MEXICO Law and Practice Contributed by: Fernando Todd, Mariana Todd, Jorge Garcia and Silvia Alanis, Todd
4. Taxation of Mining and Exploration 4.1 Mining and Exploration Duties, Royalties and Taxes The Ministry of Finance and Public Credit is respon - sible for collecting taxes, improvement contributions, duties, products, federal benefits, and associated charges, and for administering the Income Tax Law. With respect to exploration and exploitation, holders of mining concessions must pay fees for the extrac - tion of minerals according to the hectares exploited, the value of the minerals extracted, and the rates established by the executive. Additionally, mining companies must declare and pay taxes on the profits obtained from mining exploration and exploitation. In addition, Mexico has the Mining Special Tax and Extraordinary Mining Duty, which break down as fol - lows. • The Mining Special Tax is a 8.5% tax levied on income from the sale of minerals, ensuring mining companies contribute to public revenues. • The Extraordinary Mining Duty is a 1.0% tax on the annual income from gold, silver, and platinum sales, designed to capture additional value from precious metals. These measures aim to balance government revenue with sustainable investment in the mining sector. Mexico has double taxation treaties with several countries, which may affect the taxation of foreign investors. These treaties seek to avoid double taxation and usually include specific provisions for the mining sector. 4.2 Tax Incentives for Mining Investors and Projects With respect to mining tax incentives, exploration and development expenditures in mining projects may be tax deductible in some particular cases, helping to reduce the tax burden for mining companies. Mexico has signed double taxation treaties with sev - eral countries, which can help investors avoid paying
3.3 Sustainable Development Initiatives Related to Mining In Mexico, every six years the government issues its policies and strategies through the National Devel - opment Programme, which has among its objectives economic, social, and sustainable development, as well as specific actions for the mitigation of climate change and the promotion of renewable energies. Also, the Mexican government has a Special Climate Change Programme issued by the Mexican govern - ment, which includes objectives, strategies, actions, and goals to address the negative impact of climate change. And in international matters, Mexico has ratified its commitment to the United Nations 2030 Agenda for Sustainable Development. On the other hand, the main task of the Federal Envi - ronmental Protection Agency is to increase the lev - els of compliance with environmental regulations, to contribute to sustainable development and enforce environmental laws. 3.4 Energy-Transition Minerals With the recent legal reforms in the mining sector, the exploration, extraction, processing, and use of lithium are now exclusively controlled by the Mexican state. These activities will be carried out by the decentral - ised public agency Lithium for Mexico. Given the growing global demand for lithium, particu - larly for automotive batteries, Mexico stands to ben - efit from its lithium reserves, such as those located in Sonora. However, the country does not yet have any lithium mines in operation. Currently, there are three lithium deposits in the exploration stage, situated in the states of Sonora, San Luis Potosí, Zacatecas, and Baja California. Copper is a crucial metal in Mexico, significantly impacting the mining industry and economy. Major production areas include Sonora, Zacatecas, San Luis Potosí, Chihuahua, and Durango. Mexico is a leading global copper producer, with output driven by large- scale industrial and small-scale artisanal operations. Copper is a key export, primarily sent to the USA and China.
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