ICTD Working Paper 35

Unitary Taxation in the Extractive Industry Sector

Published on 1 May 2015

This paper analyses whether a global unitary taxation approach to corporate income tax (CIT) can improve the ability of governments to design and administer efficient and effective tax and royalty policies for the extractive industries. Drawing upon experience with unitary approaches to corporate income taxation of the extractive sectors in subnational taxation systems of the United States (US) and Canada, this paper suggests that a unitary CIT should not be used in isolation, or be employed as the dominant source of revenue from the extractive sector. Instead, because of its informational and risk-aligning advantages, a unitary CIT may be best used in combination with other rent/profit-related levies on the extractive sector. At the same time the rent/profit-related levies may be assessed on a more limited base, such as source jurisdiction, in order to alleviate source entitlement concerns. Within this context a unitary CIT is recommended, because it enables more effective design and administration of all taxes in the extractive industries sector.

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  • ICTD_WP35.pdf
  • Authors

    Sol Picciotto

    ICTD Senior Fellow

    Publication details

    published by
    ICTD and IDS
    Dayle Siu, E., Picciotto, S., Mintz, J. and Sawyerr, A.
    ICTD Working Paper, issue 35


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