INCOME TAXES: |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| INCOME TAXES: | NOTE 4 — INCOME TAXES: The income tax provision and the effective income tax rate for the three-month period ended March 31, 2025 and 2024 consisted of (in millions):
These provisions include income taxes for Peru, Mexico and the United States. The Mexican royalty, the Peruvian royalty and the Peruvian special mining tax are included in the income tax provision. The decrease in the effective income tax rate in 2025 compared to the same period in 2024 was primarily attributable to uncertain tax positions recorded in the U.S., Peruvian and Mexican jurisdictions. Peruvian royalty and special mining tax: The Company has accrued $40.1 million and $29.7 million of royalty charge and special mining tax as part of the income tax provision for the first quarter of 2025 and 2024, respectively. Mexican mining royalty: The Company has accrued $47.4 million and $30.6 million of royalty taxes as part of the income tax provision for the first quarter of 2025 and 2024, respectively. The increase in 2025 over 2024 is partially attributable to the increase in the mining royalty rate, and increased sales due to the impact of metal prices. As previously reported, effective January 1, 2025, the rates for the mining royalty and the additional royalty increased from 7.5% to 8.5%, and from 0.5% to 1%, respectively. Accounting for uncertainty in income taxes: In the first quarter of 2025, the Company made payments of $35.8 million in the Peruvian jurisdiction for uncertain tax positions. The Company also recorded current and non-current liabilities for the Peruvian jurisdiction that increased the tax expense by approximately $6.2 million. The Company has a net current liability of $19.3 million in the Peruvian jurisdiction that represents anticipated cash refunds or payments within 12 months. Tax and Pillar Two updates: Large multinational businesses with greater than €750 million in total revenue must pay a minimum effective tax rate under Pillar Two of 15% on taxable income arising in each jurisdiction where they operate. Certain provisions of Pillar Two took effect January 1, 2024, while other provisions went into effect January 1, 2025. If jurisdictions want to implement Pillar Two they will need to do so through domestic legislation. The countries in which the Company has significant operations have yet to enact Pillar Two into law and have not formally announced plans to implement these rules. The Company will continue to monitor these developments and analyze the potential impact that Pillar Two will have on future results. In the United States, tax rates for global intangible low-taxed income (“GILTI”), the base erosion and anti-abuse tax (“BEAT”) and the foreign-derived intangible income (“FDII”) are set to increase for tax years starting after 2025. From the date of enactment in 2017, these taxes have not been material but the Company will continue to monitor U.S. tax policy. |
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