9. INCOME AND MINING TAXES

Income and mining taxes expense (recovery) is made up of the following geographic components:

			Years Ended December 31,

			2012		2011			2010

Current income and mining taxes:

	Canada	$	8,750	$	62,382		$	34,217

	Mexico		33,531		3,496			1,942

	Finland		9,799		222			–

			52,080		66,100			36,159

Deferred income and mining taxes:

	Canada		26,041		(341,038	)		47,083

	Mexico		25,284		54,996			18,759

	Finland		20,820		10,269			1,086

			72,145		(275,773	)		66,928

Income and mining taxes		$	124,225	$	(209,673	)	$	103,087

Cash income and mining taxes paid in 2012 were $57.0 million (2011 – $110.9 million; 2010 – $25.2 million).

The income and mining taxes expense (recovery) is different from the amount that would have been calculated by applying the Canadian statutory income tax rate as a result of the following:


	2012	2011	2010

Combined federal and composite provincial tax rates	26.3%	27.8%	29.6%

Increase (decrease) in tax rates resulting from:

Provincial mining duties	3.6	5.9	6.8

Tax law changes	–	(2.7)	(5.1)

Impact of foreign tax rates	(1.5)	(0.2)	(0.5)

Permanent differences	1.0	(1.6)	(4.2)

Valuation allowances	1.2	(0.3)	(0.2)

Impact of changes in income tax rates	(2.1)	(2.0)	(2.7)

Actual rate as a percentage of pre-tax income	28.5%	26.9%	23.7%

The following table details the components of Agnico-Eagle's deferred income and mining tax liabilities:

	Liabilities (Assets) as at December 31,

	2012		2011

Mining properties	$761,508		$704,379

Net operating and capital loss carryforwards	(102,005	)	(104,332	)

Mining duties	(36,158	)	(88,670	)

Reclamation provisions	(42,688	)	(51,926	)

Valuation allowance	30,570		39,121

Deferred income and mining tax liabilities	$611,227		$498,572

All of Agnico-Eagle's deferred income and mining tax assets and liabilities were denominated in the local currency based on the jurisdiction in which the Company paid taxes, except for Canada, and were translated into US dollars using the exchange rate in effect at the applicable consolidated balance sheets dates. For Canadian income tax purposes, for December 31, 2008 and subsequent years, the Company elected to use the US dollar as its functional currency.

The Company operates in different jurisdictions and, accordingly, it is subject to income and other taxes under the various tax regimes in the countries in which it operates. The tax rules and regulations in many countries are highly complex and subject to interpretation. The Company may be subject in the future to a review of its historic income and other tax filings and in connection with such reviews, disputes can arise with the taxing authorities over the interpretation or application of certain tax rules and regulations to the Company's business conducted within the country involved.

A reconciliation of the beginning and ending amounts of the unrecognized tax benefits is as follows:


		2012	2011			2010

Unrecognized tax benefits, beginning of year	$	1,200	$1,630		$	5,608

Additions (reductions)		9,667	(430	)		(3,978	)

Unrecognized tax benefit, end of year	$	10,867	$1,200		$	1,630

The full amount of unrecognized tax benefits, if recognized, would reduce the Company's annual effective tax rate. The Company does not expect its unrecognized tax benefits to change significantly over the next year.

The Company is subject to taxes in Canada, Mexico and Finland, each with varying statutes of limitations. The 2007 through 2012 taxation years generally remain subject to examination.