Legal news BSTL 3 - 2013 (english version)

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Agreements to avoid double taxation.
Agreements regarding the exchange of information.
Agreement regarding mutual administrative assistance on fiscal matters.
FATCA (Foreign Account Tax Compliance Act).

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Legal news BSTL 3 - 2013 (english version)

  1. 1. Mexico, February 2013. International Agreements and Treaties on Tax AffairsA. AGREEMENTS TO AVOID DOUBLE TAXATION.Mexico has executed 46 Fiscal Agreements regarding Double Taxation applicable in 2013.Among those in negotiation or pending, are the Agreements with Saudi Arabia, Belgium (renegotiation),Slovenia, Hong Kong (executed on June 18 th, 2012), Jamaica, Lebanon, Malaysia, Malta, Morocco,Nicaragua, Pakistan, Thailand, and Turkey.Agreements with an effective date starting on 2012 and 2013 are the following: Country Date of Approval by Official Effective Date Date of Date of execution Mexican Senate Language(s) Enforceability Publication of the Agreement Publication of in DOF decree in the Mexican Federation’s Official Gazette (“DOF”) Bahrain 10-Oct-2010 24-Nov-2011 Arabic 22-Feb-2012 01-Jan-2013 27- Apr-2012 26-Dec-2011 Spanish English Hungary 24-Jun-2011 29-Nov-2011 Spanish 31-Dec-2011 01-Jan-2012 28-Dec-2011 English 01-Dec-2011 Hungarian Lithuania 23-Feb-2012 19-Apr-2012 Spanish 29-Nov-2012 1-Jan-2013 26-Nov-2012 English 24-May-2012 Lithuanian Singapore 9-Nov-1994 26-Apr-1995 Spanish 14-Sep-1995 1-Jan-1996 9-Jan-2012 29-Sep-2009 13-Jun-1995 English 1-Jan-2012 1-Jan-2013 Ukraine 23-Jan-2012 19-Apr-2012 Spanish 6-Dec-2012 01-Jan-2013 26-Nov-2012 English 24-May-2012 Ukrainian Leetonia 20-Apr-2012 11-Dec-2012 Spanish 03-March-2013 1-Jan-2014 26-Feb-2013 ______________ English Latvian 29- Jan-2013B. AGREEMENTS REGARDING THE EXCHANGE OF INFORMATION.Mexico has executed 12 Agreements on the Exchange of Fiscal Information, applicable in 2013.Among those in negotiation or pending, are the Agreements with Aruba, Gibraltar (Gibraltar’s signature ismissing), Marshall Islands, British virgin Isles, Liechtenstein, Monaco, Saint Lucia, Turks and Caicos, andVanuatu.Agreements with an effective date starting on 2012 and 2013 are the following:
  2. 2. Country Date of Approval by Official Effective Date Enforceability Date of execution Mexican Languages starting from Publication of Senate the Agreement in DOF Belize 17-Nov-2011 19-Apr-2012 Spanish 9-Aug-2012 9-Aug-2012 9-Aug-2012 English 24-May-2012 Costa 25-Apr-2011 15-Dec-2011 Spanish 26-Jun-2012 26-Jun-2012 21-Jun-2012 Rica 27-Jan-2012 1-Jan-2013 Isle of 18-Mar-2011 15-Dec-2011 Spanish 4-Mar-2012 4-Mar-2012 2-Mar-2012 Man 11-Apr-2011 English 27-Jan-2012 Cayman 17-Aug-2010 15-Dec-2011 Spanish 9-Mar-2012 9-Mar-2012 7-Mar-2012 Islands English 28-Aug-2010 27-Jan-2012 1-Jan-2013 Cook 08-Nov-2010 15-Dec-2011 Spanish 3-Mar-2012 3-Mar-2012 2-Mar-2012 Islands English 22-Nov-2010 27-Jan-2012 Guernsey 10-Jun-2011 15-Dec-2011 Spanish 24-Mar-2012 24-Mar-2012 27-Apr-2012 Islands 27-Jun-2011 English 26-Jan-2012 Jersey 08-Nov-2010 15-Dec-2011 Spanish 22-Mar-2012 22-Mar-2012 22-Mar-2012 Islands English 12-Nov-2010 27-Jan-2012 Samoa 17-Nov-2011 19-Apr-2012 Spanish 18-Jul-2012 18-Jul-2012 13-Jul-2012 English 30-Nov-2011 24-May-2012C. AGREEMENT REGARDING MUTUAL ADMINISTRATIVE ASSISTANCE ON FISCAL MATTERS.On the 27th of August 2012, in the Mexican Federation’s Official Journal, a “Proclaiming Decree regardingthe Mutual Administrative Assistance on Fiscal Matters Agreement” was published, prepared in Strasburgon the 25th of January nineteen ninety eight, with an effective date starting from the 1st of September 2012.The aforementioned Agreement, along with its reservations and interpretative declarations was executedin order to increase assistance between tax authorities (administrative assistance) of the Countries thatare Members of the European Council and the countries that are Members of the Organization forEconomic Co-operation and Development (OECD) as Mexico, in order to battle the circumvention andavoidance of tax on an international level.The Agreement does not limit, nor is limited by the international agreements previously executed byMexico; the agreement is a multilateral instrument of mutual assistance between the Countries that aremembers of the OECD.The purpose of the Agreement is the mutual administrative assistance on tax matters, which includes: i) Information exchange, including simultaneous tax audits and participation in foreign audits. ii) Assistance in collections, including the provision of precautionary measures; and the
  3. 3. notice or service of documents.The comprised taxes for Mexico are: i) Federal Income Tax and the Flat Rate Business Tax. ii) Value Added Tax. iii) Special Tax on Production and Services.Competent Authorities in Mexico: i) The Ministry of Finance and Public Credit ii) The Tax Administration ServiceComprised assistance manners: i) Spontaneous exchange of information. ii) Exchange of information upon request. iii) Automatic exchange of information. iv) Simultaneous tax revisions. v) Tax inspectors in foreign countries. vi) Assistance in collections and precautionary measures. vii) Notice of documentation.The information that is considered unlikely to be relevant to the assessment and collection of taxes, andthe collection and enforcement of tax claims, as well as for the enforcement proceedings beforeadministrative tax authority will not be exchanged in accordance with the Agreement.Within the Reservations to the Agreement, Mexico i) Will not provide any assistance (including collections, notice or service of documents) to other Parties (States) in relation to (a) income tax, profits, capital gains or net worth required by political subdivisions or local authorities of a Party; (b) mandatory social security dues payable to the general government or to social security institutions established under public law; (c) property taxes, inheritance, or donations, (d) real estate property tax; (e) motor vehicle use and possession tax; (f) payable taxes on behalf of political subdivisions or local authorities. ii) Will not permit the notice or service of documents by email, regarding the taxes listed in paragraph i) above.Use of information and confidentiality: i) The information shall be treated as secret and will be protected in the receiving State in the same manner as the information obtained under its domestic legislation. ii) If personal information is provided, it should be treated considering the guarantees that may be required to ensure the protection of the data in accordance with the domestic legislation of the Party providing the information. iii) The information may be disclosed in public court proceedings or court orders relating to taxes covered by the Agreement. iv) The information may be used for combat purposes of money laundering, corruption, and terrorism finance.D. FATCA (Foreign Account Tax Compliance Act).The Agreement, was negotiated over a period of two years and was signed on November 19, 2012 in theCity of Washington, DC by the Ministry of Finance and Public Credit and the Treasury Department of theUnited States of America, the aforementioned has not been published in the Federal Official Gazette,signed in both English and Spanish languages and both texts being equally authentic, in force as fromJanuary 1st 2013.With the signing of this Agreement, Mexico ranks among the countries with the best practices ininformation sharing by the OECD and by the G20.The Agreement is meant for purposes of exchanging banking and financial information in order to verifythe compliance with the tax obligations of the respective taxpayers.
  4. 4. The exchange of information is annual and automatic, i.e. there is no application required for itsacquisition.The information must be exchanged within nine (9) months following the end of the calendar year for therelevant year. Notwithstanding the foregoing, any information that relates to the year 2013 will beexchanged no later than September 30, 2015. I. Accounts in USA of residents in Mexico.In the case of USA, regarding to each Reportable Mexican Account on a Financial Institution in USA, theinformation to submit by the Treasury Department to the Ministry of Finance and Public Credit, is thefollowing: i) The name, address and Federal Taxpayers Registry in Mexico (FTR) of any person who is a resident of Mexico and is the holder of the account; ii) The account number (or the equivalent in the absence of an account number); iii) The name and identification number of the reporting US Financial Institution; iv) The gross amount of the interests paid on each deposit account; v) The gross amount of the dividends incoming from USA paid or credited to the account, and vi) The gross amount of other income received from USA paid or credited to the account (Tax Withholding on Non-Resident Aliens and Foreign Corporations, and Regime Consolidation in the USA ").In preexisting accounts (financial account maintained until 31 December 2013), it is not necessary toreport the FTRs of the resident in Mexico on the exchange of information, if the Financial Institution doesnot have the latter on their records, the date of birth will suffice. II. Accounts in Mexico of residents in USAIn the case of Mexico, regarding to each Reportable American Account on a Financial Institution in Mexico,the information to submit by the Ministry of Finance and Public Credit to the Treasury Department, is thefollowing: (i) The name, address and tax identification number in USA of each resident of USA who is the account holder and, in the case of an entity who is not resident in the USA but the control is managed by a resident in USA, it must be reported the name, address and tax identification number in USA (if any) of such entity and each of the people who have control of the entity; (ii) The account number (or the equivalent in the absence of an account number); (iii) The name and identification number of the reporting Mexican Financial Institution; (iv) The average monthly balance of the account or value (including, in the case of a Cash Value Insurance Contract or Revenue Insurance Contract, the cash value or the surrendering value) during the corresponding calendar year or any other appropriate reporting period or, if the account was closed during said year, the average monthly balance for the calendar year until the time of closing; (v) In the case of a custody account: a. The gross amount of the interests, the gross amount of dividends, and the total gross income over other assets held in the account, in each case, paid or credited to the account (or with respect to the account) during the calendar year or other appropriate reporting period, and b. The total gross receipts from the sale or reimbursement of the property paid or deposited to the account during the calendar year or other appropriate reporting period regarding to the Mexican Financial Institution that acted as custodian, agent, representative, or any other similar to the account holder; (vi) In the case of a deposit account, the total gross amount of interests paid or credited to the account during the calendar year or other appropriate reporting period, and (vii) In the case of any account that is not described in paragraphs (v) or (vi) above, the total gross amount paid or credited to the account holder regarding the account during the calendar year or other appropriate reporting period in respect of which reporting Mexican Financial Institution reporting is bound or debtor, including the total amount of reimbursement payments made to the holder of the account during the calendar year or other appropriate reporting period.
  5. 5. With respect to 2013 and 2014 the information that will be reported is the one specified in section II. (i) toII. (iv). For 2015, the in the information that will be reported is the one specified in section II. (i) to II. (iv)except for the gross proceeds indicated in section II. (v) (b).Non-reportable products: (i) personal retirement plans, (ii) Retirement Insurance, (iii) Pension Fund, and(iv) AFORES.The Agreement provides for the most favored nation clause (Article 9), the Treasury Department mustnotify the Ministry of Finance and Public Credit of Mexico of the most favored conditions agreed with otherParties and these most favored conditions will be applied automatically and with effect from the date of theentry into force of the agreement.Contacts:Bernardo Ledesma Uribeblu@bstl.com.mxAna Paula Pardo Lelo de Larreaapll@bstl.com.mxTelephone: +52 (55) 5091-0000.www.bstl.com.mxThe information provided cannot substitute a specific legal advice. This publication serves only for informationalpurposes. BSTL takes no legal responsibility for a decision taken on basis of this publication.
  6. 6. With respect to 2013 and 2014 the information that will be reported is the one specified in section II. (i) toII. (iv). For 2015, the in the information that will be reported is the one specified in section II. (i) to II. (iv)except for the gross proceeds indicated in section II. (v) (b).Non-reportable products: (i) personal retirement plans, (ii) Retirement Insurance, (iii) Pension Fund, and(iv) AFORES.The Agreement provides for the most favored nation clause (Article 9), the Treasury Department mustnotify the Ministry of Finance and Public Credit of Mexico of the most favored conditions agreed with otherParties and these most favored conditions will be applied automatically and with effect from the date of theentry into force of the agreement.Contacts:Bernardo Ledesma Uribeblu@bstl.com.mxAna Paula Pardo Lelo de Larreaapll@bstl.com.mxTelephone: +52 (55) 5091-0000.www.bstl.com.mxThe information provided cannot substitute a specific legal advice. This publication serves only for informationalpurposes. BSTL takes no legal responsibility for a decision taken on basis of this publication.

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