New Double Tax Treaty Announced Between Australia And Mexico

by Mary Swire, Tax-News.com, Hong Kong

06 February 2004

Trade and investment relations between Australia and Mexico are set to strengthen following the announcement of a new double taxation treaty by Minister for Revenue and Assistant Treasurer, Senator Helen Coonan yesterday.

“The new treaty will foster the development of trade and economic cooperation between Australia and Mexico and will further Australia’s trade and investment links with Mexico. Australia’s trade and investment relationship with Mexico is the largest Australia has with any Latin American country, exceeding $A1 billion in 2003,” Senator Coonan explained in a statement.

She continued:

“The new treaty reduces double taxation by allocating taxing rights between Australia and Mexico for all forms of income flows between the two countries. The basis of allocating these rights is substantially the same as those adopted in Australia’s other modern tax treaties.

“The treaty will reduce the withholding tax rates applicable to dividend and royalty flows and this will benefit Australia through reductions in the level of Mexican tax on payments flowing back to Australia.

“The integrity of the tax system will be enhanced, and government revenues will be protected, through both the establishment of a strengthened framework for the exchange of information between revenue authorities and a mechanism for settling jurisdictional disputes under the treaty.

“The treaty will provide Australia with a competitive tax framework for international trade and investment, while ensuring the Australian revenue base is sustainable and suitably protected. The treaty ensures Australia can effectively apply its taxing rights in respect of Australian sourced business profits, the exploitation of its natural resources and the sale of significant Australian assets.”

The new treaty will have effect for Australian and Mexican withholding taxes in relation to dividends, interest and royalties paid or credited on or after 1 January 2004. The dates of effect for Australian income tax and other Mexican taxes is 1 July 2004.

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