Grupo TFM claim rejected

Grupo TFM claim rejected    The Mexican Fiscal Administration Service (SAT) has declared that Grupo Transportaci'n Ferroviaria Mexicana, S.A. de C.V (Grupo TFM) is not entitled to back-dated inflation and interest on a value added tax refund it received from the Mexican government last year.
   TMM and Kansas City Southern are the two largest stockholders of Grupo TFM, a major Mexican railroad.
   Grupo TFM had claimed inflation and interest dating from 1997 on the 2.1 billion pesos ($18 million) value added tax refund it received from the Mexican government in January last year.
   After finishing its audit of TFM’s 1997 tax returns, SAT states that TFM did not supply documentation complying with the requirements of the Mexican fiscal code and, therefore, was not entitled in its 1997 tax returns to depreciate and deduct the concession title, the railway equipment and other assets that were assets of TFM at the time that it was privatized in 1997. The SAT has not yet assessed any penalties or taxes against TFM as a result of this audit.
   This action by the SAT follows the recent Mexican Appellate Court decision that TFM is entitled to receive from the Mexican government a value added tax refund certificate, increased by inflation and interest from 1997 until the date the refund certificate is delivered to TFM.
   TMM and KCS said they believe the SAT determination is without merit, and that it is based on the SAT seeking documents that the Mexican government itself failed to produce and provide to TFM.
   In a joint statement TMM and KCS said they believe the audit findings by the SAT and the continued attachment of the original value added tax certificate lack any legal merit, and they expect TFM to contest through appropriate legal means the conclusions of this tax audit and any penalties or taxes that may subsequently be assessed.