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

The document examines how multinational mining companies use debt financing to shift profits out of host countries and proposes a combination of the OECD BEPS Action 4 framework and other fiscal measures to protect the tax base in developing nations.

• Multinational enterprises (MNEs) in the mining sector may use excessive debt as a mechanism to transfer profits abroad, particularly in host countries with high corporate tax rates, thereby eroding the domestic tax base.
• The mining sector is characterized by high capital intensity, requiring hundreds of millions of dollars for construction and infrastructure before any revenue is generated, which necessitates significant financing.
• Developing countries often face administrative capacity constraints, sometimes with only 5 to 10 tax auditors covering all local mining operations, making it difficult to enforce complex tax legislation.
• Common problematic practices used by MNEs to erode tax bases include leveraged buy-outs (LBOs) where debt is shifted to the acquired company, the use of hybrid financial instruments, and the upward adjustment of interest rates beyond arm's length levels.
• The OECD BEPS Action 4 approach recommends limiting net interest deductions to a fixed ratio of EBITDA, typically between 10% and 30%, to ensure deductions are linked to the economic activity of the entity.
• To accommodate the volatility of commodity prices and the long lead times before production begins, the guide suggests allowing the carry-forward of disallowed interest deductions.
• Beyond BEPS Action 4, other effective measures include thin capitalization rules (debt-to-equity ratios), withholding taxes on interest payments to foreign entities, and strict transfer pricing rules based on the arm's length principle.
• The 'Uruguayan rule' is highlighted as a specific measure where interest deductibility is limited proportionally based on the difference between the local and foreign corporate tax rates.
• For countries with limited capacity, the guide recommends a simplified combined approach consisting of BEPS Action 4, withholding tax on interest, and transfer pricing provisions focusing on economic substance.

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} }