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What’s mine is mine. What’s yours is negotiable.

11 June 2020

The Mexican tax service (SAT, Servicio de Administración Tributaria) has estimated that the Canadian mining firm, First Majestic, owes AT THE VERY LEAST 180 million, 3000 US dollars (about 4.12 US billion pesos) in back taxes.  Not counting fines for unpaid taxes from 2010 to 2018, and the final bill, including taxes on unreported transfers to third parties, is expected to be somewhere in the neighborhood of 42.8 US billion pesos (about 2.6 billion Canadian dollars, or 1.9 billion US$).

Naturally, First Magestic is trying to weasel out, insisting on arbitration under the terms of the NAFTA treaty, which was in force during that period.  So far, Mexico is only trying to convince the Canadian government to “persuade” First Majestic not to try wiggling out of their obligations, but to pony up, but to sit down with SAT and maybe find a few legitimate deductions.  Walmart did, bringing down their 10 billion (thousand million to everyone not in the US) peso bill to a measly 8 billion.

First Majestic isn’t by any means the only mining company (overwhelmingly Canadian owned) that haven’t been paying their taxes.  As Jornada’s economy and business writer Carlos Fernández-Vega writes in his influential México S.A. column:

>a good portion of the juicy businesses and the abundant profits that transnational companies make and obtain in Mexico come from the privileged fiscal treatment… that the neoliberals granted them. In return, whoever was in Los Pinos [the former Mexican presidential compound] boasted that this foreign direct investment was a sign of the “trust and respect” that these consortia had in their government.

Pure blah, blah, blah because foreign capital is invested in the country where it earns the greatest profit and there is the least responsibility, be it fiscal, labor, ecological or legal (rather all of the above)….

But now that the party is over, transnational companies do not want to pay the taxes that by law they owe.  And, as always, they resort to blackmail, threatening to leave the country and / or resort to international courts, citing past “agreements”, although – it is supposed – when they settled in Mexico, they accepted that if necessary, the only legal authority would be the Mexican one.

Need one point out that this has been the law (constitutionally, if you want to get technical) that all foreigners, including corporations, are subject to Mexican law. And that the minerals belong to the Mexican state, not the company that extracts them (though, though concessions, they can profit — and they do quite handsomely — from the extraction of said mineral), and that the state always has the right to cancel the concession, or to, if they need, expropriate the business? Cheaper by far for First Majestic to pony up, and for the other mining firms to fall in line, rather than try and rely on the defunct NAFTA treaty and some other unrelated treaty with Luxembourg.

Carbajal, Braulio. “Reclama el SAT a la minera First Majestic al menos 180.3 mdd“, Jornada, 11 June 2020

First Majestic initiates arbitration over tax dispute in Mexico.” Mining Journal, 14 May 2020

Fernández-Vega, Carlos. “Mexico SA: Mineras canadienses, una vez más // Evasoras del fisco y chantajistas” Jornada, 11 June 2020

Jamasmie, Cecilia. “First Majestic takes Mexico tax dispute to arbitration” Mining.com, 14 may 2020

One Comment leave one →
  1. 11 June 2020 7:42 pm

    Guau, Richard! I had ni idea.

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