Ecological Taxes, Mexico
Ecological taxes, Mexico
In March 2017, Newmont, along with other companies, challenged the
constitutionality and legality of environmental taxes that the State of
Zacatecas approved in December 2016. The wording of the December 2016
legislation is ambiguous and provides little direction for how the taxes
are to be calculated and levied. There was an initial ruling in favor of
the Company but overturned on appeal. However, several other courts have
found the tax unconstitutional creating ambiguity as to the viability of
the tax. The State of Zacatecas did not issue a notice of tax or
assessment to the Company.
In August of 2020, Newmont paid to the State of Zacatecas an amount of tax
calculated by the Company for years 2017-2020, reserving the right to
dispute the constitutionality or future assessment of the tax. Since the
initial tax payment was completed, Newmont and the State of Zacatecas
government have been meeting on a regular basis to review and agree on the
technical basis of the tax calculations. In December 2020, Newmont held
meetings with the Secretary of Finances of the State of Zacatecas to
provide evidence of the calculations used by the company to substantiate
the tax calculation based on the articulation of exemptions in Mexico’s
mining law (including Articles 4 and 8), emission calculations and the
composition of mine waste. Newmont completed a second tax payment to the
State of Zacatecas on December 18, 2020 to demonstrate our commitment to
meet our legal tax obligations. The payment was based on company’s
calculations in line with its technical basis as presented to the State
government.
The Zacatecas State Government approved an amendment to correct the
current wording of the law which is similar to the interpretation of the
Company. The new wording may provide opportunities to challenge the
extraction and storage of material taxes in the future.
In the first quarter of 2021, the Company and the State of Zacatecas
reached an agreement in principle for the Company to pay for the taxes in
dispute related to tax years 2017-2020, and also arrived at a formula for
the payments for tax years 2021-2024, with an agreed-upon basis for the
extraction, storage activities, and gas emissions for such years. The
agreements have been completed and ratified by the relevant governmental
authorities, and the payments were made in the second quarter of 2021.
Newmont is a company that respects the law. Newmont is up to date with the
payments of Zacatecas ecological tax and has already paid all taxes up to
December 2021 for more than $30 Million – this is recognized by the fiscal
authorities of the State of Zacatecas.
Newmont discloses its tax and broader socio-economic contributions in our
Annual Report and in our annual sustainability report which includes
information about 2020’s payment of $45.45M in taxes and royalties in
Mexico. Further detail on this issue is provided in Newmont’s 10-K and
10-Q forms as follows: 10-K (pg.31 and 160: Note 31, “Commitments and
Contingencies", and pg.27: "Risk Factors" under the heading "New
legislation and tax risks in certain operating jurisdictions could
negatively affect us”), 10-Q (pg. 36: “Mexico Tax Matters”).