• Service: Tax, International Tax
  • Type: Regulatory update
  • Date: 5/15/2014

Mexico - Proposal for hydrocarbon exploration fee 

May 15:  Energy-related legislative proposals in Mexico would create a “fee” (or tax) to be imposed with respect to hydrocarbon exploration contracts.

The exploration fee (cuota contractual fase exploratoria) would be imposed on anyone conducting exploration and/or extraction of hydrocarbons in Mexico under a contractual agreement, with the “fee” being imposed at the exploration phase under the contract.

Also, the exploration fee would be subject to adjustment. The amount of the fee could be adjusted based on the cumulative profitability of the contract—in other words, the greater the profit, the greater the adjustment to the tax rate. The adjustment itself would also depend on certain measures (i.e., investments and revenues, well production output, and market price of hydrocarbons).

The fee is part of a legislative package being considered by the Mexican Congress. It is not certain if or when Congress would take up this proposed legislation.

KPMG observation

Tax professionals note that both the exploration fee proposal and the related adjustment mechanism are similar to practices commonly applied in other countries—including Angola, Brazil, Canada, Colombia, China, Nigeria, Libya, and the United States.

For more information, contact a tax professional with the KPMG member firm in Mexico:

Roberto Mendoza


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