Determining the Price of Minerals: A transfer pricing framework for bauxite
This mineral pricing schedule complements the practice note above and shows how the framework can be applied to bauxite.
In the mining sector, royalties and corporate income taxes are generally based on the value of the mineral transacted. Consequently, it is critically important that any transactions involving the purchase and sale of minerals are valued correctly. Due to the frequency and scale of related-party transactions, the potential risk to tax revenues posed by transfer pricing non-compliance can be high, particularly around the value of the extracted minerals.
Determining the Price of Minerals: A Transfer Pricing Framework is a practice note providing practical and meaningful guidance for developing countries to accurately delineate the transaction and price of mineral sales to support revenue collection in the mining sector.
To complement this practice note, we have published applications of this framework to specific minerals. Bauxite and lithium are available below, with additional minerals to be published over time.
This mineral pricing schedule complements the practice note above and shows how the framework can be applied to bauxite.
The IGF and OECD have released a draft document of the mineral pricing framework for lithium and are seeking public comment to inform the final publication. Interested parties are invited to send their comments no later than February 2, 2024 by e-mail to Tax@IGFmining.org in Word format (in order to facilitate their distribution to government officials). All email messages should reference “lithium consultation” in the subject line.