Client Alert

Mexico approves OECD Multilateral Instrument that would amend bilateral tax treaties to avoid double taxation

Seeking greater transparency regarding base erosion and the transfer of tax benefits, the Organization for Economic Cooperation and Development ("OECD") issued different recommendations regarding aggressive tax planning, i.e., tax strategies used by taxpayers, which intent to take advantage of discrepancies and inconsistencies existing between national tax systems, artificially shifting benefits to places of minimum or no taxation, where companies barely perform any economic activity, allowing to almost completely avoid corporate taxation.

On October 6 th , 2022, the Commissions of the Senate approved the Opinion of the Multilateral Instrument promoted by the OECD, regarding the Base Domestic tax base erosion and Profit Shifting (BEPS) Action No. 15.

This instrument is focused on modifying the Treaties to Avoid Double Taxation entered by Mexico so that they are aligned and homologated with the recommendations and conclusions of the OECD.

The execution of this instrument will result in the modification of different international treaties and domestic legislation regarding (i) withholding of taxes, (ii) permanent establishment, (iii) double taxation, (iv) tax controversy procedures, (v) transfer pricing, (vi) deduction of interests and other financial burdens, among others.

Therefore, it is expected that Mexico will implement certain amendments to international tax treaties in 2024.

In case you want to understand in detail the tax recommendations of the OECD regarding BEPS, or if you want our firm to review the implications for your company and the application of the obligations, do not hesitate to contact us.

Contact

Rafael Sánchez Acosta

rsanchez@cuestacampos.com

Franscela Sapien Olea

fsapien@cuestacampos.com

The above is provided as general information prepared by professionals with regard to the subject matter. This document only refers to the applicable law in Mexico. While every effort has been made to ensure accuracy, no responsibility can be accepted for errors or omissions. The information contained herein should not be relied on as legal, accounting or professional advice being rendered.