The recent dramatic fall in global mining commodity prices, along with high national deficits and a slow climb out of recession in most economies, has elicited a strong reaction from governments.
The shift towards indirect taxes and fees reflect governments' efforts to guarantee revenues, striking a balance between a sustainable return on natural resources and a reasonable profit to the mining companies.
On top of this, the burden of proving that companies are paying the right amount of tax no longer rests solely with the taxing authorities. In more and more countries, mining firms may soon be forced to fully disclose all revenues and taxes generated globally, on a country-by-country basis. Such disclosure will put the spotlight on companies' attempts to negotiate or structure into tax efficient operating models.
In this latest paper from KPMG's Global Mining Institute, Trends in Taxation: coping with transparency, mining royalties and volatility, we take a deeper look at the global movement towards tax transparency, and the steps companies should consider in order to comply with pending disclosure requirements. As this new operating environment exposes tax postures to tax authorities and, in many cases, to the general public, we discuss how mining firms can manage these challenges.