Mexicos legislature has approved substantive tax reforms. Some of these changes will have a direct impact on mining companies operating in Mexico. These are some of the more important changes.
The new income tax law (the New LISR) eliminates the possibility of deducting 100 percent of the pre-operating expenses related to exploration and quantification of mineral deposits in the year such expenses are incurred. These expenses will now be deducted via 10 percent annual amortizations.
Mining companies will pay a new special tax of 7.5 percent on the income obtained from the sale of minerals mined minus the deductions permitted by the New LISR. For purposes of this tax, investments not related to mining extraction activities, interests paid and the annual inflationary adjustment will not be deductible. Mining companies with an annual gross income of less than 50 million pesos may credit the special tax paid against the income tax owed during the same fiscal year.
If the minerals extracted are gold, silver or platinum, the company will pay an additional tax of 0.5 percent on the gross income obtained from the sale of such minerals.
Companies that have mining concessions will have to pay a tax every six months per hectare that has no extraction activities for two consecutive years. If the lack of extraction activities occurs after the 11th year of the issuance of the mining concession, the amount of the tax will double.
These changes are scheduled to become effective on January 1, 2014.
