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Tax Management International Forum

Author:Mr Jose Carlos Silva and Juan Manuel Lopez Duran
Profession:Chevez Ruiz Zamarripa
  1. Updates on BEPS-Related (or BEPS-Inspired) Measures or Proposed M

    No amendment to the Mexican tax provisions has been enacted or proposed in response to the OECD's discussion draft on Branch Mismatch Structures, which was published on August 22, 2016.1 More generally, Mexico has expressed its wish to continue adopting the BEPS Action Plan in a large number of forums. It is therefore expected that, over time, Mexico will implement measures based on BEPS Action Plan recommendations in areas where Mexican tax law is not already BEPS-compliant.

    It should be noted in this context that, in accordance with the usual legislative practice in Mexico, amendments to the tax provisions are enacted annually. However, as noted in previous editions of the Tax Management International Forum,2 in 2014, the Mexican Government issued a document titled ''The Certainty Agreement'' (''Acuerdo de Certidumbre Trib taria'') relating to tax matters. Under The Certainty Agreement, the Executive Branch has made a public commitment not to propose any change to the tax structure in Mexico from 2014 to 2018. Specifically, this comprises a commitment not to increase tax rates, not to propose any new taxes and not to eliminate any tax benefits or exemptions, unless any of these measures are warranted by the macroeconomic conditions in Mexico.

    In this respect, the Executive Branch recently sent to the Congress a bill that proposes amendments to a number of tax laws for 2017. However, the bill does not propose the adoption of any BEPS-related or BEPS-inspired measure. At the time of this writing the bill had been approved by Congress and was expected to be published in the official daily shortly.

  2. Going Beyond BEPS, Key Measures Recently Adopted, Applied or Proposed

    A number of measures designed to protect the tax base in the context of cross-border activities have been adopted in recent years. These measures remain in force and are outlined below.

    Since 2014, the Mexican Income Tax Law has contained a restriction on the deductibility of interest payments, royalties and payments for technical assistance in certain circumstances (i.e., BEPS Action 2: hybrids — transactions and structures). Also, in order to prevent the abuse of Mexico's tax treaties (i.e., BEPS Action 6: treaty abuse), since 2014, in the case of transactions among related parties, the Mexican

    tax authorities have been able to require a nonresident wishing to claim benefits under a tax treaty to which Mexico is...

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