ABSTRACT
Problems of taxation of foreign investment in the extractive industries arise principally from a conflict over the shares in net revenue. They also arise from the complexity and variety of the taxes imposed, the uncertainty of the tax obligation, the frequent changes in tax laws, the desire on the part of the host government to serve several different objectives through taxation, and the fact that the foreign investor is subject to taxation both by the host government and by the government of the parent company. Since, in addition, the extractive industries serve competitive international markets where additional costs cannot readily be passed on by raising prices, the form and level of taxation constitute a primary source of conflict between the foreign company and the host government.
