First Majestic to Appeal APA Annulment

Canadian mining company First Majestic Silver Corp (First Majestic) announced that it will appeal the Federal Court’s decision regarding the Advance Price Agreement (APA) between the Mexican Revenue Service (SAT) and the Mexican subsidiary First Mining Company (PEM).

The company said in a press release that the Federal Court ordered the annulment of APA, which since 2012 has allowed First Majestic to pay taxes at a lower rate in Mexico. However, SAT claims that the Canadian company owes a debt of at least US$180.3 million due to missing taxes from 2010 to 2018, reported La Jornada.

In May 2020, First Majestic initiated an arbitration process against Mexico under NAFTA's Chapter 11. The dispute centers on how Mexico taxes the Canadian company. According to First Majestic, Mexican tax authorities “have repeatedly and unilaterally chosen to reject requests for dispute resolution procedures, known as mutual agreement procedures, contained within international treaties and designed for addressing differences in interpretation and application of those treaties,” reported MBN.

President López Obrador declared some Canadian mining firms were behind on their tax payments and that there was no need to seek legal redress, as their debts were beyond doubt. First Majestic company is leaning on Canadian ambassador to Mexico Graeme Clark set a meeting with President López Obrador to reach a solution to the issue, reported MBN with information from Reuters.

First Majestic’s legal advisors checked the recent Court’s decision and said SAT made errors in analyzing PEM’s request for APA and in requesting additional information and evidence. The advisers concluded there were procedural irregularities and a failure to address the evidence and legal authorities, reported the company. As a result, the company has asked the court to re-examine the evidence and bases of the APA. The company said it will appeal the decision to the circuit courts before the Dec. 1 deadline.

In addition, the company said that despite the controversy, First Majestic aims to cooperate and resolve the dispute in an amicable way. This  includes using diplomatic channels, reported First Majestic.

In an MBN interview, First Majestic CEO Keith Neumeyer said the company has a strong relationship with the government thanks to its position as the second-largest silver producer in Mexico where it operates across nine states. Should resolution disputes fail, First Majestic will submit a new claim to the Mexican government through the provisions stated in USMCA to resolve the dispute with an international arbitration, reported the company in a press release.