{"id":274690,"date":"2023-09-08T11:00:00","date_gmt":"2023-09-08T09:00:00","guid":{"rendered":"https:\/\/blog.jusmundi.com\/?p=274690"},"modified":"2023-08-28T11:06:02","modified_gmt":"2023-08-28T09:06:02","slug":"mining-projects-and-tax-disputes","status":"publish","type":"post","link":"https:\/\/dailyjus.com\/index.php\/2023\/09\/08\/mining-projects-and-tax-disputes\/","title":{"rendered":"Mining Projects and Tax Disputes"},"content":{"rendered":"\n

What Remedies Can Be Achieved Through International Arbitration?<\/h1>\n\n\n\n
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This article was featured in our 2023 Mining Arbitration Report, which is part of a series of industry-focused arbitration reports<\/strong><\/a> edited by Jus Mundi<\/strong><\/a> and Jus Connect<\/a>.<\/strong> <\/p>\n\n\n\n

This issue explores the mining industry and presents a goldmine of information based on data available on Jus Mundi<\/a> and Jus Connect <\/a>as of February 2023<\/strong>. Discover updated insights into mining arbitration and exclusive statistics & rankings, as well as in-depth global and regional perspectives on mining projects, disputes, & arbitration from leading lawyers, arbitrators, experts, and in-house counsel. <\/p>\n\n\n\n

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Download it now<\/a><\/div>\n<\/div>\n<\/blockquote>\n\n\n\n
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THE AUTHORS:<\/strong>
Baptiste Rigaudeau<\/a><\/strong>, Associate at Lalive<\/a>
Emilie McConaughey<\/a><\/strong>, Associate at Lalive<\/a><\/p>\n\n\n\n

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International arbitration is a go-to means used by investors to challenge tax measures implemented in breach of contracts and licenses, as well as of international investment agreements (IIAs). Such measures<\/a> may include tax reforms, abusive adjustments, unreasonable or discriminatory audits, etc.<\/p>\n\n\n\n

The mining sector is not immune to these types of measures. In fact, the nature and scope of mining projects, the size and timing of required investments, and the stakes for the budgets of mineral-rich States, make it a regular target for tax authorities. Recently, some States have, for example, sought to address the general minerals price downturn by increasing contributions to State budgets arising out of mining projects [1].<\/a> An increased rate of tax audits and adjustments has also allowed States to recover a larger share of the revenues generated by mining operations. However, tax measures can often jeopardize, or even destroy, mining investments by affecting their profitability or operability.<\/p>\n\n\n\n

International arbitration proceedings involving tax measures and mining projects are therefore on the rise. This short overview seeks to map out their salient features and the remedies available to mining operators.<\/p>\n\n\n\n

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Resolving Tax Disputes Under Mining Contracts<\/strong><\/h2>\n\n\n\n

Mining contracts or conventions can take different forms, depending on the type of operators involved, the region where the project is implemented and its advancement stage. Tax authorities often get involved with mining projects at the exploitation stage, once resources and reserves have been confirmed and mining is bound to start or has started. Tax authorities are also involved throughout the commercialization of the extracted resources, by collecting taxes on the resulting revenues.<\/p>\n\n\n\n

As multi-faceted as mining projects can be, so are mining contracts. The contracting parties are generally the entity owning the resources (usually the State) and the entity looking to exploit them, most often a local entity in which the State holds an interest, often together with a foreign partner.<\/p>\n\n\n\n

These contracts generally ratify the conditions expressed in the relevant permits or authorizations issued for the exploration and exploitation. They also address the economic, legal, administrative, financial, tax, customs, mining, environmental and social conditions for the exploration or exploitation.<\/p>\n\n\n\n

In relation to taxes specifically, mining contracts usually provide for the tax regime applicable to the operation, in accordance with local legislation. They may provide for specific tax rates, breaks, exemptions, or credits (e.g.,<\/em> VAT credits). They may also include specific tax stabilization clauses, which provide that no subsequent legislative or regulatory changes may adversely impact the tax regime applicable at the time of the contract\u2019s signing. Instead of tax specific stabilization clauses, mining contracts may also include general stabilization clauses, which cover all issues considered by the contract.<\/p>\n\n\n\n

Other key features may include:<\/p>\n\n\n\n