Canadian mining company requests international arbitration against Mexico.

The Canadian mining company, which operates the San Dimas, Santa Elena, and La Encantada mines in Mexico for the production of silver and gold, considers that the Mexican authorities are in breach of tax regulations by claiming more than 500 million dollars in back taxes from its subsidiary in the Latin American country, Primero Empresa Minera (PEM).

TORONTO, Canada (EFE) – Canadian mining company First Majestic on Tuesday requested the intervention of the World Bank’s International Centre for Settlement of Investment Disputes (ICSID) given the Mexican government’s “refusal” to “establish negotiations in good faith” to resolve a tax dispute.

First Majestic said in a statement signed by its president and CEO, Keith Neumeyer, that “despite the company’s repeated attempts to establish good faith negotiations with the Government of Mexico to resolve the dispute, the Government has refused.”

The Canadian mining company operates the San Dimas, Santa Elena, and La Encantada mines in Mexico to produce silver and gold. They consider Mexican authorities to breach tax regulations by claiming more than 500 million dollars in back taxes from its subsidiary in the Latin American country, Primero Empresa Minera (PEM).

According to First Majestic, “the government’s actions are contrary to the regulation that established PEM’s income and taxes between fiscal years 2010 and 2014, a regulation that is valid until a court of last resort annuls it.”

First Majestic also accused the Mexican Executive of “refusing to participate in the Mutual Agreement Procedure established under three international double taxation treaties signed by Mexico.”

First, Majestic’s decision to turn to the World Bank, using Chapter 11 of the North American Free Trade Agreement (NAFTA), will involve the creation by ICSID of an arbitration panel to decide on the company’s claim.

In September 2020, Mexico’s Federal Court of Administrative Justice ruled in favor of the Tax Administration Service (SAT), approving the rescission of a previous agreement that allowed the mining company to pay taxes at a lower rate.

In November, First Majestic said it would appeal the decision as it considered the Federal Court’s ruling to be erroneous but stated that it was still trying to reach an amicable solution “with the Mexican government, including diplomatic channels of resolution” in addition to considering resorting to Chapter 11 of NAFTA.

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