Many Ways to Lose a Billion: Extractive Sector Revenue Loss in Africa
Resource rich countries often fail to secure a fair share of their natural resource wealth. In 'Many Ways to Lose a Billion', Don Hubert sets out a revenue risk assessment framework, and an extensive collection of real-world case studies designed to help resource-rich countries stop tax avoidance.
Governments often offer significant tax breaks during contract negotiations without understanding their revenue implications. Once contracts have been agreed, companies seek to improve those terms by engaging in “treaty shopping.”
President and founder of Resources for Development Consluting, Don Hubert, visits NUPI for this event, coordinated by the TaxCapDev Network.
Even with good terms, governments fail to secure reasonable revenues. Companies can under-report the quantity and quality of the commodity produced, and sell to affiliated companies at below market value. Companies can also over-report project costs by claiming ineligible costs and by inflating the costs of goods and services provided by an affiliated company.
There are many pathways to government revenue loss, but there are clear patterns. Governments can protect their revenue interests by adapting a revenue risks assessment to the country legislation, the specific commodity, the company and its structure of subsidiaries and affiliates, and potential loopholes in the contract.
The presentation will focus on cases of revenue loss from Africa, and on the efficacy of strategies to help countries secure a fair share of their natural resource wealth.
The report can be accessed here.
Don Hubert is the President of Resources for Development Consulting, a policy research firm that helps citizens in resource-rich developing countries secure a fair share of natural resource wealth. His work focuses on analyzing EI contracts and fiscal regimes, modeling government revenues, assessing vulnerability to company tax avoidance and identifying risks of corruption. He has conducted economic analyses of extractive sector projects in Belize, Cambodia, Chad, Kenya, Malawi, Mozambique, Tanzania, Uganda and Zimbabwe. He was previously a Canadian diplomat and university professor. He holds a PhD from the University of Cambridge, UK.
Chair is NUPI researcher Morten Bøås.