Mining Taxation: An Application to Mali

24 Pages Posted: 3 Jun 2010

See all articles by Saji Thomas

Saji Thomas

International Monetary Fund (IMF)

Date Written: May 2010

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: Economic models, Fiscal policy, Gold, Mali, Mining sector, Natural resources, Tax administration, Taxation

Suggested Citation

Thomas, Saji, Mining Taxation: An Application to Mali (May 2010). IMF Working Paper No. 10/126, Available at SSRN: https://ssrn.com/abstract=1617025

Saji Thomas (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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