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PWC Mining Royalty Tax in Mexico

The document discusses proposed amendments to Mexico's Mining Law and Tax Coordination Law, which would introduce a new 5% mining royalty tax on adjusted pre-tax business income for holders of mining concessions. The proposal was approved by Mexico's Chamber of Deputies in April 2013 and will be reviewed by the Senate in September 2013, with the new regulations expected to take effect by late 2013. The document also outlines additional license fees for mining concessions considered "idle" or "unproductive" for not engaging in exploration or exploitation activities over two consecutive years.

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Carlos A. Espinoza M
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139 views10 pages

PWC Mining Royalty Tax in Mexico

The document discusses proposed amendments to Mexico's Mining Law and Tax Coordination Law, which would introduce a new 5% mining royalty tax on adjusted pre-tax business income for holders of mining concessions. The proposal was approved by Mexico's Chamber of Deputies in April 2013 and will be reviewed by the Senate in September 2013, with the new regulations expected to take effect by late 2013. The document also outlines additional license fees for mining concessions considered "idle" or "unproductive" for not engaging in exploration or exploitation activities over two consecutive years.

Uploaded by

Carlos A. Espinoza M
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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www.pwc.

com

PwCs 16th Americas School of Mines


May 21-24, 2013 - Los Cabos, Mexico

Mining Royalty Tax

Current status

An annual license fee is imposed

based on the size of the mining site, measured in hectares

PwCs 16th Americas School of Mines


May 21-24, 2013 Los Cabos, Mexico

Mayo 2013 2

Mining Royalty Tax


On April 24, 2013, the Chamber of Deputies approved certain amendments to the Mining Law and the Tax Coordination Law, which were then sent to the Senate for review and approval.
The Senate approval process will be conducted during the fall session of Congress starting in September, 2013. The proposals include a new mining royalty and other measures.

2013 Proposal

PwCs 16th Americas School of Mines


May 21-24, 2013 Los Cabos, Mexico

Mayo 2013 3

Mining Royalty Tax

New mining royalty proposal:

Holders of mining concessions

must pay an annual royalty of 5% of adjusted PTBI

PwCs 16th Americas School of Mines


May 21-24, 2013 Los Cabos, Mexico

Mayo 2013 4

Mining Royalty Tax


Base amount:

Total revenue of mining operations for IT purposes


Less:

Not including: Interest earned Taxable inflation adjustment Loans, capital increases and contributions for future capital increases

Total expenses and

deductions for IT purposes


______________________ Base for mining Royalty X Rate of 5%

Not including: Depreciation and amortization Accrued interest payable Late payment interest Deductible inflation adjustment Taxes

PwCs 16th Americas School of Mines


May 21-24, 2013 Los Cabos, Mexico

Mayo 2013 5

Mining Royalty Tax

Concessions are considered to qualify as idle or unproductive

When in a period of two consecutive years

Neither exploration nor physical exploitation has been carried out on a mining concession,

PwCs 16th Americas School of Mines


May 21-24, 2013 Los Cabos, Mexico

Mayo 2013 6

Mining Royalty Tax

Concessions considered to qualify as idle or unproductive


Aside from the annual license fee, parties holding mining concessions of this type are also required to pay an additional license fee every six months. First eleven years
An additional 50%

As from year twelve


Double the license fee

PwCs 16th Americas School of Mines


May 21-24, 2013 Los Cabos, Mexico

Mayo 2013 7

Mining Royalty Tax

As indicated, to become effective, the bill must also be discussed and approved by the Senate and could be amended during the course of that process, which is currently scheduled for the September-December congressional period.

Once approved by the Senate, these regulations would be in effect 90 days after they are published in the Official Gazette, which is widely expected to occur in late 2013.

PwCs 16th Americas School of Mines


May 21-24, 2013 Los Cabos, Mexico

Mayo 2013 8

Legal defense against the Mining Royalty Tax


Appeal to Constitutional Rights to be filed within the next 15 working days following the date in which the amendment to the Mining Law becomes effective.

Appeal to Constitutional Rights to be filed within the next 15 working days following the date in which the Mining Royalty Tax is paid via tax return.

Mining Royalty Tax contravenes the Proportionality Principle provided in Law.

PwCs 16th Americas School of Mines


May 21-24, 2013 Los Cabos, Mexico

Mayo 2013 9

Thank you

Hctor Garca Partner [email protected] +52.55.5263.6653

Sandro Castaeda Partner [email protected] +52.55.5263.5796

This content is for general information purposes only and should not be used as a substitute for consultation with professional advisors.

2013 PricewaterhouseCoopers, S.C. All rights reserved. PwC refers to the Mexico member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.

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