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David Cuellar |
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Fernanda Amaral |
In February 2010, the Mexican Senate ratified a protocol amending the existing 2004 Convention for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Austria with respect to taxes on income and capital.
The protocol was signed on September 18 2009 and will enter into force three months following compliance with the ratification instruments between Mexico and Austria. This treaty will become applicable as of January 1 in the year after all the requirements are met, which may be 2011.
Historically the exchange of information has been conceived as a mechanism or technique against fraud and international fiscal evasion. The fact that a double tax treaty includes specific provisions in this respect follows a legal trend where tax-related information can be exchanged between tax authorities.
The tax secrecy regulations of the information exchange provisions refer to persons who are allowed access to them and what can be done with them. Their aim is to avoid the incorrect disclosure of information and its misuse for anything other than its real purpose.
The main provision of this protocol is that the competent authorities of the two jurisdictions shall exchange information relevant for either: a) carrying out the provisions of the tax treaty or b) the administration or enforcement of the domestic laws concerning taxes of every kind imposed on behalf of these jurisdictions.
Also, the protocol allows exchange of information notwithstanding if it is in possession of a bank, other financial institution, agent or any other person acting as a representative. This protocol does not consider that the exchange of information would be in an autonomous or spontaneous way.
The exchange of information will be performed via a formal request which shall be grounded, fulfilling certain requirements and establishing the purposes for which the information should be used, avoiding fishing expeditions.
David Cuellar (david.cuellar@mx.pwc.com) & Fernanda Amaral Vicentini (fernanda.amaral.vicentini@mx.pwc.com), Mexico City
