Minmetals Resources (01208) announced that Minera Las Bambas S.A. (MLB...
Zhitong Finance App News, Minmetals Resources (01208) announced that Minera Las Bambas S.A. (MLB) has now received an audit assessment notice for MLB's income tax payment in the 2018 tax year (2018 income tax assessment), amounting to approximately US$867 million. The 2018 income tax assessment was assessed by the National Superintendence of Tax Administration of Peru (SUNAT), based on the period from January 2018 to December 2018. All interest paid on bank loans (SUNAT also determines other expenses that cannot be deducted) is non-deductible.
SUNAT has confirmed a $100 million loss relating to development costs due to the tax court's favorable rulings on MLB's recovery of development costs in 2012 and 2013. The company is confident that these losses relating to development costs from 2014 to 2015 (appeal to the tax court) will finally be confirmed. Should this carry-over loss be re-listed, the 2018 tax assessment would be reduced by approximately US$116 million.
According to the announcement, MLB intends to appeal the 2018 income tax assessment to SUNAT (or the Peruvian Tax Court if it fails). According to Peruvian law, there is no need to pay taxes until the tax court proceedings are completed. The company is aware that the Peruvian tax administration justice system may file an appeal or take years to resolve.
MMG Affiliates, MMG Netherlands BV, MMG Peru S.A.C., and MLB are aware of the Peruvian Government's dispute over the Peru—Netherlands Bilateral Investment Treaty (Treaty) and are awaiting a response to the notification. The dispute concerned the use of such interpretations and accounting methods for withholding tax and income tax and the failure to provide effective protection for MMG's subsidiary's investment in Peru and the notice stated that unless the relevant matters can be handled through negotiations, MMG subsidiaries will seek compensation from the Peruvian Government for multiple alleged violations of the Treaty and failure to provide a fair, just and secure investment environment in Peru.