Mining Taxation: An Application to Mali

Saji Thomas

No 2010/126, IMF Working Papers from International Monetary Fund

Abstract: Mali’s gold sector is an enclave with weak forward and backward linkages with the rest of the economy. Given the predominance of the fiscal transmission channel, it is important that the design of the mineral tax regime gives the state a fair share of the benefits. Using optimal control theory, this paper estimates that the optimal royalty tax in Mali is about 3.5 percent. By reducing the royalty rate from 6 percent to 3 percent, Mali’s mining code broadly ensures that the risk is shared between the state and mining companies, provides sufficient incentives to attract new exploration, and is comparable to the fiscal regimes in other sub-Saharan African countries in its mix of tax instruments and tax structure.

Keywords: WP; tax rate; Gold; Mining; Taxation; Mali; extraction plan; mining firm; profit tax; extractive firm; after-tax earnings; Mining sector; Non-renewable resources; Oil; gas and mining taxes; Royalty tax; Sub-Saharan Africa (search for similar items in EconPapers)
Pages: 23
Date: 2010-05-01
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Citations: View citations in EconPapers (11)

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