Natural Resources – an international guide to tax

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For cross-border groups operating in the Natural Resources sector, the complex nature of cross-border taxation means that the consideration of financing, operating and profit repatriation from a taxation perspective is fundamental to ensure that risks are mitigated and efficiency maximised.

At commencement, and through the exploration and development phase, provision of services and funds flows are likely to be from the parent company to the often overseas based subsidiary and will be of significant value. How these are structured and priced is fundamental, as the provision of loans and services will have VAT consequences for all entities concerned, and potential Withholding Tax issues. Transfer Pricing principles will define the correct price for such transactions, be it service value or interest cost – whilst also protecting against a potential mismatch between taxable income, and lower allowable costs.

Once extraction operations commence, and income is generated, funds flow requirements will reverse. Loans may be repaid and profit distributed back to the parent – to fund dividends to investors, new operations, or maybe simply to house financial resources in a more stable environment. Again, a multitude of tax risks will need to be considered here.

Our guide cannot tell you how to structure your Natural Resources business and transaction flows, as every overseas jurisdiction will give a differing balance of risks and opportunities. However, our team of experts have set out the key issues that you will need to consider before embarking on, and during, your overseas venture, so that you can seek the right advice at the correct time.

Discover our guide to Financial Reporting for Natural Resources which can help your finance team avoid deficiencies and understand critical accounting issues related to the sector.

Our Tax services to the Natural Resources sector

PKF Natural Resources tax guide - transfer pricing

Transfer Pricing

Our experienced Transfer Pricing team can assist you in developing transfer pricing strategies and solutions, including planning, compliance, documentation and defence, for your local, regional and global business operations.

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VAT and Indirect Taxes

We can help natural resources groups to unlock and maximise recoveries of VAT (and similar non-UK taxes) on expenditure as quickly as possible. 

PKF Natural Resources tax guide - UK VAT

Human Capital

Our dedicated team provides advice on global and UK employment-related taxes, social security and Human Capital services, supporting your business across a range of issues, including employment tax, employee benefits, off-payroll labour and international assignments.

PKF Natural Resources tax guide - our tax services

Business Tax

Our Business Tax team will ensure tax compliance, whilst also improving overall efficiency. We provide specialist corporate and business tax advice on both a local and international level, starting from correctly structuring your business operations, extraction of profits, and ensuring compliance with the regulations of relevant jurisdictions, all in a commercial manner.

Meet our Natural Resources Tax experts

Meet our wider Natural Resources Audit and Transaction Services team

We are specialists in the natural resources sector, and understanding such global, technically complex businesses has become a specialism of ours. Ranked 1st as auditors to LSE Basic Materials companies and to LSE Energy clients, we act for over 100 businesses from private companies to large listed multinational groups.