MINING TAX POLICY RESPONSES TO COVID-19

The document outlines how developing countries can use tax policy to support the mining sector during the COVID-19 crisis. It identifies sector impacts, such as mine closures in Mongolia, Peru, Bolivia, and Madagascar, and fluctuating commodity prices. The guide recommends targeted relief for companies in severe financial distress, suggesting options like deferring payroll taxes, speeding up VAT refunds, and granting import duty relief. It explicitly advises against income tax holidays and withholding tax relief, while proposing that any state aid be conditioned on worker retention and the abandonment of aggressive tax avoidance.

• The COVID-19 pandemic has caused operational disruptions in the mining sector, including the quarantine and temporary suspension of mines such as Rio Tinto’s Oyu Tolgoi in Mongolia, Anglo American’s Quellaveco in Peru, the San Cristobal mine in Bolivia, and the Ambatovy mine in Madagascar.
• Commodity price volatility has created divergent impacts: demand and prices for copper, nickel, and platinum have dropped, while demand for precious metals like gold and silver has increased as investors seek stability.
• Governments should target tax relief specifically to companies demonstrating severe financial distress rather than applying sector-wide measures. Criteria for relief include negative project cash flows for over a year, inability to meet tax or debt obligations, and a prohibition on any company paying dividends in 2020.
• Proposed short-term tax relief options include the deferral or temporary exemption of payroll taxes to protect employment, accelerating VAT refunds, and exempting import duties on essential supplies, fuel, explosives, and chemicals.
• Financial relief should be conditional on companies retaining workers at regular salaries, withholding executive bonuses, and abandoning artificial tax avoidance arrangements such as treaty shopping and tax havens.
• The guide advises against using income tax holidays, as they are inefficient for marginal mines and prone to abuse, and recommends maintaining withholding taxes because they are relatively easy for developing countries to collect.
• If governments waive or reduce mineral royalties, they should consider treating the waived amount as a capital injection to increase government equity in the mine or as a loan to be repaid in cash or mineral production.

APA

Corrick, L., Lassourd, T., Readhead, A., & Taquiri, J. (2020). MINING TAX POLICY RESPONSES TO COVID-19. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/mining-tax-policy-covid-19-en.pdf

Chicago

Corrick, Lee, Thomas Lassourd, Alexandra Readhead, and Jaqueline Taquiri. MINING TAX POLICY RESPONSES TO COVID-19. International Institute for Sustainable Development, 2020. https://www.iisd.org/system/files/publications/mining-tax-policy-covid-19-en.pdf.

Wikipedia

{{cite report |last1=Corrick |first1=Lee |last2=Lassourd |first2=Thomas |last3=Readhead |first3=Alexandra |last4=Taquiri |first4=Jaqueline |title=MINING TAX POLICY RESPONSES TO COVID-19 |publisher=International Institute for Sustainable Development |date=April 2020 |url=https://www.iisd.org/system/files/publications/mining-tax-policy-covid-19-en.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{corrick2020mining, author = {Corrick, Lee and Lassourd, Thomas and Readhead, Alexandra and Taquiri, Jaqueline}, title = {{MINING TAX POLICY RESPONSES TO COVID-19}}, institution = {International Institute for Sustainable Development}, year = {2020}, month = apr, url = {https://www.iisd.org/system/files/publications/mining-tax-policy-covid-19-en.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }