MINING TAX POLICY RESPONSES TO COVID-19: Key points for policy makers

This fact sheet provides guidance for governments on designing mining tax policy relief in response to the COVID-19 pandemic, emphasizing targeted support for mines in severe financial distress and the attachment of strict conditions to any relief granted.

• Governments should determine whether to apply tax relief to the entire mining sector or only to specific companies based on whether the crisis affects the sector uniformly or only certain commodities and companies. Relief should prioritize existing mines over new investments and be granted to locally incorporated and licensed companies rather than foreign entities or parent companies.
• Tax relief should be restricted to companies that can demonstrate severe financial distress, characterized by negative project cash flows for over a year, sharp drops in commodity prices, inability to pay tax or debt obligations, or closure due to quarantine. Companies that paid dividends in 2020 are disqualified from receiving relief.
• Financial relief should be conditional upon the mining company retaining workers at regular salaries, withholding executive bonuses and salary increases, canceling shareholder dividends (excluding government equity), abandoning artificial tax avoidance arrangements, and adopting transparent transfer pricing and mineral sales pricing based on international benchmarks.
• Short-term tax relief options include deferring payroll taxes, speeding up VAT refunds or allowing VAT credit offsets, exempting import duties for COVID-19 supplies and critical operational items, and providing immediate deductions or tax credits for health-related expenditures. Royalty waivers are recommended only as a last resort for projects whose viability is at risk, potentially in exchange for increased government equity or treatment as a loan.
• The document advises against using income tax holidays, as they are only relevant for profitable companies that should not require relief, and withholding tax relief, because withholding taxes are critical for collection in developing countries with limited resources.

APA

International Institute for Sustainable Development (2020). MINING TAX POLICY RESPONSES TO COVID-19: Key points for policy makers. https://www.iisd.org/system/files/publications/mining-tax-policy-covid-19-key-points-en.pdf

Chicago

International Institute for Sustainable Development. MINING TAX POLICY RESPONSES TO COVID-19: Key points for policy makers. 2020. https://www.iisd.org/system/files/publications/mining-tax-policy-covid-19-key-points-en.pdf.

Wikipedia

{{cite report |author=International Institute for Sustainable Development |title=MINING TAX POLICY RESPONSES TO COVID-19: Key points for policy makers |date=2020 |url=https://www.iisd.org/system/files/publications/mining-tax-policy-covid-19-key-points-en.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{internationalinstituteforsustainabledevelopment2020mining, author = {{International Institute for Sustainable Development}}, title = {{MINING TAX POLICY RESPONSES TO COVID-19: Key points for policy makers}}, institution = {International Institute for Sustainable Development}, year = {2020}, url = {https://www.iisd.org/system/files/publications/mining-tax-policy-covid-19-key-points-en.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }