First Quantum at loggerheads with Panama over tax regime for 2026 and beyond – by Niall McGee (Globe and Mail – January 10, 2023)

First Quantum Minerals Ltd. and the government of Panama are at loggerheads over hundreds of millions of dollars in royalties the Canadian copper miner is expected to pay from 2026 onward, with the two sides unable to agree on the treatment of tax credits.

Panama and First Quantum have been in talks for more than a year, trying to hammer out a new pact on royalties on Cobre Panama, a giant copper mine 120 kilometres west of Panama City. Talks broke down last month with no agreement in place, and Panama’s President ordered Cobre Panama to shut down amid the spat.

Canada’s biggest copper company has been paying taxes in Panama based on a percentage of its revenue from Cobre Panama, but the Panamanian government wants to move the company to a more lucrative regime based on a percentage of profits.

If the parties can finalize an agreement, First Quantum stands to pay significantly higher taxes, at least over the next few years. The company’s approximate tax rate will be 14 per cent of profits, compared with the current rate of 2 per cent of revenue.

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