INCITATIONS FISCALES DANS L’INDUSTRIE MINIÈRE : LIMITER LES RISQUES POUR LES RECETTES

The document argues that tax incentives in the mining sector are often inefficient and ineffective because mineral resources are immobile, making them less responsive to fiscal lures than other investments. It details how specific incentives—such as temporary tax holidays, withholding tax relief, and cost-based incentives—can trigger 'behavioral responses' like high-grading (écrémage) and abusive transfer pricing, which further erode the tax base. The guide provides a step-by-step methodology for modeling the budgetary cost of these incentives and offers specific policy recommendations to protect national revenues, including the use of accelerated depreciation over tax holidays and the implementation of 'bracket' rather than 'class' progressive royalties.

• Tax incentives are generally ineffective at attracting mining investment because mineral resources are site-specific and immobile, meaning they do not respond to fiscal incentives as much as other types of capital.
• Temporary tax exemptions can lead to 'high-grading' (écrémage), where companies accelerate the extraction of high-grade ore during the holiday period to maximize tax-free profits, leaving fewer resources for later taxable periods.
• Withholding tax relief on interest and management fees increases the risk of Base Erosion and Profit Shifting (BEPS), as companies are incentivized to artificially inflate payments to foreign affiliates in low-tax jurisdictions.
• Cost-based incentives, such as accelerated depreciation and investment allowances, are preferred over tax holidays because they allow investors to recover capital more quickly without completely eliminating the tax base for years.
• Export processing zones (EPZs) can create parallel fiscal regimes that encourage abusive transfer pricing, where companies under-value minerals sold from a mine to a processing plant within the zone to shift profits to the lower-taxed entity.
• Progressive royalties designed using a 'class' system (where the rate applies to the total price) create 'cliff effects' that incentivize companies to under-report prices to avoid jumping into a higher tax bracket.
• Fiscal stabilization clauses can inadvertently freeze harmful tax incentives and prevent governments from updating laws to combat BEPS or adjust to rising commodity prices.
• A financial modeling approach is recommended to calculate the total loss of revenue by combining the direct cost of the incentive and the additional cost resulting from the investor's behavioral response.

APA

Readhead, A. (2018). INCITATIONS FISCALES DANS L’INDUSTRIE MINIÈRE : LIMITER LES RISQUES POUR LES RECETTES. International Institute for Sustainable Development. https://www.iisd.org/system/files/2024-07/tax-incentives-in-mining-minimising-risks-to-revenue-fr.pdf

Chicago

Readhead, Alexandra. INCITATIONS FISCALES DANS L’INDUSTRIE MINIÈRE : LIMITER LES RISQUES POUR LES RECETTES. International Institute for Sustainable Development, 2018. https://www.iisd.org/system/files/2024-07/tax-incentives-in-mining-minimising-risks-to-revenue-fr.pdf.

Wikipedia

{{cite report |last1=Readhead |first1=Alexandra |title=INCITATIONS FISCALES DANS L’INDUSTRIE MINIÈRE : LIMITER LES RISQUES POUR LES RECETTES |publisher=International Institute for Sustainable Development |date=2018 |url=https://www.iisd.org/system/files/2024-07/tax-incentives-in-mining-minimising-risks-to-revenue-fr.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{readhead2018incitations, author = {Readhead, Alexandra}, title = {{INCITATIONS FISCALES DANS L’INDUSTRIE MINIÈRE : LIMITER LES RISQUES POUR LES RECETTES}}, institution = {International Institute for Sustainable Development}, year = {2018}, url = {https://www.iisd.org/system/files/2024-07/tax-incentives-in-mining-minimising-risks-to-revenue-fr.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }