited administrative capacity, the guide recommends prioritizing simple, transparent, and clearly defined measures, such as a combination of BEPS Action 4, withholding taxes, and basic transfer pricing rules.

APA

Devlin, D. (2018). LIMITER L’IMPACT DES DÉDUCTIONS D’INTÉRÊTS EXCESSIVES SUR LES RECETTES DE L’EXPLOITATION MINIÈRE. International Institute for Sustainable Development. https://www.iisd.org/system/files/2024-07/limiting-impact-excessive-interest-deductions-mining-revenue-fr.pdf

Chicago

Devlin, Dan. LIMITER L’IMPACT DES DÉDUCTIONS D’INTÉRÊTS EXCESSIVES SUR LES RECETTES DE L’EXPLOITATION MINIÈRE. International Institute for Sustainable Development, 2018. https://www.iisd.org/system/files/2024-07/limiting-impact-excessive-interest-deductions-mining-revenue-fr.pdf.

Wikipedia

{{cite report |last1=Devlin |first1=Dan |title=LIMITER L’IMPACT DES DÉDUCTIONS D’INTÉRÊTS EXCESSIVES SUR LES RECETTES DE L’EXPLOITATION MINIÈRE |publisher=International Institute for Sustainable Development |date=2018 |url=https://www.iisd.org/system/files/2024-07/limiting-impact-excessive-interest-deductions-mining-revenue-fr.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{devlin2018limiter, author = {Devlin, Dan}, title = {{LIMITER L’IMPACT DES DÉDUCTIONS D’INTÉRÊTS EXCESSIVES SUR LES RECETTES DE L’EXPLOITATION MINIÈRE}}, institution = {International Institute for Sustainable Development}, year = {2018}, url = {https://www.iisd.org/system/files/2024-07/limiting-impact-excessive-interest-deductions-mining-revenue-fr.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }