12/08/2024 – OECD and IGF have joined forces to support developing countries with practical guidance when addressing the transfer pricing challenges faced when pricing lithium—a critical mineral in the global energy transition. This practice note identifies the primary economic factors that can influence the pricing of lithium using transfer pricing principles, building on the transfer pricing framework in Determining the Price of Minerals: A transfer pricing framework. The practice note provides practical guidance for countries to accurately delineate the transaction and price lithium exports on an arm’s length basis. Interested parties were invited to provide comments on a preliminary version of the practice note during a public consultation process. The OECD and IGF appreciate all the feedback received.
Background
For many resource-rich developing countries, mineral resources present a significant economic opportunity to increase government revenue. Tax base erosion and profit shifting (BEPS), combined with gaps in the capabilities of tax authorities in developing countries, threaten this prospect. Government revenue depends on mineral products being priced and measured accurately. However, pricing is not always straightforward. It may be complicated by the different stages of mineral beneficiation, the lack of publicly quoted prices for certain minerals, and adjustments based on the quality or grade of the product. Many governments worry they do not know the value of their exported minerals and are therefore losing much-needed revenue.
The OECD’s Centre for Tax Policy and Administration (CTPA) is collaborating with the Intergovernmental Forum on Mining, Minerals, Metals and Sustainable Development (IGF) to address some of the challenges developing countries face in raising revenue from their mining sectors. Under this partnership, a series of practice notes and tools are being developed for governments.
The IGF and OECD CTPA have formed a partnership, combining the IGF’s mining expertise with the OECD’s knowledge of taxation to design sector-specific guidance on some of the most pressing BEPS challenges facing resource-rich developing countries. This work is published under the responsibility of IISD (the IGF’s host organisation) and of the Secretary-General of the OECD. The opinions expressed and arguments employed herein do not necessarily reflect the official views of the Member countries of the OECD and the IGF.
More information
Further information on the work of both organisations is available at:
