On 25 March 2025 the Subcommittee on the Extractive Industries taxation presented to the UN Tax Committee a draft supplement to Chapter 5 (tax incentives) of the UN Handbook on Selected Issues for Taxation of the Extractive Industries; draft guidance on the Valuation of Mining Products for Tax Purposes; and draft guidance on the Energy Transition in the Extractive Industries.

The supplement to the chapter on tax incentives, which will be inserted as an Annex to the chapter on incentives, considers the interaction between the global minimum tax rules and incentives in the extractive industries, examining how the incentives can remain effective without causing unintended consequences. As extractive projects involve high initial expenditure, a special regime or incentives will often be available to companies in the extractive industries to encourage investment by reducing the high costs and project-related risks. The tax incentives often include measures such as longer loss carry forward rules; accelerated depreciation rules; preferential treatment of long-term capital gains; incentives that encourage local procurement; and sometimes reduced corporate income tax rates or tax holidays. Profit-based tax incentives may be impacted by the Pillar 2 GloBE rules, as they could lower a company’s effective tax rate (ETR) below the minimum level and trigger top-up tax. A review of incentives may therefore be necessary in many countries.

The report on mineral product valuation presented to the Tax Committee for approval was further updated following the previous session of the Committee through consultation with the subcommittee on transfer pricing. The report outlines the significance of accurate product valuation in preventing profit shifting in the extractives sector, examining the available assessment techniques for tax administrations and explaining the practical challenges. The report notes that there are two primary means for the tax administration to look at the possibility of undervaluation of the extracted product. The tax administration could attempt a direct valuation of the products transferred to a marketing hub in related-party sales; or it could examine whether the marketing hub retained profits that exceed the level of profit appropriate to the hub’s functions, assets and risks. Other methods of dealing with difficulties in valuation include administrative pricing; or the use of advance pricing agreements which would apply pricing methods agreed by the government and taxpayer in advance of the transactions.

The paper on the energy transition presented to the Tax Committee for approval examines the interaction of tax policy and the energy transition, focusing on energy production. The paper outlines various approaches to the energy transition, setting out tax policies to increase clean energy investment in developing countries and emphasising the important role of tax administrations at national and subnational levels.