MMG (01208): MLB has received a favorable judgement from the Peruvian tax court.

MMG (01208) announced that Minera Las Bambas S.A. has received a favorable ruling from the Peruvian Tax Court, granting MLB the right to (i) claim a tax loss of $429 million for the 2018 tax year; and (ii) deduct interest on a $378 million loan obtained from a syndicate of Chinese loan banks and a $242 million shareholder loan obtained from MMG Swiss Finance A.G in 2018. The restated tax loss from 2014 to 2018 is $2.575 billion. The income tax assessment amount of $912 million for 2018 has been reduced to $0 by the tax court. The rationale is similar to the previous judgement regarding the 2017 income tax assessment, stating that the income tax regulations are only aimed at preventing tax evasion, which does not apply in this case. The related party regulations cannot be applicable to state-owned enterprises (i.e. Chinese loan banks) based solely on the company's relationship with the government. The argument by SUNAT regarding negative assets was also rejected, as there is no relationship between MLB and the Chinese loan banks. According to the principle of causality, the tax court deemed that the shareholder loan can be deducted, as the ultimate purpose of the loan is related to the acquisition of Las Bambas. As of now, the cumulative effect of the tax court rulings announced by MMG has eliminated the uncertainty of paying $2.016 billion in income tax, interest, and fines claimed by SUNAT. It is not yet determined whether SUNAT intends to appeal the ruling. It is known that appealing within the Peruvian tax administrative judicial system may take years to resolve.