Mexican mining companies already pay 40% in taxes and dutiesincluding a 10% profit share to employees. According to the mining Chamber, only two mining countries mandate profit sharing to employees.
Following preliminary approval in April this year for the introduction, for the first time, of a royalty on the profits of mining companies in Mexico, provisionally set at 5 percent, the sector has now received a shock in that those royalties will now probably be 50 percent higher than they had thought.
The President's 2014 tax reform proposals include a mining royalty of 7.5 percent on mining companies' earnings before interest and taxation, which is increased by a further 0.5 percent for miners of precious metals. While the proposal remains subject to parliamentary approval, the new royalty is expected to take effect in January 2014.
The unexpected increase in the new royalty is raising some opposition from within the mining industry, which has begun to say that rising costs and higher taxes could reduce the attractiveness of any further exploration investment in Mexico, in comparison with mining sites in other countries.