Lithium Power International Ltd (fka LTHHF)

[Dr_Vonschellan]

Simbalik_SupremeCourt win_supports_SQM refusal_to pay double_taxation
Another effect of the rise in lithium: SQM risks US$ 745,000,000 due to differences with the SII (Internal Revenue Service) over mining royalties
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if Google translation does not work then see below

After the Simbalik win and new Supreme Court precedents, miner SQM is now saying to the Chilean Treasurer essentially/abbreviated "listen, the government can have pre-1979 Concession Taxes under the IEAM (Specific Tax on Mining Activity), Or you can have the Royalty payments though the contract with CORFO... but you can't have both. Take your pick Chilean government".

If SQM revolts against Mommy's Boy Gabby Boric on lithium then this government needs to get the NLP written and approved by Congress like yesterday... or there are much-much bigger problems coming on "peacefully" collecting lithium taxes & royalties for the Chilean Treasurer.

The Doctor
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Another effect of the rise in lithium: SQM risks US$745,000,000 due to differences with the SII over mining royalties
by Leonardo Cardenas

While the mining company (SQM) maintains that it should not pay the specific tax on mining, since lithium is a non-concessible mineral, the SII (Servicio de Impuestos Internos = Internal Revenue Service) says that the age of the mining properties allows their exploitation and that Albemarle has been paying the tax. If at the end of 2021 that difference amounted to US$79,000,000 but in 2022 everything changed, given the price rise and the million-dollar profits. SQM estimates that if the SII maintains its criteria, "the amount that could be settled by the SII amounts to US$745,300,000"

"The financial situation of the company could not be better." With these words, the general manager of SQM, Ricardo Ramos, highlighted the historic result of 2022 with revenues of US$10,711,000,000 and profits of US$3,906,000,000 due to the high prices of lithium plus the strong demand for electromobility. The balance of last year also left US$5,000,000,000 in payments to the State. But that figure could be even higher.

The last financial report of the non-metallic mining company for the fourth quarter of 2022 revealed a sharp increase in the tax contingencies that it maintains with the Internal Revenue Service (SII). If at the end of 2021 it estimated that the amount of the differences with the tax authority amounted to US$79.8 million, at the end of 2022 the figure was multiplied almost by 10, up to US$745.3 million.

In its tax contingencies, SQM explains that its subsidiary SQM Salar, which exploits the Salar de Atacama, has filed three tax claims against the SII for the collection of taxes from tax years 2012 to 2018, which corresponds to business years 2011 to 2017. The total amount for these claims totals US$127,000,000 a figure that has been paid by the company. Then, in September 2022, the SII settled differences for the 2019 tax year regarding the specific tax on mining activity and other adjustments for US$36,000,000 million. "SQM Salar paid the liquidated amount, having one year to claim such liquidation, which it plans to do vigorously," the company described. Thus, the differences now span a period of eight years.

This is how SQM explains the difference it has with Internal Taxes. "The SII has sought to extend the application of the specific tax on mining activity to the exploitation of lithium, a substance that is not granted under the legal system," the company states in its financial statements.

The big leap will occur for the 2022 business year, which is still far from being settled by the SII. As the price of lithium jumped, the amount of the future and eventual tax dispute skyrocketed. This is how SQM explained it in its latest balance sheets. “The SII has not settled differences regarding the specific tax on mining activity for tax years 2020 onward. If the SII uses a criterion similar to that used in previous years, it is possible that it will make settlements in the future corresponding to said period. The company's estimate for the amount that could be settled by the SII amounts to US$745,300,000 if the first category tax is discounted and without considering interest and fines," the mining company explained in the latest report on 2022.

In its balance sheets for the previous year, as of December 2021, the firm said the same. But the figure that was risked in the future was only US$ 79,800,000 million.

In 2022, SQM recorded lithium sales of US$8,152,000,000, 770% more than in 2021. The average sale price in 2022 amounted to US$52,000 per metric ton. The previous year it had been US$14,600.

The response of the SII

The Internal Revenue Service recognizes current litigation for the payment of the Specific Tax on Mining Activity (IEAM) for tax years 2017 and 2018. The Service (ie SII) maintains, contrary to what the company argues, that SQM is subject to the IEAM and that the exploitation it carries out uses the same rights as any mining operator of concessionable substances. And they remember that the other company that exploits lithium in the Salar de Atacama, the American company Albemarle, is complying with this obligation.

In its argument, the SII supports lithium, despite being non-concessible, in the case of SQM Salar it is. "The lithium that SQM Salar exploits in particular is covered by an exception to inconcesibility, contained in Article 5, Letter a), of Decree Law 2,886 of 1979," they say from the SII.

With this, the SII refers to the decree that declared lithium a strategic mineral reserved for the State, except for mining properties that have been registered before 1979. In this category fall the properties that CORFO leases in the Salar de Atacama to SQM and Albemarle.

“The position of the SII continues to be that the company is affected by the IEAM and will assert its arguments in court up to the last judicial instances. In this context, through the Directorate of Large Taxpayers, it is complying with its legal obligation to verify correct tax compliance in the determination of the Specific Tax on Mining Activity in the exploitation of lithium in its various forms, which includes the review of the tax periods following the one currently being discussed in court. And in case of establishing differences, it will make the corresponding liquidations. For this, it has the prescription periods of the inspection action of article 200 of the Tax Code, which establishes that the SII has 3 years to inspect from the expiration of the legal term to pay the tax, a period that can be extended up to 6 years. limited the SII to Pulse (Pulse news service).

In the three tax claims filed, SQM obtained a favorable ruling, for the 2017 and 2018 tax years, but lost those related to the previous years. All cases have been appealed to the higher courts.

And for this same case, a few years ago, SQM appealed with a request for non-applicability due to unconstitutionality against these charges and the Constitutional Court rejected it.