premine exploration and development costs with premine reserves used to establish fea-sibility. The rate is calculated by dividing the total premine capital costs by the tonnage of proven reserves. The costs of exploration for new deposits after a mine is brought into production may be written-off currently. Amortization rates and schedules are published in the official government gazette. Profit-Sharing All industrial and mining operations, either organized as partnerships or corporations, are required to distribute a portion of their annual profits among all employees except the general manager; directors of the company are also excluded. The amount to be distributed is equal to 20 percent of the net distributable profit as defined by the Na- tional Commission. It usually varies from 12.6 percent of net income for tax purposes (after deduction of income tax) to a minimum of 2.8 percent of that amount in special situations. About 12 percent is applicable in the case of most mining and industrial con-cerns. The employees' share in the profits must be distributed within five months after the end of the fiscal year, and the employer is required to make available to his employ- ees a copy of the company's tax return. But the employees' right to share in the profits does not give them the right to intervene in a company's administration. Under the law, profit-sharing is not required of newly established concerns. In the case of mining com-panies, it is not required during the exploration period. As mentioned earlier, the Pinoles group paid out more than US$3 million to its employees in profit-sharing during the ten-year period ending December 1969. Summary Prior to the 1960 Law of Mexicanization, the mining industry was subject to high and discriminatory taxes. This situation is believed to be the principal reason for Mexico's failure to attract new investment capital and, until recently, for the lack of interest in financing major exploration projects. Mexico is one of the few countries in the world that imposes five different taxes on minerals viz., production tax, export tax, income tax, commercial receipts tax, and concession tax plus profit-sharing with employees. The production tax has been singled out for criticism as being grossly unfair and inequitable, because it must be paid even if metals or minerals are produced at a loss. According to Arthur Andersen, Ruiz, Urquiza y Cia., S.C., the management of a mining company must have an unusually close working relationship with the federal tax authorities to take advantage of possible benefits through special tax reductions, incentives, and other forms of relief available on somewhat of a quid pro quo basis. In the tax calculation on refined copper in the case, for example, of a 50-cent-per-pound export price, the production plus export tax base comes to 15.2 cents per pound. The automatic reduction in the FNP portion of these taxes reduces the unit figure to approximately 9.0 cents per pound; additionally, the 25 percent reduction lowers the tax to 6.8 cents per pound. The producer may also negotiate for further reductions that are available, but are subject to special conditions and susceptible to varying inter-pretations on a project-by-project basis. One of the key factors governing tax negotia-tions in Mexico is the dollar amount that a company plans to reinvest in the country for the development of new reserves, plants, and metallurgical facilities. Furthermore, 29