COT attends Global Conference on Resource Taxation

COT Advocates for Resource Taxation at Global Conference

Mr. Samuel Loi, the Commissioner of Taxation (COT) for the Internal Revenue Commission (IRC), attended and participated as a panelist at the Global Conference on the Future of Resource Taxation for Papua New Guinea (PNG) from June 26th to 28th, 2023. Representing the Commissioner General, Mr. Loi emphasized the significance of the mining and extractive sectors in resource-rich economies such as PNG, as they provide employment opportunities, generate revenue, and drive development. However, the key challenge remains to ensure these resources are utilized sustainably to benefit both present and future generations.

Held in Zambia, one of Africa's leading mining nations, the conference served as a platform to bring together experts, policymakers, civil society representatives, industry professionals, and revenue agencies. The discussions revolved around exploring innovative fiscal measures and tax policies that can maximize the benefits derived from resource extraction while promoting responsible resource management. It was unanimously acknowledged that no one-size-fits-all solutions exist, as each country must strike a balance based on its unique circumstances and objectives. Strengthening institutions, monitoring mechanisms, and ensuring compliance were deemed critical elements in effectively implementing new policies.

As a representative of PNG, Mr. Loi shared invaluable insights on various topics, including the challenges faced in mining contract negotiations, the implications of fiscal stabilization clauses, the resource-intensive nature of administering mining activities, and the exploration of production sharing options. These discussions aimed to evaluate their potential application within the local context, aligning with the goal of maximizing government revenue fairly and effectively.

The International Forum on Mining, Minerals, Metals, and Sustainable Development (IGF) extended an invitation to PNG to participate in this international event. Concurrently, the IGF launched a comprehensive handbook on tax policy options in mining (accessible via this link: https://www.igfmining.org/resource/future-resource-taxation-10-policy-ideas-to-mobilize-mining-revenues/), serving as a valuable resource for peer learning and the development of tax policies that contribute to the long-term development and benefits from the extractive sector in PNG.

The handbook, jointly developed and published by the IGF and the African Tax Administration Forum (ATAF), provides ten fiscal policy and administrative ideas specifically tailored to the mining sector. It highlights the unique features of the mining industry and describes dominant fiscal regimes observed worldwide. Surveys were conducted to showcase global changes and demonstrate how countries have financially benefited from different approaches. Notably, the ATAF countries have demonstrated expertise in managing transfer pricing and have even conducted training programs for OECD member countries.

In addition to the handbook, the IGF is actively assisting PNG's Internal Revenue Commission (IRC), Department of Treasury (DoT), and Mineral Resources Authority (MRA) in developing a model term sheet. This sheet will serve as a template for evaluating the real revenue benefits resulting from contract negotiations between the state and investors. Once completed, it will facilitate an assessment of past, present, and future mining development contracts, shedding light on their negotiation outcomes and their alignment with the state's interests.

The participation of Mr. Samuel Loi in this global conference and the availability of the handbook have provided PNG with invaluable insights and opportunities for peer learning. By leveraging this knowledge, PNG can work towards developing tax policies that not only optimize revenue but also contribute to sustainable long-term development within the extractive sector.

#resourcetaxation #taxpolicy