## Natural Resource Taxation in Mexico: Some Considerations

_IMF Working Papers, October 18, 2021_

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## Bibliographic details
- Authors: Alpa Shah
- Published: October 18, 2021
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781513599663.001

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### Overview
- Mexico has large extractive industries and it traditionally has raised sizable fiscal revenues from the oil and gas sector.
- A confluence of factors—elevated commodity prices, financial challenges of the state-owned oil company Pemex, and revenue needs for financing social and public investment spending over the medium term—suggest that a review of Mexico’s taxation regimes for natural resources would be opportune.
- The paper places tax-reform discussion “against the backdrop of a comprehensive approach to tackling Mexico’s challenges.”

### Key findings
- The paper identifies opportunities for redesigning mining taxation to increase somewhat the revenue intake while maintaining the favorable investment profile of the sector.
- It discusses recent reforms to the oil and gas fiscal regime and future reform considerations, with attention to the attractiveness of investment on commercial terms.
- The attractiveness of investment on commercial terms should be placed in the context of an overall reform of Pemex’s business strategy and possibly of the energy sector more generally.

### Mining taxation: opportunities and constraints
- Reform objective: increase somewhat the revenue intake from mining taxation while maintaining the sector’s favorable investment profile.
- Emphasis on designing changes that preserve commercial attractiveness to investors.

### Oil and gas fiscal regime: recent reforms and considerations
- The paper reviews recent reforms to the oil and gas fiscal regime.
- Future reform considerations emphasize ensuring attractiveness of investment on commercial terms.
- Reforms and investment attractiveness should be evaluated in the context of Pemex’s financial challenges and broader energy-sector reform.

### Policy implications and recommended framing
- Any review of natural-resource taxation should be part of a comprehensive approach to Mexico’s fiscal and sectoral challenges.
- Tax-design choices should balance revenue objectives with maintaining a favorable investment profile in the extractive sectors.
- Consideration of oil and gas taxation reforms should be integrated with reforms to Pemex’s business strategy and potentially broader energy-sector reforms.

*Alpa Shah, Natural Resource Taxation in Mexico: Some Considerations, IMF Working Paper No. 2021/245, October 18, 2021.*

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_Source: https://www.imf.org/en/publications/wp/issues/2021/10/18/natural-resource-taxation-in-mexico-some-considerations-494705_