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International Taxation and the
Extractive Industries

The taxation of extractive industries exploiting oil, gas or minerals is usually

treated as a sovereign, national policy and administration issue. This book offers
a uniquely comprehensive overview of the theory and practice involved in
designing policies on the international aspects of fiscal regimes for these indus-
tries, with a particular focus on developing and emerging economies.
International Taxation and the Extractive Industries addresses key topics that are
not frequently covered in the literature, such as the geo-political implications of
cross-border pipelines and the legal implications of mining contracts and regional
financial obligations. The contributors, all of whom are leading researchers with
experience of working with governments and companies on these issues, present
an authoritative collection of chapters.The volume reviews international tax rules,
covering both developments in the G20-OECD (Organisation for Economic
Co-operation and Development) project on base erosion and profit shifting and
more radical proposals, identifying core challenges in the extractives sector.
This book should become a core resource for both scholars and practitioners.
It will also appeal to those interested in international tax issues more widely and
those who study environmental economics, macroeconomics and development
economics.
Philip Daniel is Honorary Professor at the Centre for Energy, Petroleum and
Minerals Law and Policy at the University of Dundee, UK, and Senior Fellow,
Natural Resource Governance Institute. He served in the Fiscal Affairs Depart-
ment of the IMF from 2006 to 2015.
Michael Keen is Deputy Director of the Fiscal Affairs Department of the
International Monetary Fund. Before joining the Fund, he was Professor of
Economics at the University of Essex, UK.
Artur Świstak is an economist in the Fiscal Affairs Department of the Inter-
national Monetary Fund, where he works on tax policy issues. Prior to joining
the IMF in 2011, he worked for the Polish Ministry of Finance as a chief of tax
policy analysis division.
Victor Thuronyi is a graduate of Cambridge University and Harvard Law
School. He has practiced tax law, served in the U.S. Treasury Department and
taught tax law before joining the International Monetary Fund (1991–2014).
Routledge Studies in Development Economics

For a full list of titles in this series, please visit www.routledge.com/series/SE0266.

124 Trade, Investment and Economic Development in Asia

Empirical and policy issues
Edited by Debashis Chakraborty and Jaydeep Mukherjee

125 The Financialisation of Power

How financiers rule Africa
Sarah Bracking

126 Primary Commodities and Economic Development

Stephan Pfaffenzeller

127 Structural Transformation and Agrarian Change in India

Göran Djurfeldt with Srilata Sircar

128 Development Management

Theory and practice
Edited by Justice Nyigmah Bawole, Farhad Hossain, Asad K. Ghalib,
Christopher J. Rees and Aminu Mamman

129 Structural Transformation and Economic Development

Cross regional analysis of industrialization and urbanization
Banji Oyelaran-Oyeyinka and Kaushalesh Lal

130 The Theory and Practice of Microcredit

Wahiduddin Mahmud and S. R. Osmani

131 The Economics of Child Labour in an Era of Globalization

Policy issues
Sarbajit Chaudhuri and Jayanta Kumar Dwibedi

132 International Taxation and the Extractive Industries

Edited by Philip Daniel, Michael Keen, Artur Świstak and Victor Thuronyi
International Taxation and
the Extractive Industries

Edited by Philip Daniel, Michael Keen,

Artur Świstak and Victor Thuronyi
First published 2017
by Routledge
2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN
and by Routledge
711 Third Avenue, New York, NY 10017
Routledge is an imprint of the Taylor & Francis Group, an informa business
© 2017 International Monetary Fund
Nothing contained in this book should be reported as representing the
views of the IMF, its Executive Board, or any other entity mentioned
herein. The views expressed in this book belong solely to the authors
The right of the editors to be identified as the author of the editorial
material, and of the contributors for their individual chapters, has been
asserted in accordance with sections 77 and 78 of the Copyright, Designs
and Patents Act 1988.
All rights reserved. No part of this book may be reprinted or reproduced or
utilised in any form or by any electronic, mechanical, or other means, now
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from the publishers.
Trademark notice: Product or corporate names may be trademarks or
registered trademarks, and are used only for identification and explanation
without intent to infringe.
British Library Cataloguing in Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloging-in-Publication Data
Names: Daniel, Philip, editor.
Title: International taxation and the extractive industries : resources
without borders / edited by Philip Daniel, Michael Keen, Artur Swistak
and Victor Thuronyi.
Description: Abingdon, Oxon ; New York, NY : Routledge, 2017.
Identifiers: LCCN 2016018657 | ISBN 9781138999626 (hardback) |
ISBN 9781315658131 (ebook)
Subjects: LCSH: Mineral industries. | Natural resources—Taxation. |
Taxation—International cooperation.
Classification: LCC HD9506.A2 I636 2017 | DDC 336.2/783382—dc23
LC record available at https://lccn.loc.gov/2016018657
ISBN: 978-1-138-99962-6 (hbk)
ISBN: 978-1-315-65813-1 (ebk)
Typeset in Bembo
by Apex CoVantage, LLC
Contents

List of figuresvii
List of tablesix
List of boxesx
Contributorsxi
Forewordxv

1 Introduction and overview 1

PHILIP DANIEL, MICHAEL KEEN, ARTUR ŚWISTAK
AND VICTOR THURONYI

2 International corporate taxation and the extractive

industries: principles, practice, problems 11
MICHAEL KEEN AND PETER MULLINS

3 An overview of transfer pricing in extractive industries 42

STEPHEN E. SHAY

4 Transfer pricing – special extractive industry issues 79

JACK CALDER

5 International tax and treaty strategy in resource–rich

developing countries: experience and approaches 111
PHILIP DANIEL AND VICTOR THURONYI

6 Extractive investments and tax treaties: issues

for investors 133
JANINE JUGGINS

7 Taxing gains on transfer of interest 160

LEE BURNS, HONORÉ LE LEUCH AND EMIL M. SUNLEY

8 Fiscal issues for cross-border natural resource projects 190

JOSEPH C. BELL AND JASMINA B. CHAUVIN
vi Contents
9 International oil and gas pipelines: legal, tax, and
tariff issues 215
HONORÉ LE LEUCH

10 The design of joint development zone treaties and

international unitization agreements 242
PETER CAMERON

11 Fiscal schemes for joint development of petroleum in

disputed areas: a primer and an evaluation 264
PHILIP DANIEL, CHANDARA VEUNG AND ALISTAIR WATSON

12 Taxes, royalties and cross-border resource investments 306

JACK M. MINTZ

13 Tax competition and coordination in extractive

industries 332
MARIO MANSOUR AND ARTUR ŚWISTAK

Index359
Figures

1.1 Proportion of natural resource taxes paid by

multinational enterprises 2
1.2 Government receipts from natural resources, averages 2000–2013 2
2.1 Estimating the revenue loss from BEPS 22
2.2 Numbers of BTTs and TIEAs, 1975–2013 26
3.1 Transfer pricing between two countries – example 1 46
3.2 Transfer pricing between two countries – example 2 47
3.3 Low-tax intermediary – example 3 49
3.4 Host country tax minimization – example 4 64
4.1 Exploiting the use of average prices 88
6.1 Typical life cycle of a mine 136
6.2 Typical cash waterfall 145
7.1 Indirect transfer of interest 173
7.2 Multi-tiered indirect transfer of interest 175
7.3 Indirect transfer of interest involving non-corporate
intermediary176
8.1 Illustration of a single-country versus cross-border
resource project 191
8.2 Summary of key results 203
9.1 Schematic arrangements of cross-border pipeline projects 225
11.1 Malaysia–Thailand JDZ 270
11.2 Malaysia–Thailand project life revenues and AETR from a
stylized 900 MMBbl field 273
11.3 Nigeria–São Tomé e Príncipe project life revenues and
AETR from a stylized 900 MMBbl field 279
11.4 Project economics: stylized petroleum project examples 282
11.5 Average effective tax rates for EEZs and JDZs 284
11.6 Timor Sea – joint petroleum development area 286
11.7 Fiscal regime for Bayu-Undan 293
11.8 Sunrise fiscal regime 294
11.9 Timor-Leste and JPDA PSCs 296
11.10 Australia and Timor-Leste: fiscal regimes; 900 MMBbl field 297
12.1 Decomposing the effective tax and royalty rate 2012 314
viii Figures
13.1 Composition of tax revenue in Sub-Saharan Africa:
resource vs. non-resource; 1980–2010 333
13.2 CIT rates in Sub-Saharan Africa 339
13.3 Worldwide mine production and prices of copper, 2000–2012 340
13.4 Worldwide production and prices of natural gas, 2000–2012 340
13.5 AETRs for copper mining in selected countries 341
13.6 AETRs for natural gas production in selected countries 342
Tables

2.1 Tax treatment of foreign sourced dividends received by

corporate taxpayers, 2015 15
3.1 Example 3: EBT and taxes by company 48
5.1 Namibia: double taxation agreements and provisions 120
5.2 Southern Africa: withholding tax on payments for services
to subcontractors 122
5.3 Withholding rates and the capital gains article in double
taxation agreements with Kenya 124
8.1 Ranges of parameters in determining the access fee 200
8.2 Key assumptions and financial results under three scenarios 203
10.1 Joint development arrangements – sample of models 246
11.1 Cost recovery limits and shares of excess cost recovery and
profit petroleum to contractors 271
11.2 Royalty rates for Thailand III 274
11.3 Rates of special remuneratory benefit using Thai Baht 274
11.4 Summary of Nigeria fiscal terms 277
11.5 Contractor profit share in STP PSC 280
11.6 Contractor profit share from PSC 281
11.7 Timor-Leste: PSC fiscal terms and sharing between
governments289
11.8 The tax regime applying to Timor-Leste’s PSCs 291
11A.1 Petroleum fiscal terms in simulated countries and their
joint development areas 301
12.1 METRRs by jurisdiction (in percent), 2012 314
12.2 METRRs by jurisdiction for a Canadian parent
2012321
12.3 Financing cost by type of investors, 2012 322
12A.1 Data appendix: non-tax parameters by country, 2012 330
13.1 Taxes generally applicable to extractive industries 346
Boxes

2.1 Crediting of resource taxes in the United States 17

2.2 International tax planning – tools of the trade 19
2.3 International tax planning by multinational
enterprises – evidence 20
2.4 Treaty shopping 27
2.5 Indirect transfers of interest 29
7.1 Examples of structuring direct and indirect transfers of
mining or petroleum rights 161
7.2 Economic effects of taxing gains on transfers of interest 164
7.3 Possible impact of transfer on host country future tax revenues 167
9.1 Examples of existing landlocked export pipelines 219
9.2 Selected cross-border transit pipelines 221
9.3 Examples of pipeline transit fees 234
11.1 The Malaysia–Thailand JDZ production sharing contract 271
11.2 Petroleum exploration and development in treaty areas 295
Contributors

Joseph C. Bell is Of Counsel at Hogan Lovells in Washington, DC. His current

practice is principally devoted to resource management and fiscal issues in
developing countries in Africa, Asia and the Middle East and the negotiation
and re-negotiation on behalf of governments of long-term concession and
investment agreements in the agricultural and mining sectors. He is Chair
of the Board of the International Senior Lawyers Project, www.islp.org, co-
chair of the Advisory Board of the Natural Resource Governance Institute,
http://www.resourcegovernance.org and a member of the Council on For-
eign Relations.
Lee Burns is Honorary Professor, Graduate School of Government, University
of Sydney. Lee specialises in international and comparative tax law. Lee has
authored many papers and articles on international tax and has advised the
Australian Treasury and the Board of Taxation on the reform of Australia’s
controlled foreign company and foreign trust regimes. Since 1991, Lee has
provided assistance on the design and drafting of tax laws under the technical
assistance program of IMF to more than 30 countries. In recent years, Lee’s
technical assistance work has focused particularly on the design of tax law
regimes for extractive industries.
Jack Calder, now retired, had a long career in the UK Inland Revenue, in
the course of which he occupied various senior positions, including latterly
that of Deputy Director of the Oil Taxation Office. He then worked for a
number of years as a consultant for the IMF and other organizations, advis-
ing governments in a wide range of developing countries on the administra-
tion of their natural resource revenues. He is author of Administering Fiscal
Regimes for Extractive Industries: A Handbook.
Peter Cameron is Director of the Centre for Energy, Petroleum and Mineral
Law and Policy at the University of Dundee and Professor of International
Energy Law and Policy. He is Co-Director of the International Centre for
Energy Arbitration, Professorial Fellow of the Law School at the University of
Edinburgh, Fellow of the Chartered Institute of Arbitrators and member of the
London Court of International Arbitration. He is the author or editor of more
xii Contributors
than a dozen book-length publications, mostly on international investment and
energy. He has given oral and written testimony in a number of international
arbitrations.
Jasmina B. Chauvin is a Research Fellow at the Center for International
Development at Harvard University and a doctoral candidate in Strategy
at Harvard Business School. Her research seeks to understand the drivers
of firm location and firm productivity, with a particular focus on the role
of trade and of transportation barriers. Prior to starting her doctoral studies,
Jasmina was policy advisor to the government of Liberian President Ellen
Johnson Sirleaf. Previously she worked in infrastructure and energy finance
at Citigroup and as a freelance consultant to the World Bank, the National
Resource Governance Institute and various national governments.
Philip Daniel is Honorary Professor at the Centre for Energy, Petroleum and
Minerals Law and Policy, University of Dundee, and Senior Fellow, Natu-
ral Resource Governance Institute. He Chairs the Advisory Board of the
Oxford Centre for the Analysis of Resource Rich Economies in the Depart-
ment of Economics, University of Oxford. Philip Daniel previously worked
for nine years at the Fiscal Affairs Department (FAD) of the IMF, part as
Deputy Head,Tax Policy Division and part as Advisor in FAD’s Front Office.
He is co-editor of The Taxation of Petroleum and Minerals: Principles, Problems
and Practice.
Janine Juggins is EVP Global Tax Unilever. Before joining Unilever, she was
the Global Head of Tax at Rio Tinto. Janine has more than 25 years of inter-
national tax experience gained with companies in the engineering, energy,
mining and FMCG sectors working in both the U.S. and the UK. She has a
special interest in tax and development issues. She graduated in French with
German from Manchester University, UK, and subsequently trained as a
Chartered Accountant with KPMG in London. She is also a Chartered Tax
Advisor, UK, and Associate Corporate Treasurer, UK.
Michael Keen is Deputy Director of the Fiscal Affairs Department of the
International Monetary Fund. Before joining the Fund, he was Professor of
Economics at the University of Essex and Visiting Professor at Kyoto Uni-
versity. He was awarded the CESifo-IIPF Musgrave Prize in 2010, and is
an Honorary President of the International Institute of Public Finance. He
has led technical assistance missions to more than 30 countries and is co-
author of books on The Modern VAT, the Taxation of Petroleum and Minerals
and Changing Customs.
Honoré Le Leuch has more than 40 years’ professional experience in inter-
national oil and gas activities and is an acknowledged consultant on petro-
leum legislation, taxation and contracts, institutional and regulatory regimes,
economics and negotiation. He was formerly with IFPEN and its affiliate
Beicip-Franlab. H. Le Leuch is an Honorary Lecturer at the Centre for
Energy, Petroleum and Mineral Law and Policy (CEPMLP) of the University
 Contributors xiii
of Dundee. He is a co-author of the reference book on International Petroleum
Exploration and Exploitation Agreements: Legal, Economic, and Policy Aspects.
Mario Mansour is Deputy Chief, Tax Policy Division, IMF Fiscal Affairs
Department. Before joining the IMF in 2004, he managed tax policy pro-
jects in the Middle East and Eastern Caribbean islands for a consultancy
(2000–03), and was a tax policy analyst for the Canadian Federal Depart-
ment of Finance (1992–2000), where he started his career, specializing in
business and international taxation and micro-simulation modeling. Mario
has advised on tax policy issues in more than 30 countries. His recent publi-
cations cover taxation issues in the Middle East and Africa, tax coordination
in West Africa and fiscal stabilization in the oil and gas sector.
Jack M. Mintz is the President’s Fellow at the University of Calgary after step-
ping down as the founding Director of the School of Public Policy, July 1,
2015. He is also the National Policy Advisor for EY as well as serving on
several private and public boards. He has served as the Clifford Clark Visit-
ing Economist at the Department of Finance 1996–1997, when he chaired
a panel whose report became the basis for business tax reform in Canada.
Peter Mullins is a Deputy Division Chief with the Tax Policy Division of the
Fiscal Affairs Department of the International Monetary Fund in Washing-
ton, DC. Peter has extensive experience in tax policy and tax law, having
been involved in the area for more than 25 years. Peter has provided advice
to more than 40 countries on a range of tax policy issues including corpo-
rate tax, personal tax,VAT, international tax issues, natural resources taxation
and property taxes. Prior to joining the IMF in 2005, Peter was the General
Manager of the Business Tax Division in the Australian Treasury. He has
worked in both the private and public sectors, including many years as a
senior official in the Australian Tax Office.
Stephen E. Shay is a Senior Lecturer on Law at Harvard Law School. Before
joining the Harvard Law School faculty as a Professor of Practice in 2011,
Mr. Shay was Deputy Assistant Secretary for International Tax Affairs in the
United States Department of the Treasury. Prior to joining the Treasury in
2009, Mr. Shay was a tax partner for 22 years with Ropes & Gray, LLP.
Mr. Shay has published scholarly and practice articles relating to interna-
tional taxation and testified for law reform before Congressional tax-writing
committees. He has had extensive practice experience in international taxa-
tion, including in transfer pricing counseling and controversies. Mr. Shay is a
1972 graduate of Wesleyan University, and he earned his J.D. and his M.B.A.
from Columbia University in 1976.
Emil M. Sunley served at the IMF as an Assistant Director in the Fiscal Affairs
Department, specializing in tax policy advice to transition countries, post-
conflict countries and countries with petroleum extraction or mining. Prior
to that, he was a tax director at Deloitte and Touche, Deputy Assistant Secre-
tary for Tax Policy at the U.S. Treasury and a senior fellow at the Brookings
xiv Contributors
Institution. He is a graduate of Amherst College and earned his Ph.D. in
economics at the University of Michigan.
Artur Świstak is an economist in the Fiscal Affairs Department of the Interna-
tional Monetary Fund, where he works on tax policy issues. He has advised
more than 15 countries on their tax reforms, including on natural resources
taxation. Prior to joining the IMF in 2011, he worked for the Polish Min-
istry of Finance as a chief of tax policy analysis division. Mr. Świstak holds
M.A. and M.P.S. degrees. Currently he is pursuing his Ph.D. in economics.
Victor Thuronyi is a graduate of Cambridge University and Harvard Law
School. He has practiced tax law, served in the U.S. Treasury Department
and taught tax law before joining the International Monetary Fund in 1991.
He has worked on tax reform in numerous countries. He is the author of
Comparative Tax Law (2003) and other writings on tax law and policy. He
retired in 2014 as lead counsel (taxation), IMF.
Chandara Veung was formerly a research assistant in the Tax Policy Division
of the Fiscal Affairs Department. He managed databases of fiscal regimes
for extractive industries, regularly analyzed them using the FARI modeling
framework as part of the IMF’s missions and conducted modeling trainings.
He is currently pursuing an MBA at Harvard Business School.
Alistair Watson was formerly a technical assistance advisor in the Tax Policy
Division of the Fiscal Affairs Department and is now a freelance consultant.
He specializes in extractive industry fiscal regime design and analysis and
helped develop the modeling framework FAD uses in this work. After FAD,
Alistair worked as a commercial director with Baker Hughes, a major oil
field services company, and since returning to freelance he works with the
IMF, World Bank and a number of consulting firms.
Foreword

The topic of this book may sound esoteric. It is not. What is at stake are the
economic prospects not only of one of the world’s important economic sec-
tors, the extractive industries, but the prospects for many of the world’s poorest
people.
The reason is simple. Revenues from the extractive industries make a critical
contribution to the fiscal position of resource-rich countries, including many
lower-income countries struggling to find the means to strengthen their infra-
structure and protect their vulnerable; much of those revenues come from mul-
tinationals; and multinationals are hard to tax in ways that secure reasonable
revenue without discouraging investment.
So for many countries a central part of their development agenda involves
the international dimension of the tax treatment of multinational enterprises
active in the extractive industries. For some, too, the regional and cross-border
dimension of projects or policies adds further tax issues. Managing these com-
plex challenges is, for them, key to achieving the robust revenue base and effec-
tive institutions needed for sustained growth.
These issues lie at the intersection of two broader topics to which the Fund
has devoted considerable attention. The first is the design and implementation
of fiscal regimes for the extractive industries. In this, the present book com-
plements two earlier Fund publications, Daniel and others (2010) and Calder
(2014). The second is the taxation of multinationals more widely. This has been
the focus of much attention in recent years, notably with the G20-OECD pro-
ject on base erosion and profit shifting (BEPS), now entering its implementa-
tion phase. The Fund itself has long been active in supporting our members in
this area, as described in IMF (2013), including through analytical work (such
as IMF, 2014). Despite significant progress, however, considerable challenges
clearly remain.
In drawing together these two themes, this book draws deeply on the Fund’s
extensive technical assistance work with our members. Much of this has been
made possible by the generosity of donors contributing to a dedicated trust fund
to support our work in the extractive industries – including the preparation of
this book. It is a pleasure to thank, for this, the governments of Australia, the
European Union, Kuwait, the Netherlands, Norway, Oman and Switzerland.
xvi Foreword
Addressing the highly technical difficulties raised in the various chapters will
require a mix of legal, economic and administrative skills, as well as a detailed
understanding of how the extractive industries operate. This book does not
provide any simple or single route to success. But it will, I hope, help those
seeking to navigate these always difficult, sometimes murky and often stormy
waters.
Christine Lagarde
Managing Director, IMF

References
Calder, Jack. (2014), Administering Fiscal Regimes for Extractive Industries: A Handbook (Wash-
ington, DC: International Monetary Fund).
Daniel, Philp, Michael Keen and Charles McPherson, eds. (2010), The Taxation of Petroleum
and Minerals: Principles, Practices and Problems (London, New York: Routledge).
International Monetary Fund. (2013), Issues in International Taxation and the Role of the IMF
(Washington: International Monetary Fund). Available at http://www.imf.org/external/
np/pp/eng/2013/062813.pdf
International Monetary Fund. (2014), Spillovers in International Corporate Taxation. Available at
www.imf.org/external/np/pp/eng/2014/050914.pdf
1 Introduction and overview
Philip Daniel, Michael Keen, Artur Świstak
and Victor Thuronyi

Issues and context

The mismatch between where natural resources are found and where they,
or their derivatives, are needed means that the business of finding, developing
and selling them has for centuries been inherently international. The modern
manifestation of this is the importance within the sector of large multinational
enterprises – and their dominance where the state does not own all assets above
the ground, as well as the resources below. Several state-owned enterprises
have now themselves become important multinationals in the resource sector.
Among resource-rich countries, for instance, multinationals account for the
vast bulk of fiscal receipts from private business activity in the sector, especially
in petroleum: in Ghana, Liberia, Peru and Trinidad and Tobago, they account
for all such receipts (see Figure 1.1). In designing fiscal regimes for the extrac-
tive industries, international aspects – including the opportunities for tax plan-
ning by multinationals to avoid their liabilities – thus need to be center stage.
This book aims to provide a comprehensive (and comprehensible) account of
these sometimes difficult issues.
The importance for resource-rich countries of managing these difficulties
needs little emphasis. Receipts from the extractive sector are a – often – the
major source of revenue in many countries (Figure 1.2), especially, though not
only, in Africa and the Middle East (where state-owned enterprises have a cen-
tral and even dominant role). The central task for policy makers is to design
fiscal regimes for the extractive industries that raise sufficient revenue, pro-
vide adequate incentives to invest and are implementable at reasonable cost
to both the government and taxpayers. These challenges receive considerable
attention when resource prices and the potential revenue are high. But those
are precisely the circumstances in which achieving these objectives is easiest. It
is when resource prices seem set for a lengthy subdued spell, as at the time of
writing, that the trade-offs can be most brutal, the resilience of regimes most
tested, coherence in the design and implementation of taxation in the extrac-
tive industries most needed – and the importance of ensuring effective taxation
of multinationals is most pronounced.
2 Daniel, Keen, Świstak and Thuronyi

100

90

80
Percent Paid by MNEs

70

60

50

40

30

20

10

Petroleum

Petroleum

Petroleum

Petroleum

Petroleum
Mining
Petroleum

Petroleum

Petroleum

Mining
Mining

Mining

Mining

Afghanistan Ghana Liberia Nigeria* Peru* Trinidad Tanzania Yemen

(2011) (2014) (2013) (2012) (2012) (2013) (2014) (2011)

Notes: data from EITI; excludes payments made by state-owned companies

*: Only includes income taxes

Figure 1.1 Proportion of natural resource taxes paid by multinational enterprises

100
90 Mining and Petroleum Revenue

80 Mining Revenue
Petroleum Revenue
70
60
50
40
30
20
10
0
Zambia
Congo Republic

Uzbekistan
Norway
Iraq

Iran

Papua New Guinea

Russia

Mongolia
Mauritania
Equatorial Guinea
Libya

Vietnam
Guinea

Ivory Coast

Colombia
Namibia
Niger
Ghana
Bahrain

Nigeria
Timor-Leste
Algeria
Yemen
United Arab Emirates
Qatar
Azerbaijan
Sudan
Venezuela
Trinidad and Tobago
Myanmar
Syria
Kazakhstan
Cameroon
Ecuador
Bolivia

Chile

Sierra Leone
Tanzania
Australia
South Africa
Brazil
Lesotho
United Kingdom
Canada
Philippines
Brunei

Kuwait

Malaysia
DRC
Indonesia

Peru
Saudi Arabia
Oman

Angola

Chad

Mexico

Kyrgyz Republic
Botswana

Figure 1.2 Government receipts from natural resources, averages 2000–2013 (Selected coun-
tries, in percentage of total revenue excluding grants.)

The difficulty of taxing multinationals – not only or even especially in the

extractives, has attracted considerable concern and attention in recent years.
Discontent is apparent not only in public disquiet at the success of aggressive
 Introduction and overview 3
tax planning by many multinationals but also in the discourse and actions of
many emerging and developing countries that have perceived themselves as
being placed at a disadvantage by current arrangements. This discontent has
been especially apparent in the extractive industries. Mongolia’s renunciation
of its tax treaty with the Netherlands, for instance, was prompted by dissat-
isfaction at the consequent treatment of a large copper mining project;1 and
one of the more controversial responses to the difficulties of transfer pric-
ing – the ‘sixth method’ – is used specifically in relation to natural resources
and other broadly homogeneous commodities for which some benchmark
market price can be found. Substantial discontent is perhaps not surprising, as
the basic structure of the current international framework was set out at the
time of the League of Nations, when the extent of transactions within firms
and importance of hard-to-value intangibles were much less and political
power relations very different. It has led to an ambitious attempt to strengthen
that system, in the G20-OECD project on base erosion and profit shifting
(BEPS).2 While the implications remain to be seen (and are considered in
various chapters of this book), it seems clear that while they may mitigate
they will not eliminate many of the challenges that arise – including not least
in the extractive industries. What is increasingly clear is that the revenue at
stake is substantial and quite possibly greater (relative to GDP) in non-OECD
economies: Crivelli, de Mooij and Keen (2016) put it, for them, at around
1 percent of GDP, which, given that tax revenues are commonly in the order
of 15 percent of GDP in low-income countries, is a sizable amount. And there
is increasing evidence too that the sums at issue can be especially large in the
extractive sector.
Many of the international tax issues that arise in the extractive industries
are, of course, far from unique to the sector. Profit shifting through intra-firm
lending, for instance, is a generic difficulty with multinationals. But, as in other
areas, common problems often loom especially large by virtue of the sheer
scale of their operations and the unusually high nominal tax rates that are com-
monly applied, since these amplify the gains from shifting profits to lower tax
jurisdictions. Moreover, the location of resource deposits often does not respect
national boundaries or requires cross-border co-operation for development and
export of products. These features present special cases of the wider interna-
tional fiscal challenges.
This book does not address all aspects of international taxation but focuses
on two sets of issues: those that have proved especially important, problematic
and recurrent in the extractive industries and those that arise from specific
aspects of the operations of extractive enterprises, such as those that arise from
cross-border infrastructure or joint developments in disputed maritime zones.
In focusing on these issues, this book complements both Daniel, Keen
and McPherson (2010), which focuses mainly on domestic aspects of fiscal
regime design, and Calder (2014), which focuses on administrative issues. As
there, the present book mainly takes the perspective of resource-producing
4 Daniel, Keen, Świstak and Thuronyi
emerging-market and developing countries. That is where the international
tax challenges for the extractive sector arise in most pronounced form and,
within the wider fiscal scheme of things, are most significant for both rev-
enue and wider economic performance. Their significance in Africa, for
instance, is highlighted and explored in Africa Progress Panel (2013). These
are also the cases in which the IMF, through its technical assistance and
other activities, tends to become most closely involved3 with many of the
authors of this book playing leading roles. An appendix later in the chapter
lists some of the international tax issues that are most frequently encoun-
tered in this advisory work and that guided the selection of topics for this
book.

This book
The book can be thought of as falling into four parts. The first sets the scene
for the discussion of international tax issues in the extractive industries. The
second part takes up generic issues in international taxation with an eye to
the specifics of the application to the extractives, focusing on transfer pricing
issues, tax treaty strategies and design and the taxation of capital gains associated
with natural resources. Cross-border issues, including those related to interna-
tional pipelines and joint development zones, are taken up in the third part of
the book. The fourth part takes up some core policy issues: the interactions
between components of fiscal regimes and inter-governmental tax competition
and coordination in the extractive sector.
Setting the scene for the chapters that follow, Michael Keen and Peter Mul-
lins provide in Chapter 2 an overview, with an eye to the extractive indus-
tries, of the current international tax framework, common tax planning devices
and recent initiatives to address them. They also review the emerging evidence
pointing to the considerable scale of profit shifting both in general and, perhaps
especially, in the extractives and in non-OECD countries. This chapter also
highlights three specific issues that later chapters examine in more depth: the
difficulties of the arm’s length principle and transfer pricing, treaty abuse and
the taxation of capital gains on asset transfers.
On the first of these issues, transfer pricing, Stephen Shay provides in Chap-
ter 3 an overview of major rules that apply in the context of extractive indus-
tries in resource-rich developing countries. He considers a number of examples
and discusses steps that developing countries can take to mitigate transfer pric-
ing tax avoidance by multinationals. Jack Calder complements this analysis in
Chapter 4 by focusing on complications added by ring-fencing, special meth-
ods for valuing extractive industry sales and special rules for costs. In addition,
he considers a number of tax administration issues, particularly special bench-
marking and ‘physical audit’ procedures.
Chapter 5 by Philip Daniel and Victor Thuronyi outlines the principal inter-
national tax and fiscal regime issues faced by developing countries engaged
 Introduction and overview 5
in natural resource extraction or exploration. The focus of the chapter rests
on corporate tax issues for extractive industries. It considers the principal ele-
ments in tax treaty strategy that form an integral part of tax policy making.The
chapter concludes with a brief discussion of defensive steps that developing
countries can take unilaterally.
The role of tax treaties in the extractives sector is further taken up in Chap-
ter 6 by Janine Juggins, who – writing from the investor’s point of view –
provides an overview of the different types of taxes that arise over the life cycle
of a mine, followed by a discussion of the relevance of tax treaties to investment
financing decisions, the role that tax treaties play in relation to capital gains
and in supplementing gaps in domestic tax law. Further to that, she considers
the importance of tax treaties as a component of foreign investment tax policy
development and choices.
In Chapter 7 Lee Burns, Honoré Le Leuch and Emil M. Sunley focus on
the tax treatment of gains arising on a transfer of a mining or petroleum right
under both domestic tax law and tax treaties – which has proved a controver-
sial issue in many countries. They investigate the complexities concerning the
characterization, valuation, timing and geographic sourcing of the gain both
made directly by the holder of the right or indirectly by a person disposing of
an interest in the entity holding the right.
Joseph C. Bell and Jasmina B. Chauvin in Chapter 8 set the scene for discus-
sion of cross-border projects. They focus on potential arrangements for allo-
cating the taxable income from a project crossing national boundaries among
different national entities, using as an example a hypothetical mining project
with the mine and infrastructure in two different countries.
In Chapter 9 Honoré Le Leuch focuses specifically on the key role of cross-
border pipelines in the global oil and gas industry and their commercial struc-
ture and taxation. He highlights the striking differences and challenges between
the two main categories of transnational pipelines and provides a brief review
of the international law applicable to landlocked countries and transit coun-
tries.The chapter also highlights the special issues pertinent to the design of the
tax regime applicable by each state to the segment of a transnational pipeline
under its jurisdiction, as well as possible interactions between the regime and
international taxation and double tax treaties.
Joint development zones are discussed in Chapter 10 by Peter Cameron
and Chapter 11 by Philip Daniel, Chandara Veung and Alistair Watson. Chap-
ter 10 discusses design of joint development zones (JDZs) treaties and inter-
national unitization agreements. This outlines the conceptual framework for
both arrangements and the differences between them, focusing largely on legal
aspects and international obligations. It compares JDZ and unitization struc-
tures, providing examples of actual operations and challenges therein. Chap-
ter 11 then examines the fiscal structure of JDZs and sets out examples from
around the world, drawing lessons for the future use of this important institu-
tional structure.
6 Daniel, Keen, Świstak and Thuronyi
Interactions between different tax regimes and instruments are the topic of
Chapter 12, by Jack M. Mintz. He shows how to assess the impact of oil tax and
royalty regimes on investment decisions by calculating an effective tax and roy-
alty rate for marginal projects. The analysis highlights several cross-border fiscal
issues that affect the incentive to invest and the resource revenues derived by
governments. This chapter also looks at the impact of various financial strate-
gies of multinational companies when investing abroad such as transfer pricing,
conduit financing and the discount rate for carrying forward unused deduc-
tions under rent-based royalties.
The book concludes with an analysis by Mario Mansour and Artur Świstak
of the issues of tax competition and coordination in the extractive industries.
In Chapter 13 they attempt to answer the key questions of whether tax com-
petition is a reality in relation to the extractives and if so, why (which is far less
obvious than it may seem), which taxes it affects – and, critically, to what extent
and in what ways governments should consider coordinating their tax treat-
ment of the extractive industries.

Appendix
International tax issues in some IMF FAD advisory work on
resource-rich countries
Coverage
This appendix draws upon advisory work between 2010 and 2014 in about
20 countries and upon regional workshops. Advice or analysis specific to indi-
vidual countries remains confidential.

Scope
The international or BEPS issues arising included: source and residence taxa-
tion, double tax treaties (including border withholding taxes), transfer pric-
ing, thin capitalization limitations, taxation of gains on transfers of interest in
immoveable property and mineral rights and the treatment of financial instru-
ments. Recent activity reflected an upsurge of interest from the authorities in
the content and desirability of double taxation treaties and in the taxation of
gains on transfers of interest.

Source and residence taxation

A few countries inherited territorial systems at independence that had already
been substantially amended in the jurisdictions formerly governing. In some cases,
technical assistance (TA) recommended an explicit switch to worldwide taxation
of resident individuals and corporations. In other cases, recommendations to widen
the definition of permanent establishment (especially for provision of services) and
to strengthen or clarify definitions of domestic source income were made.
 Introduction and overview 7
Double tax treaties
TA consistently recommended that governments refrain from concluding new
tax treaties, at least until a uniform and consistent national policy on treaties
has been formulated.The policy should ensure full taxing rights with respect to
extractive industries, border withholding on dividend, interest and royalty pay-
ments abroad and also payments for services.Where the existing treaty network
was limited, the recommendation sometimes included maintenance of full leg-
islated rates of border withholding.
As an alternative to treaties, TA sometimes recommended tax informa-
tion exchange agreements (TIEAs) or joining the Convention on Mutual
Administrative Assistance in Tax Matters. Full integration of treaty policy
with domestic tax policy was advised, making the point that many things
done in treaties could be done in domestic law in a non-discriminatory way.
One example concerns introduction of a rule that a cost is not deductible
unless the counterpart receipt is also taxable and perhaps taxable at some
minimum rate.
Some of the TA reports gave a detailed analysis of existing treaties and the
treaty-shopping opportunities the treaty network might present. More recent
TA has recommended introduction of a provision in domestic legislation that
would protect against treaty-shopping practices. The same suggestion (together
with a possible ‘principal purpose’ rule) came from the BEPS reports: should
a multilateral treaty instrument eventually become effective, the appropriate
national action might, of course, change.
TA has not called for repudiation of ratified treaties, but recommenda-
tions were made to clarify the validity or operation of very old treaties. In
some cases, treaties that were signed but not ratified had serious inadequa-
cies, and the authorities were advised to review them before ratification. In
one case (Mongolia) the authorities independently decided to seek treaty
renegotiations.

Transfer pricing
The detail of treatment of transfer pricing policy issues deepened in more
recent advice.The standard position has called for adherence to the arm’s length
principle and implementation, by various means, of the OECD guidelines on
transfer pricing. In many cases, the introduction of advance pricing arrange-
ments (APAs) was proposed. In more recent cases, TA suggested stronger pow-
ers for the authorities to make regulations on transfer pricing. Some TA called
for consistent transfer pricing rules for transactions among residents as well as
with non-residents.
Some TA (especially where oil and gas is involved) has suggested use for tax
purposes of transfer pricing rules devised for transactions among private par-
ties (such as the ‘transfer at cost’ rules among affiliates for services under joint
operating agreements) or devised for production-sharing contracts.
8 Daniel, Keen, Świstak and Thuronyi
For the pricing of extractive industry outputs, reference prices (sometimes
with adjustments) have been put forward where these are available.

Thin capitalization limitations

The recommendation has usually been to strengthen overall limitations on the
deductibility of interest rather than to propose something specific for extractive
industries. In some cases, however, it was necessary to recommend removal of
provisions in production sharing contracts that permitted recovery of interest
as a cost. TA has offered both a debt-equity ratio test and a test of the ratio of
interest expense to income in different circumstances. In a few cases, both were
suggested in combination.
In one case legal advice called for reclassification of finance leases as loans
and also for use of rules analogous to those for thin capitalization for other
types of base-eroding payments.
TA usually advised against using a distinction between interest payments
nominally between third parties and those between affiliates.

Taxation of gains on transfers of interest in immoveable

property and mineral rights
Recent TA has recommended that such gains be taxed as income within the
corporate tax system rather than through a separate capital gains tax or seg-
regated stream of capital transactions within the corporate income tax. The
recommendation to tax follows political preference rather than a specific eco-
nomic analysis or consideration of alternatives. In earlier TA, the point was
made that (as, for example, in Norway) transactions within the petroleum tax
ring-fence could be considered post-tax – in the sense that no tax would be
due on any gain and no deduction available for any outlay – provided that the
overall taxation of resource rents was appropriate.
Recommendations have differed on whether to follow the course of seg-
regating capital transactions (the U.S. model) so that payment of premiums
for acquisition can only be offset against future capital transactions of a similar
nature or to follow the more widespread treatment of the cost of acquisition of
mineral rights under which the cost is amortized (usually over the life of the
right). Both courses have justification, and the choice between has depended
on local circumstances.
In either case, a frequent issue has been whether to define mineral rights
as immovable property (or to make transactions in them taxable in their own
right as assets) and then to ensure that both domestic law and treaties permit
the taxation of transactions in such property by non-residents.
TA has adopted more than one approach to the problem of taxing indirect
transfers of interest through disposal of shares in companies holding mineral
rights or non-resident companies holding such companies. Recommendations
 Introduction and overview 9
were usually made to tighten rules on ‘change of control’. Obligatory notifica-
tion of transfers and change of control can be required in sector legislation or in
tax law or both, with stiff penalties for failure to notify (financial or forfeiture of
the license).There are differences among legal advisers on the merits (and treaty
implications) of using a ‘deemed disposal’ mechanism to tax the local entity,
obliging a local entity to withhold tax due from a non-resident or attempting
directly to tax the transaction by the non-resident as domestic source income.
Withholding pending final assessment is in any case an option.
In some cases, TA has dealt with farm-in/out, with work obligations as con-
sideration, as the method of transfer of interest and also with the creation of an
over-riding royalty.

Financial instruments
For extractive industries the issue is usually the use of instruments for hedging,
not only of commodity prices but also foreign exchange and the cost of debt.
The common approach has been to attempt to exclude transactions in financial
instruments (or forward sales) from the regime of resource taxation (royalty,
rent taxes or production sharing) and thus to get as close as possible, for calcu-
lating the tax base, to the intrinsic costs and proceeds of resource production.
For income tax purposes, the recent recommendation for extractive industries
is to quarantine losses on financial instruments so that they can only be set
against losses on financial instruments. More work on the taxation of hedging
is warranted.

Notes
1 See more details in IMF (2012b).
2 OECD (2015) summarizes the outcome; a brief account is in Keen and Mullins (2016),
Chapter 2 in this volume.
3 More detail on these activities is in Appendix 2 of IMF (2012a).

References
Africa Progress Panel. (2013), Equity in Extractives: Stewarding Africa’s Natural Resources for All. Avail-
able at http://app-cdn.acwupload.co.uk/wp-content/uploads/2013/08/2013_APR_Equity_
in_Extractives_25062013_ENG_HR.pdf
Calder, Jack. (2014), Administering Fiscal Regimes for Extractive Industries: A Handbook (Wash-
ington: International Monetary Fund).
Crivelli, Ernesto, Ruud de Mooij and Michael Keen. (2016), “Base Erosion, Profit Shifting
and Developing Countries,” forthcoming in Finanzarchive.
Daniel, Philp, Michael Keen and Charles McPherson, eds. (2010), The Taxation of Petroleum
and Minerals: Principles, Practices and Problems (London and New York: Routledge).
International Monetary Fund (IMF). (2012a), Fiscal Regimes for the Extractive Industries: Design and
Implementation. Available at https://www.imf.org/external/np/pp/eng/2012/081512.pdf
10 Daniel, Keen, Świstak and Thuronyi
International Monetary Fund (IMF). (2012b), Mongolia:Technical Assistance Report – Safeguard-
ing Domestic Revenue – A Mongolian DTA Model, IMF Country Report No. 12/306. Avail-
able at https://www.imf.org/external/pubs/ft/scr/2012/cr12306.pdf
Organization for Economic Cooperation and Development. (2015), OECD/G20 Base Ero-
sion and Profit Shifting Project: Executive Summaries 2015 Final Reports (Paris: OECD Publish-
ing). Available at http://www.oecd.org/ctp/beps-reports-2015-executive-summaries.pdf
2 International corporate
taxation and the extractive
industries
Principles, practice, problems
Michael Keen and Peter Mullins*

1 Introduction
International aspects of the corporate taxation of the extractive industries (EIs)
arise, of course, within the context of a wider international tax framework.   That
framework is contentious, complex, and changing. Contentiousness is doubtless
to some degree inevitable, given the scope for countries to disagree on how to
share tax base between them, but has risen to new heights in recent years: the
unprecedented cancelation of tax treaties, a warning of risks to the established
framework, signals an increasing discontent that has been amplified by growing
public concern at the apparently small amounts of tax that many multinational
enterprises (MNEs) manage to pay – including, not least, in the extractive
industries.1 Complexities, which create the scope for such tax planning, are
themselves to some degree inherent in dealing with the intersections between
national tax systems but also arise from the attempts of policy makers to shape
those rules to their own advantage. And these tensions have generated pressures
for change that have led to major initiatives, most notably the G20-OECD pro-
ject on base erosion and profit shifting (BEPS) which produced, in late 2015,
proposals that are now in the course of implementation – but which remain
contentious, as some observers continue to press for still more radical reform of
the international tax framework, and may even add to complexity.
This chapter aims to set the scene for those that follow by providing an
overview of these controversies, complexities, and reforms, all with a particular
eye to the EIs. Some international tax issues tend to arise more often in the
EIs than in other sectors, and we shall touch on these. But what is often most
striking about tax issues in the EIs is less their qualitative nature than their
sheer scale. Particularly high nominal tax rates associated with distinct taxes on
upstream operations, for instance, can imply particularly large incentives to use
transfer pricing and other devices to shift profits to where they face lower rates.
And the huge capital gains that can be associated with resource discoveries lend
special urgency to the question of where (and whether) those gains should be
taxed. Experience in the EIs thus provides wider insights into the challenges
that MNEs face in coping with, and that policy makers face, in designing inter-
national tax rules more generally.
12 Michael Keen and Peter Mullins
This overview begins, in Section 2, with an account of the main features
of the current international tax framework (though that term itself risks over-
stating its coherence and the degree of conscious design underlying it). Sec-
tion 3 reviews some of the main tax planning devices open to MNEs and the
evidence on their quantitative significance. Section 4 discusses three specific
problems of particular relevance to the EIs, which are further explored in later
chapters: transfer pricing (Chapter 3 [Shay] and Chapter 4 [Calder]), treaty
issues (Chapter 6 [Juggins]), and indirect transfers of interest (Chapter 7, [Burns,
Le Leuch and Sunley]). The nature and likely implications of the BEPS project
and other recent initiatives are taken up in Section 5. Section 6 concludes.

2 The international tax framework

The present international corporate tax framework arises from the interplay of
domestic laws and tax treaty obligations, primary concerns being the allocation of
taxing rights between countries – that is, which country or countries tax a particu-
lar item of income. The framework provides opportunities for MNEs to use plan-
ning devices to avoid tax and reflects governments’ attempts to limit them. These
arrangements have evolved over the last century or more with little explicit coor-
dination (other than through bilateral treaties that touch only a subset of relevant
matters)2 – until, that is, the BEPS project discussed in Section 5.

2.1 Principles and concepts

2.1.1 Allocating taxing rights: source and residence

It is generally accepted that the country in which profits are derived (the source
country) has the first right to tax that income, directly or through withholding
taxes on payments made abroad. Source refers – very loosely – to where invest-
ment is made and production takes place and is traditionally determined largely
by the physical presence in a country of labor and/or capital. A source country
may forgo its right to tax for its own policy purposes or under a double tax
treaty, although this is rare for rents from natural resources.
A foreign company (i.e. one that is not legally resident – as discussed later) is
usually taken to have enough presence in a country to be liable to its income
tax when it meets conditions laid down (in domestic law or treaties) deemed
to create what is known as a permanent establishment (PE).The country in which
it operates then has the right to tax such of the profits of that business as are
associated with that presence. Importantly, the location of ‘sales’ (in the sense of
the country into which the goods or services produced are sold) is not, under
this long-standing consensus, in itself taken to give rise to a place of ‘source,’ and
so does not trigger any liability for income taxation.
In the case of the EIs, it is usual for countries to make certain that a foreign
company undertaking any EI activities in the country is treated as a PE.   This is
commonly achieved by ensuring that the definition of a PE, in domestic law
and tax treaties, covers activities at a mine, gas or oil well, quarry, or any other
Another random document with
no related content on Scribd:
Vahingon ja vastoin käynin
Tuulet turkaiset tulevat?
Niinkuin aaltoja ajaavi
Tulemahan tuonempata.
Raju ilma innoissansa
Meri meiskavi jalosti
Pilven tanssivi tasalla.
Niinpä mielessä minulla
Ajatukset ajelevat
Toinen toistansa jälestä.
Runtelevat ruumistani.
Vievät unet viikkoisiksi
Rauha kauaksi katoovi.
Niinkuin pilven pimennossa
Meren muoto mustenevi —
Eikä taida taivaskana
Taivas täysi tähtinensä
Kuvaella kuvaistansa
Veden pinnassa pimiän —
Niin on sieluni sisussa
Kuvan julkisen Jamalan
Mustununa murheilta. —

Tähän asti aikojani

Kuljeskelin kunnialla
Vaan nyt vasta alkavaiset
Päivät päätäni panevat
Jo mä selvästi selitän
Katsellessa kahden puolen
Silmän eessä ja sivulla
Vaaroja ja vastuksia.
Jopa saattavi salassa
Olla joit' en oivaltana.
Kallioita ja karia
Joihin haaksi halkiavi
Pahki purteni menevi. —

[Nimellä »Epäilys» painettu Koittareen I, s. 138.]

JOS MA LAULAJA OLISIN.

Jos ma laulaja olisin

Laulasin ma laivan tänne,
Laivan tänne lastinensa
Tälle laihalle lah'elle
Tälle ra'alle rannikolle.
Mik' on lasti laivassani?
Suuri summaton tavara,
Tuota tuolta tuonempoa
Etsitty eteläisiltä
Paikoilta palaus-piirin.
Kelle tarvitsen tavaran?
Sille tarvitsen tavaran,
Jota kauvan katseltua
Olisin jo ottanunna
Oman onneni osaksi,
Jos se joutava koria
Kukka-päinen, päärly-vöinen, —
Ehkä on kanaljan kaunis,
Aika kaunis kasvoiltansa,
Koko ruusu ruumihilta,
Soma-varsinen, solakka, —
Olis mieltynyt minuhun,
Ois mieheksi minua
Tahtonut tavaratonta. —
Vaan jos laivani näkisit
Tuovan tuulella tavaran
Rikeneellä rikkauden,
Takoa Tasaus-kaaren
Tälle ra'alle rannikolle
Tälle laihalle lah'elle,
Niin ma verkkoni, veneeni,
Pyssyni ja pyydökseni,
Hevoseni, henkeheni,
Kaikki pantiksi panisin,
Vedon löisin ja vetäsin,
Että tahtosit tariten
Ihan ilo-mielelläsi
Tulla miehelle minulle.

[Painettu Koittareen I, s. 149, muutamilla parannuksilla.]

VARPUNEN.

Lauletaan kuin:
Muntra sparf i linden
Gungande för vinden etc.

Varpunen sä räivä!
Joka tullut päivä
Härkyt seutuilla kartanon.
Jos o'is sulla mieltä
O'isit tästä tieltä
Mennyt kunne pääsky mennyt on.

Päällä kurki-hirren
Pidät ääntä virren
Kadehtittu yli kaiken maan.
Eikä kuka pidä
Sirkutosta sitä
Laulun arvoisena kuitenkaan.

Vaikk' on sulla kaula,

Niin et herjä laula
Kansan mieltä myöten ensinkään.
Tekisit sä muuta,
Tukitsisit suuta,
Pakenisit tieltä pahan sään.

Varpunen se vastaan,
Tuuvitellen lastaan
Pihlajalta pilpatti ne syyt,
Miks ei sinne mennyt
Kunne pääskyn pennut
Kunne kiurut ja muut pelto pyyt.

Syy on isä vainaan;

Miks hän meni naimaan
Harmajana, päistäröityn päin;
Elänyt ei kauvan;
Jätti lapsi-lauman,
Josta pahnan pohjimaiseks jäin.

Tuskin vielä lensin

Kuin jo kurki ensin
Läksi matkan tielle ajallaan,
Vaikk' ol' viljat vielä
Koskemata siellä
Haasioilla eli hajallaan.

Minä kiljun heille:

Mikä kiire teille
Ennen kuin ma nämät syödyks saan.
Mutta syönnin alla
Pakkanen ja halla
Jääksi jähmetytti järven, maan.
 Ken o'is silloin tiennyt
Kuinka nyt on viennyt
Talvi kaiken sen kuin kasvo maa.
O'isin lentänynnä,
Muiden kansa ynnä
Vaivallakin, valta meren taa.

Vaan mä syöä mätin,

Matka huolet jätin
Kunne kesä-kelit kestivät.
Sitte liika päkki,
Ja nyt tyhjä säkki
Menon matka-tielle estivät.

Vaan kuin päivä palaa,

Kultiansa valaa
Yli hangen, yli meren, maan;
Talvi herkiäävi,
Kevät kerkiäävi,
Silloin minä uuden mielen saan.

Kosiin mään ja palan,

Luvan saan ja valan
Teen, mun kulta kaunoiselleni.
Sitte työtä lisää
Taivaallinen isä
Mulle ja mun ainoiselleni.

Ei nyt huolet anna,

Eikä minua panna
Aikaa laulamalla viettämään;
Kuin ma annan suuta
Joudanko ma muuta,
Silloin huulillani tiettämään.

Ensin tehdään pesää,

Sitten pitkin kesää
Pesä pienoisilla täytetään;
Niist' on kyllä työtä,
Niitä juota, syötä,
Niitä pellollakin käytetään.

Ei Mar' oltu laiskat,

Mutta lapsi-raiskat
Tarvitsivat kaiken kesän työn;
Etten saanut sunkaan,
Mitään muuta junkaan,
Talveks tallelleni mitä syön.

Nyt mä pidän majaa

Pitkin katon rajaa,
Enkä niinkään ole turvata.
Vasten Luojan mieltä
Katoltakaan sieltä
Eipä varpuistakaan murhata.

[Painettu Koittareen I, s. 156.]

Jos kunniaksi kutsut sitä rosvon tapaa,

Kuin toisen varat miekan voimin viep' ja paljastaa
Ja orjaksensa kansan tekis, joka oli vapaa
Ja maat ja asuinpaikat lyöp' ja anastaa
Jos kunnialliseksi kutsut sitä kansaa,
Niin Suomen mies ei kunniallisuutta sitä ansaa.

[Painettu Koittareen I, s. 150 nimellä 'Suomalaisen kunnia'.]

Niinkuin narri minä nain

Vanhan kompuran ma sain
Hän oil rikas, minä köyhkö
Vaikka työtä tein kuin löyhkö.

Hoki sitä päivät yöt

Kuka tehnyt täss on työt
Tokko leivot tokko paistat
Vaikka parhat palat maistat.

Minä poltin tupakkaa

Jost' oil altis jupakkaa
Otin kerran tilkan viinaa
Jost' kärsin paljon piinaa.

[Ennen painamaton.]

Viittaukset

1) A. Bergholm, Sukukirja Suomen aatelittomia sukuja.

Kuopiossa, 1892 —. XIII vh. s. 1038. 2) Kts. C.A. Gottlundin
päiväkirjaa esim. v. 1808—10 Suomal. Kirjall. Seuran
kokoelmissa. 3) A. Bergholm, Sukukirja. 4) C.A.G:n päiväkirja
1817 lokak:n 17 p:ltä. 5) C.A.G:n päiväkirja. 6) A.R. Niemi,
Kalevalan kokoonpano I, s. 29. 7) C.A.G:n päiväkirja 1/3 1816
8) C.A.G:n päiväkirja 5/11 1816 9) C.A.G:n päiväkirja 15/10
1816 10) C.A.G:n päiväkirja 5/11 1816 11) C.A.G:n päiväkirja,
kirjeenjäljennös 5/11 1816 12) C.A.G:n päiväkirja,
kirjeenjäljennös 15/1 1817 13) Tällaisia pitäjänkertomuksia oli
Porthanin kehoituksesta muutamia kokoonpantu jo hänen
elinaikanansa, ja hiljattain v. 1815 oli Bengt Jakob Ignatius
kirjoittanut semmoisen: »De paroecia Haliko I». — 14) C.G.
Estlander, A.I. Arwidsson som vitter författare, ss. 31-32. 15)
Kts. Poppiusen kirje Sjögrenille 17/3 1818, Suomal. Kirj.
Seuran kokoelmissa. 16) 17/3 1818 17) Helmikuussa 1818
18) C.G. Estlander, A.I. Arwidsson som vitter författare, ss. 33
—34. — C.A.G:n päiväkirja 12/10 1817. 19) C.A.G:n
päiväkirja 13/10 —28/10 1817. 20) C.G. Estlander, A.I.
Arwidsson som vitter författare, s. 34. — C.A.G, Läsning for
finnar i blandade ämnen, ss. 219-223. 21) C.A.G., Läsning for
finnar, s. 224 ja C.G. Estlander — A.I. Arwidsson som vitter
författare, s. 34, 36. 22) C.A.G:n päiväkirja 15/6 1818. 23)
Helmikuussa 1818. 24) 17/3 1818 25) C.A.G:n päiväkirja.
esim. 4/11 ja 19/12 1817. 26) Poppiusen kirje Sjögrenille
helmikuussa 1818. 27) 14/8 1818 28) Helmikuussa 1818. 29)
C.G. Estlander, A.I. Arwidsson som vitter författare, ss. 34-35.
30) Poppiusen kirje Sjögrenille 17/3 1818. 31) 14/8 1818. 32)
14/11 1818. 33) Poppiusen kirje Sjögrenille 26/5 1818. 34)
»Omkring 800 Rdr B:co har jag redan på detta år förstört»,
sanoo Poppius kirjeessään Sjögrenille 15/10 1823. 35)
Poppiusen kirje Sjögrenille 16/9 1818. 36) C.A.G:n päiväkirja
vuosilta 1818—20. 37) Julius Krohn, Koitar I, s. 128;
Suomalaisen kirjallisuuden vaiheet, s. 235. — Biografinen
Nimikirja, s. 547. — A.R. Niemi, Kalevalan kokoonpano I, 43.
38) 7/7 1819 kirjoittaa GottIund päiväkirjaansa: »Tog i gär 3
exemplar af Schröters Finnische Runen af Aminoff.» (»Otin
eilen Aminoffilta 3 kappaletta Schröterin Finnische Runen.»)
39) 15/10 1818. 40) C.A.G:n päiväkirja 27/5 1820. 41) 16/9
1818. 42) Poppiusen kirje Sjögrenille 23/5 1820. 43)
Poppiusen kirje Sjögrenille 28/8 1822. 44) Poppiusen kirje
Gottlundille 15/4 1823. 45) Poppiusen kirje Sjögrenille 28/3
1822. 46) Poppiusen kirje Gottlundille 15/4 1823. 47)
Poppiusen kirje Sjögrenille 15/10 1823. 48) Edellä main. kirje.
49) Kirjeessä Upsalasta 3/10 1828. 50) Poppiusen kirje
Tukholmasta Gottlundille Upsalaan 22/11 1824. Lagusen
tiedonanto Åbo Akademies Studentmatrikelissa II s. 529, että
Poppius jo edellisenä keväänä olisi saanut papinviran
Pietarissa, ei siis voi pitää paikkansa; P. muutti nähtävästi
Tukholmasta suoraan Viipuriin vasta seuraavana vuonna. 51)
J. Krohn, Koitar I, s. 129. 52) A. Bergholm, Sukukirja, s. 1040,
T. 6. 53) Poppiusen kirje Sjögrenille 16/2 1826. 54) Poppiusen
kirje Sjögrenille 31/5 1820. 55) A. Bergholm, Sukukirja, s.
1040, T. 6. 56) Poppiusen kirje Gottlundille 7/6 1858. 57)
Edellä main. kirje. 58) Poppiusen kirje Gottlundille 24/1 1860.
59) Poppiusen kirje Gottlundille 7/6 1858. 60) Poppiusen kirje
Gottlundille 26/8 1862. 61) Poppiusen kirje Gottlundille 1/5
1863. 62) Poppiusen kirje Sjögrenille 23/5 1820. 63)
Poppiusen kirje Sjögrenille 16/8 1826.
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