sharing in governance of extractive industries
Do you remember that story happening in early May 2016:
The miner Freeport McMoRan sold its 56% controlling stake in the Tenke Fungurume copper mine - one of the biggest mining projects in the DRC - to China Molybdenum Inc. (CMOC) for $2.65 billion. The DRC received nothing from this deal. Indeed, the DRC did not even know it was happening, despite owning a 20% equity stake in the project. This is because Freeport did not directly sell the Tenke Fungurume copper mine. Freeport sold its 70 % interest in TF Holdings Limited, a Bermuda holding company that owned an 80 % interest in Tenke Fungurume Mining SA, the company owning the mine. As a result, Freeport only owned its 56 % interest in Tenke Fungurume Mining SA and in the copper mine “indirectly”. It is the indirect stake that CMOC acquired. Thus, the acquisition of DRC mining rights was done in a jurisdiction outside of the DRC.
At CCSI and ISLP we decided to develop practical guidance for countries that would decide to tax capital gains arising from indirect transfer of the underlying assets situated in host countries.
We focus on all the issues that the governments of developing countries may wish to consider if they adopt a policy to tax such transfers. In doing so, we examine and provide the language of the legislative and regulatory provisions employed by countries that have adopted such a policy to tax, and comments on the pros and cons of these provisions. We also consider the impact of bilateral tax treaties on this issue.
The paper is available here: http://ccsi.columbia.edu/files/2017/10/Designing-a-legal-regime-to-...
We look forward to feedback!
Add a Comment