MEXICO Law and Practice Contributed by: Edgar Klee and Joel Gonzalez Lopez Haynes and Boone, S.C.
USA
Mexico
Mexico City
Guatemala
Contents 1. Corporate Structures, Residence and Tax Treatment p.332 1.1 Corporate Forms and Their Tax Treatment p.332 1.2 Use and Taxation of Transparent Business Structures p.332 1.3 Tests for Determining Tax Residence p.332 1.4 Applicable Corporate and Individual Tax Rates p.333 2. Corporate Tax Regime p.333 2.1 Taxable Profits p.333 2.2 Technology Investments p.333 2.3 Special Incentives p.333 2.4 Loss Relief p.334 2.5 Deduction of Interest p.334 2.6 Consolidated Tax Grouping p.335 2.7 Capital Gains p.335 2.8 Other Taxes on Transactions p.335 2.9 Other Notable Taxes p.336 3. Corporations and Non-Corporate Businesses p.336 3.1 Form of Closely Held Local Businesses p.336 3.2 Individual and Corporate Rates p.336 3.3 Restrictions on Retention of Earnings by Closely Held Corporations p.336 3.4 Taxation of Individuals on Shares in Closely Held Corporations p.336 3.5 Taxation of Individuals on Shares in Public Corporations p.336 4. Taxation of Inbound Investments p.336 4.1 Application of Withholding Taxes p.336 4.2 Key Treaty Jurisdictions for Inbound Investment p.338 4.3 Tax Authority Scrutiny of “Treaty Shopping” Practices p.338 4.4 Transfer Pricing Issues for Inbound Investors p.338 4.5 Challenges to Related-Party Limited Risk Distribution Arrangements p.339 4.6 Local Transfer Pricing Rules and OECD Standards p.339 4.7 Transfer Pricing Disputes and Mutual Agreement Procedures p.339 5. Taxation of Non-Local Corporations p.339 5.1 Compensating Adjustments p.339
5.2 Local Branches and Local Subsidiaries p.339 5.3 Capital Gains of Non-Residents p.339
5.4 Tax Implications of Change of Control p.340 5.5 Formula-Based Income Attribution p.340 5.6 Deductibility of Intra-Group Management and Administrative Charges p.340 5.7 Restraints on Related-Party Borrowing p.340 6. Taxation of Foreign Income of Local Corporations p.340 6.1 Foreign Income Exemptions p.340 6.2 Non-Deductible Local Expenses p.340 6.3 Dividends From Foreign Subsidiaries p.340 6.4 Taxation of Intangibles Developed by Local Corporations p.340 6.5 Controlled Foreign Corporation-Type Rules p.341 6.6 The Substance of Non-Local Affiliates p.341 6.7 The Sale of Shares in Non-Local Affiliates p.341 7. Anti-Avoidance Provisions p.341 7.1 Overarching Provisions p.341 8. Audit Cycles p.342 8.1 Regular Routine Audit Cycle p.342 9. BEPS p.343 9.1 Adoption of BEPS Recommendations p.343 9.2 Government Policy and Objectives Approach p.343 9.3 International Tax p.344 9.4 Competitive Tax Policy Objectives p.344 9.5 The Competitive Tax System p.344 9.6 Hybrid Instruments and BEPS Implementation p.344 9.7 Interest Deductibility and Territorial Tax Regime p.344 9.8 Controlled Foreign Corporation Reform p.344 9.9 Anti-Avoidance Rules p.344 9.10 Transfer Pricing and IP Taxation p.344 9.11 Country-by-Country Reporting and Transparency Provisions p.344 9.12 Digital Economy Businesses p.344 9.13 Approach to Digital Services Taxation p.345 9.14 Offshore IP Provisions p.345
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