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News Article

Mexican Mining Leader Fresnillo Triples Tax Payments

By Paloma Duran | Fri, 07/01/2022 - 14:23

Fresnillo plc, the world's largest primary silver producer and Mexico's largest gold producer, released a report on the tax it paid in 2021, showing it tripled its payments in compared to 2020. The report comes amid tension in the mining sector, after the government accused miners of tax evasion.

According to the Report on Payments to Governments for the year 2021, issued by the London Stock Exchange, Fresnillo paid US$407.14 million to the Mexican government, which is 150.8 percent more than what it paid in 2020. The company paid US$37.17 million to the Mexican Ministry of Economy and US$369.97 million to the Ministry of Finance and Public Credit (SHCP).

Fresnillo furthermore broke down how many taxes it had to pay for each project:  US$25.73 million for the Ciénega project, US$39.59 million for Fresnillo, US$169.6 million for Herradura/Noche Buena, US$3.24 million for Juanicipio, US$45.83 million for San Julián and US$100.59 for Saucito.

Industry leaders say Fresnillo’s report exemplifies the mining sector's commitment to follow the legal framework and demonstrates that the claim that mining companies are tax evaders is false.

This week, Mexico’s tax service SAT said that over 26 national and foreign companies evaded the payment of US$955 million of income taxes (ISR), which represents 32 percent of contributions from large taxpayers excluding national oil company PEMEX. “This supposed tax evasion has been detected when mining companies register investments in extraction as expenses or the reclassification of expenses, with the aim to increase their deductions,” SAT stated.

Mining chamber CAMIMEX rejected the accusation, arguing that the sector is one of the largest tax contributors in the country and that it supports Mexico’s economic reactivation. The chamber reported that according to SHCP, the industry paid more than US$12 billion in taxes and other fees over the past 7 years. The extractive sectors, which consist of mining, oil and gas, account for 83 percent of ISR contributions.

According to CAMIMEX, mining companies paid over US$3.2 billion of taxes in 2021, with an increase of over 124 percent for their ISR payments on the back of higher metal prices. The chamber also quoted a comparative study carried out by PricewaterhouseCoopers (PwC), which shows mining companies have a tax burden of 52 percent. Therefore, Mexico’s taxation is bigger than the one in Peru with 39.9 percent, Chile with 35.6 percent, Ontario, Canada with 34.6 percent and Arizona, US with 30 percent.

The data used in this article was sourced from:  
MBN, Fresnillo
Photo by:   Jon Tyson
Paloma Duran Paloma Duran Journalist and Industry Analyst