MEXICO Law and Practice Contributed by: Fernando Todd, Jorge Garcia, Silvia Alanis and Ana Lilia Solano, Todd
Given the growing global demand for lithium, particularly for automotive batteries, Mexico stands to benefit from its lithium reserves, such as those located in Sonora. However, the coun - try does not yet have any lithium mines in opera - tion. 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, significant - ly impacting the mining industry and economy. Major production areas include Sonora, Zacate - cas, 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. 4. Taxation of Mining and Exploration 4.1 Mining and Exploration Duties, Royalties and Taxes The Ministry of Finance and Public Credit is responsible 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 extraction 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:
• The Mining Special Tax is a 7.5% tax levied on income from the sale of minerals, ensur - ing mining companies contribute to public revenues. • The Extraordinary Mining Duty is a 0.5% tax on the annual income from gold, silver, and platinum sales, designed to capture addition - al value from precious metals. In 2024, the government proposed raising royal - ties from 7.5% to 8.5% and from 0.5% to 1.0%, sparking industry concerns about deterring investment. These measures aim to balance government rev - enue with sustainable investment in the mining sector. Mexico has double taxation treaties with sev - eral countries, which may affect the taxation of foreign investors. These treaties seek to avoid double taxation and usually include specific pro - visions for the mining sector. 4.2 Tax Incentives for Mining Investors and Projects With respect to mining tax incentives, explora - tion and development expenditures in mining projects may be tax deductible in some particu - lar cases, helping to reduce the tax burden for mining companies. Mexico has signed double taxation treaties with several countries, which can help investors avoid paying taxes on the same income in two different jurisdictions. 4.3 Transfer Tax and Capital Gains on the Sale of Mining Projects In Mexico, the transfer or sale of a mining pro - ject is subject to taxation, specifically income tax. The tax is mainly levied on gains on the dis -
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