Home »Taxation » World » Mexico’s tax authority scrutinizing mining, auto, energy firms

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  • Jun 1st, 2017
  • Comments Off on Mexico’s tax authority scrutinizing mining, auto, energy firms
Mexico is scrutinizing firms in the energy, mining and telecommunications sectors to see if they are paying their fair share of taxes after a series of reforms introduced by President Enrique Pena Nieto shook up those industries. Authorities are also in contact with firms in Mexico's auto industry, which typically have small margins and complex global supply chains, making it difficult to calculate their appropriate tax burden, said Osvaldo Santin, head of the Tax Administration Service (SAT).

"A lot of the sectors that are now facing issues are those whose legal frameworks were transformed (with the reforms)... and that is reflected in compliance with their tax obligations," Santin said in an interview with Reuters. Santin said Mexico's tax authority was seeking to better understand how the reforms impacted the different sectors and their taxable income. He did not name the firms SAT was scrutinizing.

Pena Nieto's energy reform put an end to the monopoly state-owned oil company Pemex enjoyed in everything from crude production to retail sales, opening up the sector to private capital. Meanwhile, an overhaul of the telecommunications sector was meant to reduce the power of billionaire Carlos Slim, whose America Movil firm still dominates the cell phone market. New royalties for mining companies also went into effect in 2014 as part of a broader tax reform.

Santin said that some of the main mining companies have taken actions to reduce their royalty payments to the government, confirming a Reuters report. "It's something we're also reviewing with them to understand what's behind this decrease and if the answer is unsatisfactory we'll have to act unless they voluntarily correct this themselves," Santin said. SAT, which brought in about $7.74 billion through audits last year, up over 2 percent from a year earlier, is considering extending Pena Nieto's program to repatriate undeclared capital from abroad beyond a current deadline of July, said Santin. "Until we are clear about what the need for this extension really is, we won't authorize it.

What we have to look at is what the actual benefit would be in terms of additional resources that would come back if the time frame is extended," he said. The tax repatriation program, which attracted nearly $161.5 million in investment into the country through April, is expected to generate $10 billion in investment.

Copyright Reuters, 2017


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