Tyson Foods faces litigation with Mexico‘s Ministry of Finance and Public Credit (SHCP) related to the payment of taxes on an asset sale in 2015.
Founded in the United States, Tyson Foods is one of the world’s largest food companies and a recognized leader in proteins, with annual revenues as of September 30, 2023 of US$52.881 billion, down 0.8% year-on-year, and net losses of US$649 million compared to a profit of US$3.249 billion in the previous year.
In December 2021, the company received an assessment from the Mexican tax authorities related to the 2015 sale of its direct and indirect equity interests in subsidiaries that maintained operations in Mexico.
As of September 30, 2023, the settlement amounted to approximately US$488 million (8.6 billion Mexican pesos), which includes taxes, inflation adjustment, interest and penalties.
«We believe the assertions made in the assessment letter are without merit and we will defend our positions through the administrative appeals process and Mexican litigation, if necessary,» the company said.
Tyson Foods
In fiscal 2014, the company announced the plan to sell its Brazil and Mexico operations to JBS SA for $575 million in cash, less debt and other adjustments.
As a result, Tyson Foods performed an impairment test and recorded an impairment charge of $39 million in the fourth quarter of fiscal 2014 related to our Brazil operation.
The company then completed the sale of the Brazil operation in the first quarter of fiscal 2015 and received net proceeds of $148 million which included working capital, net debt adjustments and cash transferred.
The sale did not result in a significant gain or loss as the carrying value of the Brazil operation approximated sales proceeds at the time of sale.
Separately, the company completed the sale of the Mexico operation in the fourth quarter of fiscal 2015 and received net proceeds of approximately $374 million, including working capital, net debt adjustments and cash transferred.
As a result of the sale, it recorded a pre-tax gain of US$161 million, which was reflected in Cost of Sales in its Consolidated Statements of Income.