Consultant: Ring-Fencing Mining : toolkit tax administrators and pol

The International Institute for Sustainable Development is a globally recognized think tank with more than 30 years of experience working to solve today's greatest sustainable development challenges. We combine deep expertise across critical policy areas with a collaborative approach to research, advice, and hands‑on support that delivers real‑world results.

Headquartered in Winnipeg, Manitoba, we are a diverse team of over 300 experts working from offices in Canada and Switzerland as well as other locations around the world.

IISD hosts the Secretariat of the Intergovernmental Forum on Mining, Minerals, Metals and Sustainable Development (IGF).

The IGF's Global Mining Tax Initiative (GMTI) helps countries to increase mining revenues for sustainable development.

Drawing on broad experience working with IGF member governments, the Secretariat offers this specialized and comprehensive program covering fiscal policy for the entire mining value chain, from exploration and development to mining, processing, mineral sales, and mine closure.

The GMTI focuses on all aspects of fiscal policy, including taxes, royalties, and financial modelling, and has developed particular expertise on the fiscal treatment of mineral beneficiation and downstream processing.

In 2025, the Organisation for Economic Co‑operation and Development and the IGF jointly published Ring‑Fencing Mining Income: A Toolkit for Tax Administrators and Policy‑Makers, a comprehensive practice note on when and how governments should limit the consolidation of income and expenditure across mining projects and activities.

The toolkit addresses the treatment of integrated operations in several places, notably its discussion of ring‑fencing by shared processing facility, ring‑fencing of upstream versus downstream activities, and its recommendation that transfer pricing rules extend to internal dealings within a single ring‑fenced entity.

The toolkit's treatment of integration is oriented toward the design of the ring‑fencing rule itself: where the statutory boundary should sit when a mine feeds a processor, and how to prevent profit‑shifting across that boundary once drawn.

There is a separate but distinct question to consider, namely how ring‑fencing rules interact with the value‑addition (beneficiation) tax and non‑tax incentives that many of the same governments offer to draw investment into downstream processing.

Specifically, this would include such incentives as tax holidays, accelerated depreciation, royalty rate differentials for refined versus unrefined product, and preferential processing licences.

Where such incentives sit on one side of a ring‑fence and the extraction activity sits on the other, the incentive may fail to achieve its stated purpose (because start‑up losses in the incentivized processing segment cannot offset profits in the ring‑fenced mining segment), or it may create the very transfer‑pricing and rate‑arbitrage risks the toolkit is designed to guard against.

The Challenge Tax policy‑makers and administrators currently have authoritative guidance on ring‑fencing design (the 2025 toolkit), and there is separate literature on mineral beneficiation incentives (such as from the International Monetary Fund, World Bank, International Council on Mining and Metals tax expenditure work), but there is no practice note that puts the two together: a framework for how a value‑addition incentive should be designed, and where the ring‑fence should sit, when the two instruments apply to the same integrated project.

This gap matters because the interaction is not merely theoretical. It shows up directly in country practice already surveyed by the toolkit and by the IGF's own country work: a differentiated…