Canadian multinational enterprises (MNEs) with global mining operations, especially in developing countries, may be interested in a recent public consultation document on determining the price of minerals published by the Organization for Economic Co-operation and Development (OECD) and the Intergovernmental Forum on Mining, Minerals, Metals and Sustainable Development (IGF). The document describes material transfer pricing risks within each stage of the mining value chain, provides a framework for valuing the sale of minerals to related parties within a MNE group as well as reviews administrative approaches and alternative policy options that resource rich countries have adopted for pricing the sale of commodities. Stakeholders are invited to submit comments on the public consultation document to the OECD by July 14, 2023.

The OECD advises that the framework provided in the consultation document is intended to support developing countries address the base-erosion and profit-shifting (BEPS) risk that can be posed by the cross-border sale and purchase of mineral products between related parties. The public consultation document does a deeper dive into:

  • Identifying key intercompany transactions in the mining value chain which MNEs should look out for (exploration, development, production processing, etc.)
  • Outlining a mineral specific comparability analysis for applying the comparable uncontrolled price (CUP) method to value the sale of commodities to related entities, and
  • Identifying administrative approaches and alternative policy options that have been implemented by resource rich countries with respect to pricing minerals.

For more information, contact your KPMG adviser.

Information is current to May 29, 2023. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500

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