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Designing a Legal Regime to Capture Capital Gains Tax on Indirect Transfers of Mineral and Petroleum Rights: A Practical Guide


Columbia Center on Sustainable Investment, International Senior Lawyers Project

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Columbia Center on Sustainable Investment, International Senior Lawyers Project

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Negotiation stage:

1. Legal & Policy Framework


Extractive Industries

Long description:

Building on the momentum created by the Platform for Collaboration on Tax’s draft paper regarding taxing indirect transfers of source country assets, CCSI and the International Senior Lawyers Project (ISLP) developed a practical guide for developing country governments on the taxation of indirect transfers of extractive industries’ assets.  Indirect transfers occur when—instead of selling the asset—the shares of the domestic subsidiary, the shares of the foreign company with a branch in the country, or the shares of the holding company are sold.  In these cases, the right to capital gain attributable to the underlying situation in the host country is more likely to escape taxation by the host country on the transfer, unless domestic law has special provisions to capture the gains made through such an indirect transfer.  

This document provides practical guidance to address the taxation of indirect transfers of assets of extractive industries that are located in developing countries. It focuses on issues that developing country governments may wish to consider if they adopt a policy to tax such transfers. In doing so, it examines 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. 


Africa Asia North & South America Europe Australia

Roadmap references:

Reform and Revise the Legislative and Regulatory Frameworks Setting the Legal and Policy Framework Government Policies and Strategies: Assess, Formulate and Reform


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