Fiscal Regimes

1. Introduction

The fiscal regime determines what share of the revenues from extractive industry projects accrues to investors and governments. Establishing a sound fiscal regime for mining and petroleum industries is a vital step towards both attracting investors, and ensuring that the government receives revenues from the sector.

Alongside the revenues shared between government and investors, there is also significant spending which could potentially benefit local economies such as procuring local products and services and providing local employees. Design of the fiscal regime should therefore be integrated into broader strategic decisions regarding management of the sector and the national economy.

In the following chapters this topic overview discusses the main policy issues governments need to take into account and reviews the key policy instruments available.

Figure illustrating typical distribution of economic benefits from extractive projects. It shows that government revenues generally account for a minority of the spending. Source: Bill and Melinda Gates Foundation, 2015, Delivering on the promise: Leveraging natural resources to accelerate human development in Africa, p. 32.