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Transfer Pricing in Mining with a Focus on Africa

Cite Magazine

Written by experts in mining and economics, Transfer Pricing in Mining with a Focus on Africa: A Reference Guide for Practitioners captures the results of a study commissioned by the World Bank and supported by the Australian Department of Foreign Affairs and Trade, which was designed to help strengthen fiscal control in mineral-rich developing countries, and deal with base erosion and profit shifting by multinational enterprises.

Transfer Pricing in Mining book cover

The main body of the book is split into three parts. Following the identification of common transfer pricing issues in Part A, Part B considers these issues in the context of commodities currently mined in Africa, using case studies as examples.

Part C explains how these issues can be addressed, and provides practical suggestions for resourcing and implementing organisational skills.

The book closes with a discussion on strategies, which if employed, could improve the industry’s compliance with sound transfer pricing principles, contribute to effective transfer pricing auditing and minimise revenue leakages.

Research was directed and coordinated through the Centre for Exploration Targeting1 and contributing authors Professor Pietro Guj and Dr Bryan Maybee from Curtin Graduate School of Business’s Department of Mineral and Energy Economics, played a pivotal role in structuring, resourcing and successful completion of the initial study that forms the backbone of the book.

It was a complex task that required coordinating the effort of many specialists scattered around the globe. But the collective wealth of global expertise had unexpected benefits. Not only did it aid the identification of transfer pricing issues, it also generated practical solutions.

“Mispricing of the transfer prices applied to cross-border transactions has emerged as one of the most significant sources of tax avoidance, which, in the case of Africa, is estimated to be of the order of the amount of foreign aid currently directed to the continent,” explains Professor Guj.

“This reference guide, specifically focused on transfer pricing in mining, fills a critical gap in the knowledge of tax administration in many developing countries and complements recent more general work by the OECD, the UN and the World Bank in this field.”

“This work is a step towards enhancing the capacity within the tax authorities of developing nations so that the wealth housed within their natural resources can be unlocked to support their development,” adds Dr Maybee. “We like to believe that our work may represent a small, but hopefully effective, contribution to alleviate poverty in the African continent.”

The book is due to be formally launched in late March in Washington DC, US and will be the basis for a series of specialised international workshops conducted during 2017 in Africa and Latin America.

[1] The Centre for Exploration Targeting is a joint venture between Curtin University, The University of Western Australia and the mining industry.

About the author

Professor Pietro Guj and Dr Bryan Maybee work at the Curtin Graduate School of Business’s Department of Mineral and Energy Economics.

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