The workshop on Mining Taxation: "Transforming Wealth into Sustainable Development", jointly organised by the European Commission and the African Union Commission in cooperation with UNECA, was held on 9-10 December 2011 in Addis Ababa. It brought together experts from both the public and private sector and resulted in a set of concrete proposals that were presented to senior experts at the second AU Conference of Ministers responsible for Mineral Resources held on 12-16 December. The recommendations made, notably regarding effective regulation in extractive industries and capacity building in the domain of domestic resource mobilization through better transparency and improved taxation regimes, should strengthen the implementation of the Africa Mining Vision.

The workshop discussed the relationship between natural resources, taxation and development, as well as the political economy of extractive industries. The workshop addressed a variety of concrete topics, such as licensing and contract negotiations, fundamentals for effective extractive industries and taxation regimes (such as royalties, corporate income taxation and production sharing), strategies for effective implementation and control (such as the auditing of multinational corporations and transfer pricing), and the creation of incentives for sustainable mining.

The workshop concluded that African countries had to adopt visions for their mining sectors that should be aligned with the AU Mining Vision. These visions should guide the establishment of effective taxation regimes. The workshop also asserted that the right balance must be struck between augmenting domestic revenue collection and attracting and retaining investors. Participants agreed that African countries should observe the principles transparency, exchange of information and fair tax competition, and focus on capacity building in relation to domestic resource mobilization in the extractive industries - particularly in the domain of tax administration. Moreover, donor support should be coordinated to harmonize all capacity building efforts.

In particular, European and African countries, in tandem with their civil societies, should take into consideration global transparency initiatives and mainstream them into the African Peer Review Mechanism (APRM) so as to prevent corruption and boost transparency in revenue collection and tax administration. African and European countries were also encouraged to capitalize on linkages between mineral resource extraction, infrastructure building and related sectors to promote industrial development. Both continents should work together to implement country-by-country reporting provisions - which are underway in the EU and the US respectively - and push for this to be globally adhered to. This would encourage transparency in payments from multinational corporations to governments and warrant a fair playing field for all corporations and countries concerned.

With regard to the Joint Africa-EU Strategy, the workshop encouraged European and African countries to intensify cooperation in the mining sector, and to build on the achievements of the Democratic Governance and Human Rights partnership in this area, notably those of the Working Group on the Governance of Natural Resources.

The recommendations of the workshop were presented to senior experts from African countries that were participating at the Second AU Conference of Ministers Responsible for Natural Resources. By being comprehensively addressed at the AU Ministerial Conference by all principal actors and a range of development partners, the recommendations of the mining taxation workshop will contribute to mainstream the Africa Mining Vision in African national mining strategies and to better regulate African extractive industries.

• Conference presentation and related documents on African Union's website
• Conference presentation on "Africa's Mining Vision" portal
• UNECA press release
• Africa Mining Vision portal

Background

Adopted at the third Africa-EU Summit in November 2010, the Action Plan 2011-2013 of the Partnership on Regional Integration, Trade and Infrastructure identifies raw materials as a priority for Africa-EU cooperation. Capacity building, governance, infrastructure and investment, geological knowledge and skills, as well as transparency of mining contracts are key areas for joint action. The Joint Strategy stresses the need to achieve a coherent vision on development, mining and raw materials, building on Africa's own Mining Vision and the EU's Raw Materials Initiative.

In addition, the Africa-EU partnership on Democratic Governance and Human Rights has set up an AU-EU Working Group on the Governance of Natural Resources to discuss ways for Africa and the EU to intensify collaboration and ensure a better management of natural resources. First discussions within this Working Group focused on financial transparency, capacity building for actors involved in the exploitation of natural resources and the need for a solid institutional framework and resulted in a package of recommendations to be presented at the Africa-EU High Level Conference on Raw Materials in early 2012.

These achievements supplement a number of European Commission initiatives addressing related issues, such as the recent legislative proposals for the Transparency and Accounting Directives, requiring the disclosure of payments to governments on a country and project basis by corporations active in the extractive industries in Africa. Another initiative is the European Commission’s introduction of measures to support entrepreneurship and responsible business, including the CSR communication.