Fiscal Regimes for Natural Resources
- Lead PI:
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Unit Affiliation: Columbia Center on Sustainable Investment (CCSI)
- Unknown start date - Ongoing
- Active
- Project Type: Research
DESCRIPTION: Financial revenues are one of the most important benefits a country receives for the extraction of its non-renewable natural resources. A deal that is equitable for both the country and the investor will be more durable than one that is too generous to either side. Knowing what constitutes a fair deal is, however, an enormously difficult task, and even once the terms are agreed upon, designing a fiscal regime that will achieve the anticipated sharing of benefits over a long-term, volatile and inherently unpredictable investment lifecycle is immensely complex. CCSI is researching several aspects of designing and implementing a fiscal regime in an attempt to find legal and fiscal elements that can help avoid unanticipated consequences or disputes between the investor and the government over the course of the investment.
OUTCOMES: Fiscal Reforms
Monitoring fiscal reforms in extractive industries is an ongoing part of CCSI’s research. CCSI completed a study of select fiscal reforms in the mineral and hydrocarbon sectors in both developed and developing countries, evaluating the impact of reforms on a country’s attractiveness for investment in the resource sectors (published in the Yearbook on International Investment Law & Policy 2011-2012).
CCSI has compiled a database of all fiscal reforms since the 1990′s until 2013, for all oil-rich countries with legislated fiscal terms or model contracts, identifying whether the fiscal reforms led to the introduction of progressive fiscal instruments. CCSI welcomes any comments on this database, and in particular, those highlighting inaccuracies.
Periodic Reviews
CCSI is also studying whether particular mechanisms like progressive taxation regimes or periodic review would reduce conflict, help manage inherent risks and fluctuations in the sector, or reduce the overall need for fiscal reforms.
In addition, CCSI is examining what constraints governments have under international law to modify their legal and fiscal regimes and tax policies, and what steps governments can and have taken to protect their policy flexibility in this area.
The overall objective is to equip governments with a better understanding of the policy tools available to them when it comes to extractive industry fiscal regimes.
Fiscal Models
Designing and monitoring a fiscal regime that is fair and balanced for both the country and the investor requires a fiscal model. To encourage the use of fiscal models, CCSI released 2 open models: a gas-LNG model and a benchmarking model for gold mining fiscal regimes.