Pwc Mining Royalty Tax in Mexico

PwC’s 16th Americas School of Mines

May 21-24, 2013 - Los Cabos, Mexico

www.pwc.com

Mining Royalty Tax

Current status

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Mayo 2013 PwC’s 16th Americas School of Mines May 21-24, 2013 Los Cabos, Mexico

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

An annual license fee is imposed

Mining Royalty Tax

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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

Mining Royalty Tax

New mining royalty proposal:

Holders of mining concessions

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must pay an annual royalty of

5% of adjusted PTBI

Mining Royalty Tax

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

Base amount:

Total revenue of mining operations for IT purposes

Less:

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

Total expenses and

deductions for IT purposes

______________________

Base for mining Royalty

X Rate of 5%

Mining Royalty Tax

Concessions are considered to qualify as “idle” or “unproductive”

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When in a period of two consecutive years

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

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.

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First eleven years

An additional 50%

As from year twelve Double the license fee

Mining Royalty Tax

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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.

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.

Legal defense against the Mining Royalty Tax

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• 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.

Thank you

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.

Héctor García Partner [email protected] +52.55.5263.6653

Sandro Castañeda Partner [email protected] +52.55.5263.5796

Pwc Mining Royalty Tax in Mexico

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