The Canadian mining company First Majestic filed a claim under the North American Free Trade Agreement (NAFTA) for a dispute related to pricing and taxes in a case that has been trying to reconcile with the Administration Service for years. Tax (SAT).

The SAT began a procedure to annul the Advance Pricing Agreement (APA) that it had previously issued to Primero Empresa Minera, S.A. de C.V. (First, a subsidiary of First Majestic), with respect to the San Dimas mine in 2012.

According to First Majestic, the APA had confirmed Primero’s basis for paying taxes on Primero’s price for silver sales between 2010 and 2014.

If the SAT override challenge succeeds, the Canadian company would have a material adverse effect on the business, financial condition and results of operations.

For fiscal year 2015 and thereafter, Primero continued to record its silver sales revenue for Mexican tax accounting purposes in a manner consistent with the APA on the basis that the facts and applicable laws have not changed.

«The SAT, for its various actions, has shown complete disregard for the applicable provisions of three separate double taxation treaties it has entered into with Canada, Barbados and Luxembourg, which are relevant to First Majestic and its subsidiaries,» the company said.

First Majestic

The Canadian mining company has invested more than $ 2 billion in Mexico since 2003, has some 4,700 direct employees, and generates approximately 20,000 indirect jobs distributed in eight states within Mexico.

According to its version, the SAT has repeatedly and unilaterally chosen to reject requests for dispute resolution procedures, known as mutual agreement procedures (MAP), contained in those three treaties designed to address differences in interpretation and application of those treaties.