
Contents
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6.1 Introduction 6.1 Introduction
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6.2 Terminology 6.2 Terminology
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6.3 Fiscal Analysis Framework 6.3 Fiscal Analysis Framework
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6.3.1 Manage the Resource on Behalf of the Population: Returns to Ownership 6.3.1 Manage the Resource on Behalf of the Population: Returns to Ownership
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6.3.2 Impose and Administer the General Tax Regime: Return for Rights to Taxation 6.3.2 Impose and Administer the General Tax Regime: Return for Rights to Taxation
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6.3.3 May Take Equity Positions in Some, or All, Mining Operations 6.3.3 May Take Equity Positions in Some, or All, Mining Operations
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6.3.4 May Use State Enterprises as Operating Companies 6.3.4 May Use State Enterprises as Operating Companies
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6.3.5 Summary 6.3.5 Summary
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6.4 Principles for the Design of a Fiscal Regime 6.4 Principles for the Design of a Fiscal Regime
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6.4.1 Royalties: Returns to Ownership 6.4.1 Royalties: Returns to Ownership
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6.4.2 Generally Applicable Taxes and Fees 6.4.2 Generally Applicable Taxes and Fees
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6.4.2.1 Taxes on Returns to Invested Capital 6.4.2.1 Taxes on Returns to Invested Capital
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a. Exploration a. Exploration
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b. Development b. Development
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c. Depletion c. Depletion
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d. Reclamation d. Reclamation
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6.4.2.2 Border Withholding Taxes 6.4.2.2 Border Withholding Taxes
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6.4.2.3 Indirect Consumption Taxes 6.4.2.3 Indirect Consumption Taxes
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6.4.2.4 Tariffs 6.4.2.4 Tariffs
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6.4.3 Returns to Equity Participation 6.4.3 Returns to Equity Participation
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6.5 Recommendations 6.5 Recommendations
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6.5.1 General Background 6.5.1 General Background
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6.5.1.1 Need to Measure Opportunity Costs of Mineral Extraction 6.5.1.1 Need to Measure Opportunity Costs of Mineral Extraction
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6.5.1.2 Contracts Should Invoke Statutes 6.5.1.2 Contracts Should Invoke Statutes
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6.5.1.3 Stabilization 6.5.1.3 Stabilization
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6.5.14 Basis for Framing Recommendations 6.5.14 Basis for Framing Recommendations
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6.5.2 Generally Applicable Taxes 6.5.2 Generally Applicable Taxes
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6.5.2.1 Profits Taxes (or basis for advanced payments): Taxes on Return to Invested Capital 6.5.2.1 Profits Taxes (or basis for advanced payments): Taxes on Return to Invested Capital
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a. Mineral-Specific Provisions a. Mineral-Specific Provisions
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b. Other Provisions b. Other Provisions
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6.5.2.2 Oil and Gas and Mining 6.5.2.2 Oil and Gas and Mining
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a. Long Investment Periods a. Long Investment Periods
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b. Exports b. Exports
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c. Potential Solutions c. Potential Solutions
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6.5.2.3 Tariffs 6.5.2.3 Tariffs
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6.5.2.4 Capital Gains 6.5.2.4 Capital Gains
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6.5.2.5 Factor Payments 6.5.2.5 Factor Payments
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a. Basic Royalty a. Basic Royalty
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b. Ad Valorem Royalty b. Ad Valorem Royalty
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c. Additional Charges c. Additional Charges
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References References
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6 Mining and Natural Resources
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Published:March 2024
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Abstract
Fiscal policy for mining is discussed in this chapter. Separation of payments is maintained in return for the ownership of the resource stock and taxes. The chapter argues that any mineral producer should be subject to the generally applicable tax system with no specific modifications in a contract. Mineral-specific provisions in the income tax include capitalization of exploration and development expenses and amortization of reclamation expenses. Depletion should be allowed only to the resource owner, the state in most cases. An alternative to the Resource Rent Tax (RRT) and other rent capture schemes in proposed. In addition, the chapter proposes that stabilization be limited both in time and in scope.
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