Fiscal Affairs Department
This technical note addresses the following questions:
- What are the context and main features of natural resource (NR) tax administration?
- What are the special challenges for NR tax administration?
- How should a tax administration organize itself to manage NR taxation?
- What key procedures should be in place to ensure effective NR tax administration?
- What specific capacity concerns should be addressed?
- How can transparency be improved in NR tax administration?
Many developing countries have significant natural resource endowments, presenting a remarkable opportunity to boost long-term growth. However, this opportunity comes with enormous challenges. To maximize social and economic benefits, strong governance and institutional capacity are essential along the whole value chain that turns NR endowments into sustainable development and poverty reduction. Administering NR fiscal regimes is one essential piece of the NR value chain. An effective and transparent tax administration is crucial for properly managing NR revenues within a legally-approved tax system, so the country may benefit economically and socially from its natural resources. This note describes the challenges that developing countries face in NR tax administration and presents good practices to help build countries’ long-term institutional capacity.