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Ms. Oana Luca and Diego Mesa Puyo
This manual introduces key concepts and methodology used by the Fiscal Affairs Department (FAD) in its fiscal analysis of resource industries (FARI) framework. Proper evaluation of fiscal regimes for extractive industries (EI) requires economic and financial analysis at the project level, and FARI is an analytical tool that allows such fiscal regime design and evaluation. The FARI framework has been primarily used in FAD’s advisory work on fiscal regime design: it supports calibration of fiscal parameters, sensitivity analysis, and international comparisons. In parallel to that, FARI has also evolved into a revenue forecasting tool, allowing IMF economists and government officials to estimate the composition and timing of expected revenue streams from the EI sector, analyze revenue management issues (including quantification of fiscal rules), and better integrate the EI sector in the country macroeconomic frameworks. Looking forward, the model presents a useful tool for revenue administration practitioners, allowing them to compare actual, realized revenues with model results in tax gap analysis.
Ms. Oana Luca and Diego Mesa Puyo

, additional profit sharing mechanisms, final withholding taxes, state participation, and / or other EI related levies. 4 FARI uses a suite of indicators to evaluate how different combinations of fiscal terms compare along relevant economic criteria (such as neutrality, revenue raising capacity, time profile of government revenue and progressivity), and against fiscal regimes in other jurisdictions—the calculations of which are discussed in detail in this manual. While FARI was originally designed as a tool for EI fiscal regime design and evaluation, it can also be adapted

Philip Daniel, Alan Krupnick, Ms. Thornton Matheson, Mr. Peter J. Mullins, Ian W.H. Parry, and Artur Swistak
This paper suggests that the environmental and commercial features of shale gas extraction do not warrant a significantly different fiscal regime than recommended for conventional gas. Fiscal policies may have a role in addressing some environmental risks (e.g., greenhouse gases, scarce water, local air pollution) though in some cases their net benefits may be modest. Simulation analyses suggest, moreover, that special fiscal regimes are generally less important than other factors in determining shale gas investments (hence there appears little need for them), yet they forego significant revenues.
Sebastian Beer
Profit shifting remains a key concern in international tax system debate, but discussions are largely based on aggregate estimates, with less attention paid to individual sectors. Drawing on a novel dataset, we quantify tax avoidance risks in the extractive industries, a sector which is revenue critical for many developing economies. We find that a one percentage point increase in the domestic corporate tax rate has historically reduced sectoral profits by slightly over 3 percent; and the response tends to be more pronounced among mining than among hydrocarbon firms. There is only weak evidence transfer pricing rules contain tax minimization efforts of MNEs in our sample, but interest limitation rules (e.g., thin capitalization or earnings based rules) do reduce the observable extent of profit shifting. Our findings highlight the challenge of taxing income in the natural resource sector and suggest how fiscal regime design might be strengthened.
Sebastian Beer

Profit shifting remains a key concern in international tax system debate, but discussions are largely based on aggregate estimates, with less attention paid to individual sectors. Drawing on a novel dataset, we quantify tax avoidance risks in the extractive industries, a sector which is revenue critical for many developing economies. We find that a one percentage point increase in the domestic corporate tax rate has historically reduced sectoral profits by slightly over 3 percent; and the response tends to be more pronounced among mining than among hydrocarbon firms. There is only weak evidence transfer pricing rules contain tax minimization efforts of MNEs in our sample, but interest limitation rules (e.g., thin capitalization or earnings based rules) do reduce the observable extent of profit shifting. Our findings highlight the challenge of taxing income in the natural resource sector and suggest how fiscal regime design might be strengthened.

Ms. Oana Luca and Diego Mesa Puyo

Front Matter Page Fiscal Affairs Department Executive Summary This manual introduces key concepts and methodology used by the Fiscal Affairs Department (FAD) in its fiscal analysis of resource industries (FARI) framework. Proper evaluation of fiscal regimes for extractive industries (EI) requires economic and financial analysis at the project level, and FARI is an analytical tool that allows such fiscal regime design and evaluation. The FARI framework has been primarily used in FAD’s advisory work on fiscal regime design: it supports calibration

Ms. Alpa Shah

@imf.org Contents Abstract I. Introduction A. Mining B. Petroleum II. Principles for Extractive Industries’ Fiscal Regime Design III. Mexico’s Mining Fiscal Regime A. Background B. Mexico’s Mining Fiscal Regime C. Economic Modeling of Mexico’s Mining Fiscal Regime D. Summary Findings for the Mining Regime IV. Pemex’s Taxation Regime A. Background B. Mexico’s Petroleum Fiscal Regime C. Economic Modeling of Mexico’s Petroleum Fiscal Regime D. Implications of Climate Change Mitigation Efforts E. Summary Findings for the Petroleum Regime

International Monetary Fund. African Dept.

AW2 2019 Improve risk processes, compliance management FAD 2019 Diagnostic Mission on BoG’s Forecasting and Policy Analysis System AW2 2019 Mining fiscal regime design and modelling FAD 2019 Liquidity Management Framework MCM 2019 Integrity Strategy and Implementation of Action Plan AW2 2019 Fiscal Risks FAD 2019 Petroleum Fiscal Modelling FAD 2019 PCA Training and Mentoring Support AW2 2019 Supporting the MoFEA in Applying a Prioritizing Framework to Existing Capital Projects

International Monetary Fund. Asia and Pacific Dept

. It should be easy to administer for the government, and easy to comply with for taxpayers, and minimize discretionary and negotiated elements. It should also provide incentives to maximize efficient production and avoid distortions, such as disincentives and sub-optimization. Such objectives have important implications for fiscal regime design. 7. Although no one fiscal regime is ideal for all countries, combining ad valorem royalty, CIT and resource rent tax has a considerable appeal for developing countries . While the specific fiscal regime should be tailored

Daniel, Philip

of the operations of extractive enterprises, such as those that arise from cross-border infrastructure or joint developments in disputed maritime zones. In focusing on these issues, this book complements both Daniel, Keen and McPherson (2010) , which focuses mainly on domestic aspects of fiscal regime design, and Calder (2014) , which focuses on administrative issues. As there, the present book mainly takes the perspective of resource-producing emerging-market and developing countries. That is where the international tax challenges for the extractive sector