AMLO rules out mining tax hike

President Andrés Manuel López Obrador (AMLO) has confirmed he has no plans to increase Mexican mining taxes.

Mexico introduced a 7.5% mining royalty in 2014, along with a 0.5% special mining tax levied on gold and silver producers.

Mining companies also pay per-hectare mineral rights fees and 30% corporation tax.

“We are not considering increasing taxes or creating new taxes, because we don’t only have mineral rights, but also mining [royalties],” AMLO told a press conference.

The president’s comments, in response to a question about mineral rights fees, will be welcomed by the mining industry.

Mining companies face a hefty tax burden in Mexico, with some firms paying around 50% – more than in jurisdictions such as Canada, which are traditionally seen as higher tax countries.

AMLO’s comments also raise doubts about the future of a proposal to overhaul the country’s mineral rights system.

The proposal, by lower house lawmaker Irán Santiago Manuel of the ruling Morena party, calls for a new regime of minerals rights fees based on production to replace the current per-hectare payments.

The initiative would see companies pay 5% of revenues from mineral sales annually for concessions, rising to 8% for gold, copper and silver operations, compared to half-yearly levies ranging from 7.56 pesos (US$0.38) to 165.32 pesos per hectare.

The proposal aims to end what the legislator claims is an excessively generous mining tax regime.

When AMLO came to office, he pledged to freeze taxes for the first three years of his six-year term.

With the three-year mark coming up in December, the president has signaled no increase in taxes is planned for the mining sector, which is tacit recognition that the industry is already relatively highly taxed.