New Withholding Tax On Dividends In Mexico - Tax - Mondaq Mexico - Mondaq Business Briefing - Books and Journals - VLEX 510899274

New Withholding Tax On Dividends In Mexico

Author:Mr Rodrigo Gómez
Profession:Jones Day
 
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Up to December 31, 2013, Mexico did not tax dividend payments. However, the Mexican Income Tax Law ("MITL") that entered into force on January 1, 2014 established a new 10 percent withholding tax on the gross amount of dividend payments made by legal entities resident in Mexico for tax purposes to its shareholders. The 10 percent withholding tax will be applicable to the following shareholders of the relevant entity paying dividends: individuals who are tax residents in Mexico and foreign shareholders. No withholding tax is triggered when a legal entity resident for tax purposes in Mexico pays dividends to other Mexican resident legal entities. Most of the 57 tax treaties executed by Mexico include either a reduced withholding tax rate on dividend payments for some qualified shareholders (e.g., 5 percent for the tax treaties with the United States, Germany, Belgium, Spain, Canada, France, Luxembourg, South Africa, Panama, Uruguay, Japan, or China, among others) or a source taxation exemption (e.g., the tax treaties with the U.S., Singapore, Australia, Colombia, Hong Kong, Japan, Kuwait, Qatar, Sweden, Switzerland, or the United Kingdom, among others). As...

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