• 1
    With a gold price of USD 1,600 per ounce.
  • 2
    With a low-profit mine and a gold price of $1,600 per ounce.
  • 3
    Cecilia Jamasmie, “Petra Diamonds’ stake in Williamson to shrink as part of deal with Tanzania,”, 13 December 2021,….
  • 4
    Lifezone Metals, “Kabanga Nickel Signs Framework Agreement,” 19 January 2021,
  • 5
    Thomas Scurfield and Silas Olan’g, “Magufuli Seeks the Right Balance for Tanzania’s Mining Fiscal Regime,” NRGI, 31 January 2019,…; Thomas Scurfield, “Tanzania Strikes a Better Balance with its Mining Fiscal Regime,” NRGI, 24 June 2020,….
  • 6
    This framework agreement was published in a document setting out Barrick’s offer to buy the shares it did not already own in Acacia Mining, the previous owner of the Bulyanhulu, Buzwagi and North Mara mines in Tanzania. See Acacia Mining and Barrick Gold, Recommended Final Offer for Acacia Mining Plc by Barrick Gold Corporation, 2019, 66–79,
  • 7
    The main revenue streams are import duty, skills development levy, royalty, corporate income tax, a share of dividends and shareholder loan repayments through state equity, and dividend withholding tax.
  • 8
    The earlier in time a shilling (Tanzania’s official currency unit) is received, the more it is worth. This is, first, because it can be used earlier; and second, because the future is uncertain, and no one can be sure they will receive that shilling in the future. To account for this time value of money, a “discount rate” is applied. In the sharing arrangement, this would mean that if the government received a shilling in year 1, the company would need to receive more than a shilling in year 2 for the benefits to be comparable. However, given cumulation here is based on actual cash flow, the company would need to receive only a shilling in year 2 for the benefits to be shared equally.
  • 9
    This provision for the company to earn its minimum return before sharing is triggered means Ecuador’s mechanism is similar to an R-based cash flow tax, commonly referred to as a Brown Tax. See, e.g., Robin Broadway and Michael Keen, “Theoretical perspectives on resource tax design,” in The Taxation of Petroleum and Minerals: Principles, Problems and Practice, edited by Philip Daniel, Michael Keen and Charles McPherson (Oxford: Routledge, 2010), 13–74.
  • 10
    Prices are taken from World Bank, “Commodities Price Data (The Pink Sheet),”
  • 11
    With a gold price of $1,600 per ounce.
  • 12
    With a gold price of $1,600 per ounce.
  • 13
    With a gold price of $1,600 per ounce.
  • 14
    The Fraser Institute survey estimates that, unless there are extremely harmful policies, around 60 percent of an investment decision tends to be based on a country’s geology. The other 40 percent comprises of several other factors, including political stability and policy predictability (given they affect the risk that investors will not be able to secure future returns generated by their investments), a conducive business environment and the tax level. See Julio Mejia and Elmira Aliakbari, Fraser Institute Annual Survey of Mining Companies 2022, (Fraser Institute, 2023), 8,
  • 15
    However, information gaps make it difficult for taxes to be structured to capture all excess profit. See Jean-Franҫois Wen, Progressive Taxation of Extractive Resources as Second-Best Optimal Policy (International Monetary Fund, 2018),….
  • 16
    Recent research provides a sense of the potential revenue loss to governments from tax avoidance. The International Monetary Fund recently estimated that sub-Saharan African mining countries could be losing between $450 and $730 million in corporate income tax a year. See Sebastian Beer and Dan Devlin, Is There Money on the Table? Evidence on the Magnitude of Profit Shifting in the Extractive Industries (International Monetary Fund, 2021),….
  • 17
    It is perhaps surprising that Tanzania’s 50-50 sharing arrangement generates an AETR greater than 50 percent (with a discount rate of 10 percent). This is despite AETR measuring government take as the share of pre-tax profits, which is larger than “economic benefits” (given economic benefits exclude interest payments). This outcome results from the 50-50 split being based on actual cash flow. The government receives revenue before the mining company through input and production taxes that do not depend on the mine making a profit. Because of these earlier revenues, the government receives a larger share on a discounted basis.
  • 18
    As reported in the S&P Global database. Legal risks are “expropriation, state contract alteration and contract enforcement risks.” Tax risks are “tax increase and tax inconsistency risks.” Control Risks scores these risks as still “very high” and “high” respectively (following Tanzania’s overhaul of extractives sector laws and other actions against existing mines in 2017) but reducing.
  • 19
    With a discount rate of 10 percent. While Ecuador’s sharing mechanism does not account for the labor profit share because none of it will go to the government from 2024 onwards, I have included it in the AETR because it is a tax on the project. The Democratic Republic of Congo regime has an excess profits tax that is triggered for a mine when the realized price is at least 25 percent higher than the price in its feasibility study. I assumed that the feasibility study has a price of $1,300 per ounce, so the excess profits tax is not triggered.   
  • 20
    Total benefits in this case are a project’s revenues minus operating costs and replacement capital (but not minus exploration and development capital). This cash flow represents the money available to pay back the initial investment and provide a return. The government share of it is a common measure of progressivity.
  • 21
    Wen, Progressive Taxation of Extractive Resources as Second-Best Optimal Policy.
  • 22
    With a discount rate of 10 percent. The results for only some countries are shown to clearly depict each data point. The results for all the evaluated countries can be found in my model. 
  • 23
    Scurfield, “Tanzania Strikes a Better Balance with its Mining Fiscal Regime.”
  • 24
    This feature is not fully reflected in Figure 5 given that “total benefits” use a slightly different definition of profits and are based on discounted cash flows.
  • 25
    With a gold price of $1,600 per ounce.
  • 26
    For example, an average 62 percent of respondents to the Fraser Institute surveys between 2017 and 2019 said the current implementation of Tanzania’s legal system would strongly discourage investment, and 73 percent said regulatory uncertainty would. See, e.g., Ashley Stedman, Jairo Yunis and Elmira Aliakbari, Fraser Institute Annual Survey of Mining Companies 2019 (Fraser Institute, 2020),
  • 27
    With a low-profit mine and a gold price of $1,600 per ounce.
  • 28
    Tax avoidance could extend the Philippines’ recovery period, and therefore delay the payment of some taxes including import duty and interest withholding tax, given the end of the recovery period depends on the reported profitability of a mine rather than an ex-ante assessment. However, the rule that the recovery period must end five years from the start of production regardless of whether pre-production expenses have been recouped limits the extent to which it can be extended.
  • 29
    The merits of these measures require further scrutiny. E.g., taking a share of loan repayments could result in lenders charging a higher interest rate to ensure they still recoup their loan and a minimum return. This would not only reduce taxable income but also make it harder for the government to assess whether an interest rate is reasonable, because it would not be comparable with industry benchmarks. It can also be difficult for a government to always determine whether a loan is from a related party or not. However, these considerations are outside the scope of this analysis.
  • 30
    Natural Resource Governance Institute (NRGI), Natural Resource Charter, 2nd edition, 2014,
  • 31
    Although its exclusion of several significant taxes from the government’s share of benefits means low-profit mines may still be impacted.
  • 32
    With a gold price of $1,600 per ounce.
  • 33
    Anna Fleming, Thomas Lassourd and David Manley, “Variable Royalties: an Answer to Volatile Mineral Prices?” in Handbook on the Future of Resource Taxation, African Tax Administration Forum and Intergovernmental Forum on Mining, Minerals, Metals and Sustainable Development (forthcoming),
  • 34
    Ensuring that interest rates used as a comparison apply to comparable assets with a similar risk profile is challenging, but rules of this nature have been successful in reducing profit shifting in other countries. See Beer and Devlin, Is There Money on the Table?.
  • 35
    The main taxes listed are VAT, royalty and corporate income tax. The regime also includes a share of pre-tax profits that is currently divided between the company’s workers and the government, with the portion received by the government included in its accumulated benefits. However, a recent court ruling means that all this labor profit share will go to workers from the start of 2024 and therefore none of it will be included in government benefits.
  • 36
    The discount rate used is specific to each mine and based on its weighted average cost of capital (WACC). I have assumed that WACC is around 7 percent in real terms. This is based on the typical discount rate for equity shareholders used by industry and government analysts of 8 percent in real terms, and the current average cost of debt for the mining sector as reported by Aswath Damodaran, Damodaran Online,
  • 37
    Republic of the Philippines, Financial or Technical Assistance Agreement,
  • 38
    For example, some terms in the original FTAA for an OceanaGold mine differed in some areas: Republic of the Philippines, Financial or Technical Assistance Agreement with Arimco Mining Corporation, 1994, I understand that the recently signed extension to this agreement has slightly different terms again.
  • 39
    A template of the FARI model and a user guide that explains all the concepts and workings of the model are available at International Monetary Fund, “Fiscal Analysis of Resource Industries,”


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