Mexico is following the US lead in treating the IGA as a competent authority agreement that merely interprets and clarifies the existing tax treaty between the two countries and therefore does not need to be subjected to internal ratification or implementation processes. From a Baker & McKenzie client alert posted at Tax Analysts today:
Upon a number of consultations with the relevant tax authorities, we have concluded that no need exists for the United States and Mexico FATCA Intergovernmental Agreement to be published in the Mexican Federal Official Gazette in order for it to be effective. The Intergovernmental Agreement has become effective as of January 1st, 2013 as stated therein.
The Intergovernmental Agreement merely constitutes an accord between the two countries as to the actual implementation of the exchange of information in connection with taxes already covered in other Conventions – i.e., the Convention on Mutual Administrative Assistance in Tax Matters the US-Mexico Double Tax Treaty, and the US-Mexico Tax Information Exchange Agreement, all of which are in effect and authorize the exchange of information for tax purposes on an automatic basis. This Intergovernmental Agreement sets the framework for the coordination of the Competent Authority of each country in their efforts to improve international tax compliance.I confess, I still don't see it. How can an agreement to implement a law passed in the US in 2010 "interpret" an existing treaty that predates it, especially when the law in question would override the treaty? A possible explanation is that Mexico's internal financial reporting rules already require financial institutions with the specific information being asked by the US, and that this is just a matter of turning over an existing data stream on an automatic basis. But how can that be--is it likely that Mexican financial institutions already as all of their clients for indicia of US person status? And that it imposes withholding taxes on US-source payments in excess of treaty rates in cases of noncomplianee? Not likely, and obviously not, respectively.
I note that Mexico does seem to have much more info flow between its financial institutions and its tax authority--so much so that it wants to provide the US with monthly average balances of accounts held by US persons, because its banks have monthly info requirements to the Mexican tax authority, you can read about that here.
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