Kincora Copper Ltd. today announced that its Mongolian subsidiary Golden Grouse IBEX LLC has received a 2021 tax assessment for 2.7 billion MNT, approximately US$950,000, from the Mongolian Tax Authority (“MTA”).
The 2021 tax assessment is comprised of four items, of which Kincora strongly refutes the merit of three including the very vast majority of the liability sought relating to the 2016 merger with IBEX (the agreed liability owed is 16.2 million MNT or approximately US$5,700).
The 2016 IBEX merger required the tax assessment, which followed an audit of the IBEX’s entity’s prior year periods and the on and off-shore agreements to the merger (IBEX and parent entity). The 2016 tax assessment was a condition precedent to close the merger with any adverse liability enabling both counterparties to walk away. In the company’s view, supported by three independent external legal opinions, the 2021 tax assessment’s retrospective liability is not in-line with the 2016 tax assessment and Mongolian law, and there is no basis for a different determination.
Shortly after the IBEX merger closed, in mid-2017, a tax audit commenced on the merged entity to validate that the merger transaction completed as it was presented to the Mongolian authorities in 2016. This review has only recently completed, with a fourth audit review team, including a team member from the original 2016 review, delivering the 2021 tax assessment. A statute of limitation for the MTA to review and retrospectively enable a contradictory tax act expires on 10 February 2021.(cision)