Transparency in the Governance of Tax Incentives and Exemptions

Similar documents
Infrastructure in Southern Mongolia. The Challenges of Possible Private Financing

Dr. Baatartsogt. 31 January 2018, Paris, France

Challenges for Australia in mining investment: lessons learned from mega-projects in small developing countries

Building Partnerships in Africa African Mining Indaba, 4-7 February 2013, Cape Town Alan Davies, Chief executive Diamonds and Minerals, Rio Tinto

Chapter 16: National Economy Introduction

Building Partnerships in Africa

Investor Meetings NOVEMBER 6, Developing the third-largest copper mine

WEST AFRICA REGIONAL MINING FORUM, CONAKRY, GUINEA

Oyu Tolgoi a world-class copper and gold mine

The Work of the UN Tax Committee

2010 full year results 10 February 2011

5 August 2010 Shiploader, Cape Lambert

Coping with Global market commodity Price Fluctuations: Impact on Fiscal and Debt Management in case of Mongolia

TD Securities Mining Conference JANUARY 26-27, Developing the third-largest copper mine

Presenter: Mrs Tugsjargal Sereenendorj Senior officer, General Department of Taxation. Улаанбаатар 2013 он

Current Developments and Future Prospects for the Mongolian Copper Industry

African Iron Ore Metal Bulletin, Johannesburg, 6-8 November Alan Davies, Chief executive Diamonds and Minerals, Rio Tinto

Guy Elliott. Cautionary statement. Chief financial officer Analyst Handout

YAK:CN - Leveraged to Mongolia s Growth May 9 New York City

MINERALS COUNCIL OF AUSTRALIA SUBMISSION TO DEPARTMENT OF FOREIGN AFFAIRS AND TRADE ON PROPOSED PACIFIC ALLIANCE FREE TRADE AGREEMENT

Taxation of Natural Resource Rents: Questions, Approaches, Challenges

Outlook for Mining Projects

Outlook for Mining Projects

The future of Oyu Tolgoi is underground Developing the third-largest copper mine

Managing Fiscal Revenues From Extractive Industry:

Oyu Tolgoi a world-class copper and gold mine

Mongolia s economy and competitiveness.

Fiscal Regimes for Mining

Legislative Design of the Fiscal Regime for Seabed Mining. Lee Burns

Report of Specifications Task Force Stakeholder Requirements for Specifications

South Gobi Region Urban Infrastructure Background Study

Foreign Investment Law of Mongolia

MONGOLIA S FOREIGN INVESTMENT POLICIES AND PERSPECTIVES

International Taxation of Oil and Gas and Other Mining Activities

MONGOLIAN ASSOCIATION OF SECURITIES DEALERS ASF 2013, Mr. TSOGTBAYAR TAMJID MEMBER OF THE BOARD

OECD, UN, IMF and World Bank issue toolkit for addressing difficulties in accessing comparable data for transfer pricing analysis

8 August 2013 Safety Strategy Performance Delivery interim results. Pursuing greater value for shareholders

TD Securities Mining Conference JANUARY 18-19, Oyu Tolgoi:Creating long-term value at world s best developing copper project

Mongolia. UNCTAD Compendium of Investment Laws. Law On Investment (2013) Unofficial translation

Macroeconomic and Financial Development: Mongolia

Investor Presentation FEBRUARY Oyu Tolgoi: Creating long-term value at world s best developing copper project

Government Fiscal Take

5 September 2016 FINAL

Mining Infrastructure in the Republic of Guinea: Expansion Opportunities, Greenfield Challenges

Annual F inancial Financial Results 2008

STRATEGICALLY SIGNIFICANT MINERAL DEPOSITS OF MONGOLIA. Berlin, 2011

Oyu Tolgoi Economic Impact Assessment

MONGOLIA S FDI PROMOTION POLICY

BMO Global Metals & Mining Conference FEBRUARY 26 MARCH 1, Oyu Tolgoi: Advancing Value, Creating Options

Asian Investor Meetings AUGUST 15-18, The future of Oyu Tolgoi is underground Developing the third-largest copper mine

*******************************************

RBC Global Mining and Materials Conference JUNE 14-15, The future of Oyu Tolgoi is underground Developing the third-largest copper mine

FOREIGN INVESTMENT OPPORTUNITIES OF MONGOLIA

economic contribution report for year ended 31 December 2016

Oyu Tolgoi a world-class copper and gold mine

Genesis Housing Association Tax Strategy. Year Ended 31 March 2017

Managing revenues from mining Experience of Mongolia Tumendelger Baljinnyam

Rio Tinto plc AGM Address by the chief executive

Click to edit Master title style. Evaluating Fiscal Regimes for Resource Projects: An Example from Oil Development. Click to edit Master text styles

2016 Annual general meeting

Simandou Economic Impact Report Investment Framework update

TERRAMIN AUSTRALIA LIMITED. Annual General Meeting

China Conference 2012

GDP growth rate COUNTRY REPORT FOR MONGOLIA 2018 MASD MARKET AND ECONOMY REPORT OF MONGOLIA. 1. Economic Performance Of Mongolia GDP

A Path Forward for Mining in Mongolia

Modelling Mining and Oil Projects & Fiscal Regimes

Oyu Tolgoi a world-class copper and gold mine

Profit from the Mining Sector s Strength

Metals & Minerals. The Mongolian. Congress & SAVE US$ May Kempinski Hotel Khan Palace Ulaanbaatar Mongolia

10 May BoAML Global Metals, Mining & Steel Conference Chris Lynch. Chief financial officer

Mining Agreements Peruvian experience

Major Infrastructure Investment Opportunity

Ncondezi Coal Company A Mozambican Coal Exploration and Development Company Graham Mascall CEO Ncondezi Coal Company

Foreign Direct Investment in the Mongolian Mining Sector

Ch. Otgochuluu MONGOLIA S STATE POLICY ON THE MINERALS SECTOR AND ITS APPLICATION IN THE PROMOTION OF SUSTAINABLE DEVELOPMENT

Total Tax Contribution. A study of the economic contribution mining companies make to public finances

CONTRIBUTION OF TANZANIA S MINING SECTOR TO THE ECONOMY

POSITIVE PLAN FOR INFRASTRUCTURE

DEPARTMENT OF MINES MINISTRY OF ENERGY AND MINES LAO PDR

Mining Development Framework

2013 full year results

Anton Rühling. Program Manager

Azerbaijan Compliant since: Latest report: Government revenue: Population: Revenue per capita:

ENVIRONMENTAL ISSUES and NATURAL RESOURCE EXTRACTION

Demystifying Korea. Service sector opportunity for Australia under KAFTA

MONGOLIA is OPEN. for BUSINESS. Invest Mongolia Agency

Mine 2018 Tempting times

MONGOLIA EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE (MEITI)

Mining in APEC Economies: Opportunities and Challenges

Fiscal Regimes for Extractive Industries Design and Implementation

Who s who in Zambian mining?

TURQUOISE HILL RESOURCES LTD. Second Quarter Report June 30, 2018 Financial Statements and MD&A

Building value for shareholders

A short guide for our stakeholders

IVANHOE MINES ANNOUNCES Q RESULTS, INCLUDING AN OPERATING PROFIT OF US$9.4 MILLION

For personal use only

SECOND QUARTER REPORT JUNE 30, 2010

Mongolia. Mining and metals tax guide. A. Preface. B. Economic snapshot of Mongolia. Real GDP growth. June Contents.

Minister Elfrieda Tamba, Deputy Minister for Revenue Ministry of Finance, Liberia 21 st March 2011

BEST PRACTICES IN IMPLEMENTING EITI

Transcription:

Session II B: Business, Civil Society and International Organisation Perspectives Transparency in the Governance of Tax Incentives and Exemptions Chris Lenon, Chair BIAC Tax Committee 7 February 2012 OECD, Paris

Governance of Tax incentives and exemptions What is the policy objective of providing Tax Incentives and Exemptions? How does a government ensure it is receiving value for money in providing Tax Incentives and Exemptions? In this context, how can the Taskforce work to control and maximise the value of tax exemptions to all parties? Is there a need for principles/best practices in incentives and exemptions?

Governance of Tax incentives and exemptions Why do governments offer incentives and exemptions to investors? Should some forms of economic activity be incentivised? If so, how? How should countries compete for investment and capital given that there is a finite supply? Which incentives/exemptions are most efficient? Why do investors seek investment agreements?

Three examples: Guinea, Mongolia and Madagascar

Guinea: Simandou (iron ore)

Guinea: Infrastructure Rail: A 710 km/440 mile trans- Guinean railway connecting the mine to the port (same distance as Paris to Nuremburg or Washington to Boston). Impact on neighbouring states. Port: Deep water port and processing facilities; two-berth facility located 17 km/10 mi offshore. No existing deep water ports in Guinea.

Mongolia: Oyu Tolgoi (copper/gold)

Mongolia: Infrastructure Large coal and copper reserves Provides infrastructure to Chinese market $5.6B investment Exports $54bn Will represent 25-35% of GDP GDP increases by 95% during production (Source: Ivanhoe Mines)

Mongolia: Oyu Tolgoi investment agreement Terms of Investment Taxation Infrastructure Template established Long term investment Transparent reporting Stable tax environment Generates tax and royalty revenue Flexible energy options Provision for roads Employment & Training Regional development Environment 90% Mongolian employees 5 year training & strategy plan Scholarships for local students New regional council Transparent community plans Participative and cooperative Detailed environmental impact assessments and protection plan

Madagascar: QMM (Ilmenite) Infrastructure US$1B invested, leaving infrastructure legacy worth more than US$350M Infrastructure and Regional Development Plan across sectors and stakeholders including the World Bank, USAID, government, etc. Power and water supply facilities have been upgraded by US$7M and World Bank agreed to an additional US$4M. US$275M port development; Malagasy government investment of US$35M.

Governance of Tax Incentives and Exemptions: The Government policy challenge The challenge is to find the balance between attracting investment, assessing its value and conceding taxing rights to attract investment in a world in which capital and investment are finite. Is value about total taxes and receipts from the project over its life or the present value of those taxes and receipts?

Governance of Tax incentives and exemptions: The Government policy challenge The Investor will probably have more information about the investment and how it fits within the global economy and the Investor s global portfolio than the Government. How does a Government level this playing field? Support from International organisations (OECD, IMF, World Bank) Support from Consultants

Governance of Tax incentives and exemptions: The investor s perspective The evaluation of the investment opportunity will consider all risks and rewards from an investment tax is a part of this. The larger the upfront investment, the more emphasis there will be on protecting the recoupment of that investment. Stability and certainty are key elements effect on discount rate for project.

Governance of Tax incentives and exemptions: The investor s perspective Is there a contract which has the force of law? Does it prevail over inconsistent laws? Is there a stabilisation agreement at the time of the investment? If so, for how long does it apply? Are there renewal rights? What are the termination rights? How are disputes resolved? What is the governing law?

Governance of Tax incentives and exemptions: The investor s perspective Is there a government share of project and terms for acquiring share? What are carried interest/loan terms from project cash flows? Interaction of government share with tax regime for the project balance in extracting rent from the project. Non-project uses of project assets and infrastructure. Value of infrastructure and economics to country economy during project and after. How is the project financed?

Governance of Tax incentives and exemptions: The investor s perspective Construction phase: VAT Customs duties Other import taxes Registration duties WHT on services WHT on royalties WHT on loan interest Effect on total capital investment, hurdle rate

Governance of Tax incentives and exemptions: The investor s perspective Operating phase: VAT Customs duties Other import taxes Registration duties WHT on services WHT on royalties WHT on loan interest Corporate income tax Minimum corporate income tax Tax depreciation accelerated vs standard Tax credit for reinvestment Tax loss carry forward

Governance of Tax incentives and exemptions: The Governance Dilemna Value for Money Which incentives? VAT Customs duties Other import taxes Registration duties WHT on services WHT on royalties WHT on loan interest Which exemptions? Corporate income tax Minimum corporate income tax Tax depreciation accelerated vs standard Tax credit for reinvestment Tax loss carry forward