Revenue management and transparency

How can government ensure that the profits generated by overseas mining companies translate into revenue for the state? How should nations best distribute that revenue to support economic and social development? And crucially, how can they manage the time lag between the arrival of multinationals in the country, and the boom in taxation income – typically some years down the line?

This issue has been at the heart of the debate around the so-called resource curse, which is why revenue management was one of the six key themes identified by OPM in its study for ICMM on how the exploitation of non-renewable mineral resources can support long-term and inter-generational socio-economic development.
 

Further research has made it clear that when it comes to taxation, there is significant common ground between companies and governments – provided both take a long-term and practical perspective. Above all, both parties have an interest in ensuring the taxation regime is perceived to be legitimate.

Today, more than 50 countries are significantly dependent on mining – defined as the mining sector accounting for at least 6% of exports, or playing a pivotal role in the domestic economy - and others have as yet untapped mineral resources that could see them in the same bracket.

OPM has worked with a number of these countries to help them formulate appropriate taxation policies and processes that will optimise revenue streams, as well as develop strategic plans for the use of that revenue. Our role is to identify, through analysis, the short-term and long-term issues and open up constructive debate – as we did recently in Tanzania, where our experience and insight helped bring a practical perspective to discussions around taxation on natural gas extraction.

EITI validation from OPM

In recent years, revenue transparency has moved up the agenda for the mining sector with the launch of the Extractive Industries Transparency Initiative (EITI). OPM is currently one of the few organisations accredited to conduct EITI validation and recently completed validation in Liberia.

We are also able to offer professional consultancy services to the 30 candidate countries undertaking an EITI Validation. Find out more about EITI.