Tax Authority Accuses Mining Industry of Evasion

According to a study conducted by the Mexican tax authority SAT, along with the Universidad Autónoma de Chapingo’s Department of Statistics, Mathematics and Computing, the mining sector could have incurred tax evasion of over MX$22.5 billion (US$1.2 billion) between 2015 and 2021. 

According to the study, this could have been the result of undervaluation, which consists of declaring taxes based on a value lower than the real one for mining products. The department concluded that this undervaluation reached MX$75 billion (US$4 billion), which represents over 9.6% of total mining exports. As a result, the evaded taxes represent 11.7% of the total income tax collected from the mining sector. The university highlighted 2019 as the year with the highest evasion with MX$6.37 billion (US$ 342.1), meaning 26% of the collected income tax collected that year and 3.6% of the industry’s GDP. 

The report noted that evasion was higher in the copper, lead, silver, zinc and precious metals subsectors, which represent over 90% of total mining operations. It also pointed out that only five taxpayers concentrated 80.4% of the value of these operations and, of these, only two concentrated 64.8% of the undervalued amount. 

The study considered production costs, sales expenses and export prices declared by companies in its undervaluation analysis. It also identified two alleged systems to avoid paying taxes: “technical smuggling schemes,” which consist of document forgery and undervaluation of minerals, and “rough smuggling,” which considers illegal practices like bribery, transportation via illegal routes and using empty containers.

This is not the first time a federal office accuses the mining sector of corruption. On Dec. 09, 2022, MBN reported on Minister of Economy Raquel Buenrostro’s accusations against the industry. Buenrostro stated that the sector is among the economic sectors that contribute the least in terms of taxes. According to her, large taxpayers pay over 2.4% of their total income, common workers pay over 35% and mining companies contribute only 0.002% of their income. 

The industry’s position remains unwavering, however. According to Jaime Gutiérrez, President, CAMIME), the mining sector is subject to special taxes that no other industry has to pay. “CAMIMEX-affiliated companies work strictly complying with Mexican law and regulations. All the mining companies that operate in the country strongly reject any kind of corruption,” he added.