First Majestic considers next steps in Mexico tax dispute

28th September 2020 By: Marleny Arnoldi - Creamer Media Online Writer

Canadian miner First Majestic Silver said on Friday it was considering its legal plan of action going forward in an ongoing tax dispute with Mexico.

The dispute with the Mexican tax authority relates to a 2012 advance pricing agreement (APA) that was granted to a subsidiary of the company, Primero Empresa Minera (PEM).

First Majestic on May 13 served the authority with a notice of intent to submit a claim under the provisions of Chapter 11 of the North American Free Trade Agreement. This initiated a 90-day process for the Mexican government to enter into negotiations with the company to resolve the dispute – which involves reassessments issued by Mexico’s tax authority totalling about $210-million.

The deadline expired on August 11 without any resolution of the tax dispute, First Majestic said.

The company noted it had proposed three settlement offers since 2018.

First Majestic said that it had been informed that PEM would be served with a decision made on September 23 by the Federal Court on Administrative Matters to nullify the APA and to direct the tax authority to re-examine the evidence and basis for the issuance of the APA.

The court’s decision, which could be appealed, was not arrived at following regular procedures and did not provide opportunity for the presentation of evidence from PEM, the Vancouver-based miner said.

The company also stated that the decision was inconsistent with prior legal precedents and violated the Federal Mexican Constitution.

First Majestic owns and operates the San Dimas silver/gold mine, the Santa Elena silver/gold mine, as well as the La Encantada silver mine, in Mexico, which are on track to produce between 11-million and 11.7-million ounces of silver this year.