chapter  3
An overview of transfer pricing in extractive industries
BySTEPHEN E. SHAY
Pages 37

This chapter provides an introduction to transfer pricing in extractive industries operating in resource-rich developing countries. Managing natural resource wealth is central to efforts to mobilize revenue to achieve sustainable development and prosperity in developing countries (IMF, 2011, p. 57; UN, 2000, 2002). Natural resources (fossil fuels, metals and ores) rose to 22.7% of total global merchandise trade in 2012 and they are the largest sources of government revenue for many developing countries (Boadway and Keen, 2010; WTO, 2014). Developing countries rely substantially on foreign private investment to explore for, develop and extract these resources, and transfer pricing administration and enforcement are an integral part of maintaining host government revenues from resources. Remarkably little attention has been given in leading international transfer pricing guidelines to issues or examples involving extractive industries. Only recently has attention been paid to transfer pricing involving developing countries (IMF et al, 2011; UN, 2013).