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Mexican Tax Law: Canada-Mexico Tax Treaty
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Canada-Mexico Income Tax Treaty A bilateral income tax treaty has been in effect between Canada and Mexico since July 17, 1992. Like the U.S.-Mexico Tax Treaty, the Canada-Mexico Tax Treaty provides for avoidance of double taxation, reduction of income taxes applied to foreign residents, and the exchange of information between government authorities to avoid tax fraud.
The Canada-Mexico Tax Treaty is virtually identical to the U.S.-Mexico Tax Treaty, except for the following differences: DividendsWhile the U.S.-Mexico Tax Treaty reduces U.S. taxes on dividends to a rate of 5% or 10% (see above), the rate between Canada and Mexico will be 10% or 15%. InterestCanada and Mexico have agreed that the highest tax rate on interest income earned by non-residents will be 15%. Under the U.S.-Mexico Tax Treaty, the tax rates are 4.9%, 10% and 15% depending on the type of loan. However, according to the Most-Favored-Nation Provision of the Canada-Mexico Tax Treaty, if either country includes a lower tax rate on interest in a tax treaty concluded with another country, that tax rate will apply to the Canada-Mexico Tax Treaty, but under no circumstances shall the rate be lower than 10%. Consequently, when the U.S.-Mexico Tax Treaty is ratified, the same tax rates on interest will apply between Canada and Mexico, except that 10% will be the lowest tax rate—versus 4.9% (see Canada-Mexico Tax Treaty, Protocol). RoyaltiesThe Canada-Mexico Tax Treaty's maximum tax rate for royalties earned by foreign residents is 15%. The U.S.-Mexico Tax Treaty will apply a maximum 10% rate. However, the protocol described in the preceding paragraph will also apply to royalties, thereby reducing the rate to 10% when the U.S.-Mexico Tax Treaty is ratified. Dispute SettlementThe "Mutual Agreement Procedure" of the Canada-Mexico Treaty is identical to that of the U.S.-Mexico Tax Treaty, except that Canada and Mexico did not provide for binding arbitration. Other ProvisionsIn addition to the foregoing differences, the U.S.-Mexico Tax Treaty has a series of provisions that are not included in the Canada-Mexico Tax Treaty, such as rules regarding the taxation of branches, alimony and child support, and exempt organizations. Return to top |
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Business in Mexico: Types of Companies in Mexico
The Ley General de Sociedades Mercantiles (Corporate Law) recognizes as business entities the general partnership (sociedad de nombre colectivo), the limited liability partnership (sociedad en comandita simple), the limited liability company (sociedad de responsabilidad limitada), the stock corporation (sociedad anónima), the limited liability stock partnership (sociedad en comandita por acciones), and the cooperative (sociedad cooperativa). The LGSM regulates the operations of the above-mentioned companies, except for the cooperative which, due to its nature, is governed by a special law.
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| | Invest in Mexico: Neutral Investment
Neutral investment is a mechanism through which foreign investment can participate in certain reserved or specially regulated activities.
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The LIE defines neutral investment as investment in Mexican companies or in authorized trusts that will not be taken into consideration for determining the percentage of foreign investment in the capital stock of Mexican companies.
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| | Economic Activities in Mexico Subject to Restriction
As a general rule, there are no legal restrictions on foreign individuals and entities engaging in economic activities in Mexico, either directly or as partners or shareholders in Mexican companies.
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However, the LIE (Ley de Inversión Extranjera or Foreign Investment Law) specifies certain activities in which foreign investment is not allowed and others in which it is limited.
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Here we will discuss the activities that are reserved or subject to a specific regulation. We will also refer to the concept, regulation, and scope of neutral investment, a mechanism through which foreign investment can participate in certain reserved or specially regulated activities.
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| Canadian Chamber of Commerce in Mexico
The Canadian Chamber of Commerce in Mexico (CCCM) is a non-profit organization founded in 1982 by a prominent group of Canadian and Mexican companies. The mission of the CCCM is to promote and strengthen the commercial, financial and investment relationships between Canada and Mexico. The primary aim of the CCCM is to serve as a home for Canadian businesspersons in Mexico.
| | British Chamber of Commerce in Mexico
The BritCham represents not only British business interests but other European chambers of commerce as well, and is the perfect connection when it comes to facilitating business in Mexico. Their extensive network is also the best way to get into contact with other British and European nationals living, working and doing business in the country. Below we've presented an introduction and information on how to get in touch with the BritCham.
| | Business Practices in Mexico: The Basics
Are you conducting business in Mexico? Are you aware of the most significant cultural differences? Refer to this page for a quick education in Mexican dress code, negotiations and business lunches.
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