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Primero Mining To Continue To Fight For APA Validity

by Mike Godfrey, Tax-News.com, Washington

24 August 2016


Primero Mining Corporation has reiterated that it will continue to challenge the Mexican tax authority's efforts to nullify the advance pricing agreement they agreed in 2012.

This APA confirmed the company's basis for paying taxes on realized silver prices for the years 2010 to 2014.

However, in February 2016, the company said its Mexican subsidiary had received a legal claim from the Servicio de Administracion Tributaria (SAT).

In June, the company announced its intention to begin international arbitration proceedings, describing Mexico's decision as unprecedented. It has said that the decision breaches several provisions of Chapter 11 of the North American Free Trade Agreement (NAFTA), and said the measures are arbitrary, discriminatory, unfair, and inequitable.

That month, it informed the Government that, absent amicable resolution within 90 days, it intends to commence international arbitration proceedings under the NAFTA.

In its quarterly report released on August 4, 2016, the company said it remains committed to challenging the Government's actions, stating that it "believes that it is entitled to rely on the APA which is legally binding in respect of the company's 2010 through 2014 taxation years. The company obtained the ruling transparently and in good faith. Primero believes the APA should not be the subject of challenge by a Government administration installed upon the change of Government after the APA was duly issued."

The company added: "The APA was obtained to confirm that the company should calculate taxes on silver sold from the San Dimas mine based on the price realized by the company. The legal claim initiated does not identify any different basis for paying taxes, nor have any tax reassessments been received from the SAT. The company continues to record its revenue from the sale of silver for purposes of Mexican tax accounting in a manner consistent with the APA on the basis that the applicable facts and laws have not changed. The company's legal and financial advisors continue to believe that the company has filed its tax returns compliant with applicable Mexican law."

Primero said that it has already filed procedural and substantive responses to the legal claim initiated by the SAT.

Primero, a publicly listed Canadian company, has significant investments in Mexico, including its San Dimas gold and silver mine located in Durango, Mexico.

TAGS: compliance | tax | investment | business | tax compliance | tax avoidance | mining | law | accounting | Mexico | enforcement | tax authority | agreements | tax planning | transfer pricing | advance pricing agreement (APA) | Canada | trade | business investment | North America

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