Mexico adopts new tax structure for oil, gas exploration, production

On Jan. 1 of this year, Mexico initiated a new fiscal regime for its oil and gas industry, primarily to ensure the financial stability of Petróleos Mexicanos (Pemex), the national oil company. Under a former oppressive and unsustainable tax regime that taxed total sales rather than profit and required an implicit tax rate of 105% on net cash flow, Pemex had suffered net losses for almost a decade and was faltering in its ability to continue exploration and production expansions in its most promising-but costly to develop-structures, to properly maintain its existing facilities and systems, and to retire its mounting debt. The new tax structure, among other things, is designed to tu...

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