World Bank 2011. ANP, Gobetti et al. 2012. Source: Source: These features of natural resource revenues need to be considered when assessing the potential benefits and costs of the various intergovernmental fiscal arrangements. Revenue Sharing Instruments Countries generally use a mix fiscal and nonfiscal instruments to mobilize revenues from extractive industries, each with its own benefits and disadvantages along economic, administrative, and revenue-enhancing dimensions. Nonfiscal alternatives include auctioning exploration and extraction rights, production sharing, and equity participation. Fiscal instruments comprise royalty (specific and ad valorem), corporate income tax, presumptive income tax, resource rent tax, and property tax, as well as other taxes such as value added tax, and import and export duties (Otto and Andrews 2006, Sunley et al. 2003). In turn, petroleum and mineral revenues can be shared vertically across levels of government using a variety of arrangements, which are summarized in Table 1. Nonfiscal options imply sharing part of the resources and revenues received as part of production sharing agreements or equity participation. They can also include in-kind revenue such as capital assets received as part of resource-for-infrastructure deals (Foster 2009). Fiscal arrangements range from separation of tax bases to intergovernmental transfers (Broscio 2006). Table 1: Instruments for sharing rents from natural resources Method Separation of Tax Concurrence of Sharing of Sharing of Intergovernmental Bases (own-source Taxes (sharing of Revenue Revenue In-Kind Transfers out of taxes) tax bases) Revenue from Natural Resources Determination Subnational National National Mostly National National of the tax base Determination Subnational Subnational National Mostly national National of the tax rates (within limits) Administration Subnational Mostly national National By the producing Mostly national firm Criterion for Origin Origin Origin Origin Need, equity, or beneficiary other jurisdiction Brosio 2006, p. 441. Source:
Source: World Bank 2011. Source: ANP, Gobetti et al. 2012. These features of natural resource revenues need to be considered when assessing the potential benefits and costs of the various intergovernmental fiscal arrangements. Revenue Sharing Instruments Countries generally use a mix fiscal and nonfiscal instruments to mobilize revenues from extractive industries, each with its own benefits and disadvantages along economic, administrative, and revenue-enhancing dimensions. Nonfiscal alternatives include auctioning exploration and extraction rights, production sharing, and equity participation. Fiscal instruments comprise royalty (specific and ad valorem), corporate income tax, presumptive income tax, resource rent tax, and property tax, as well as other taxes such as value added tax, and import and export duties (Otto and Andrews 2006, Sunley et al. 2003). In turn, petroleum and mineral revenues can be shared vertically across levels of government using a variety of arrangements, which are summarized in Table 1. Nonfiscal options imply sharing part of the resources and revenues received as part of production sharing agreements or equity participation. They can also include in-kind revenue such as capital assets received as part of resource-for-infrastructure deals (Foster 2009). Fiscal arrangements range from separation of tax bases to intergovernmental transfers (Broscio 2006). Table 1: Instruments for sharing rents from natural resources Method Separation of Tax Bases (own-source taxes) Concurrence of Taxes (sharing of tax bases) Sharing of Revenue Sharing of Revenue In-Kind Intergovernmental Transfers out of Revenue from Natural Resources Determination of the tax base Subnational National National Mostly National National Determination of the tax rates Subnational Subnational (within limits) National Mostly national National Administration Subnational Mostly national National By the producing firm Mostly national Criterion for beneficiary jurisdiction Origin Origin Origin Origin Need, equity, or other Source: Brosio 2006, p. 441.