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Claiming Tax Treaty Benefits In Mexico As Of January 1

Author:Mr Rodrigo Gómez
Profession:Jones Day

The new Mexican Income Tax Law ("MITL") that entered into force on January 1 modified the so-called procedural provisions concerning the application by multinational companies of benefits set forth under tax treaties negotiated and executed by Mexico. Accordingly, foreign residents claiming tax treaty benefits (either for a tax exemption or for a reduced withholding tax rate) should comply with the following requirements; otherwise, withholding agents will not apply these benefits and could withhold taxes up to a 35 percent general tax rate for Mexican-source taxation for foreign residents:

Provide a certificate of tax residency issued by foreign tax authorities or a certification from these authorities that the foreign resident filed its tax return (this is the only requirement that was needed up to 2013). Appoint, through a power of attorney (granted before a foreign notary and apostilled or legalized by the Mexican consulate) a Mexican tax resident as its legal representative for tax purposes in Mexico. File, through the legal representative for tax purposes, either an informative tax return or a tax report. For related party transactions, the tax authorities may request that the...

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