Tax treaty disputes in Mexico

Introduction: This chapter is intended to describe how tax treaty disputes are resolved in Mexico. While some sections make reference to transfer pricing, the chapter focuses on tax treaty dispute resolution in areas other than transfer pricing. For this purpose, the chapter is divided into eight sections, followed by the questionnaire. Section 2 discusses the economic and institutional contexts under which Mexico’s tax treaty network began and developed. Section 3 describes the legal status of tax treaties with a focus on the case law that determines that status. Section 4 overviews the tax treaty network of Mexico; after a historical background, it highlights the main deviations from the OECD Model Tax Convention, particularly in connection with the MAP article (including arbitration). Tax treaty interpretation in Mexico is explained in Section 5; the influence of the Vienna Convention on the Law of Treaties, the OECD Commentaries, published MAPs and contextual elements are discussed. Section 6, which directly addresses the resolution of tax treaty disputes, is divided in two parts: one regarding the MAP and another one that refers to litigation. Comments are made on how the MAP works in practice, and on the most relevant international tax case law. Section 7 explains the current regulatory framework in Mexico in connection with exchange of information. Section 8 concludes with some closing remarks. Economic and Institutional Contexts: In 2014, Mexico registered a GDP of US$1.295 trillion, having a population of 125.4 million. Since the early 1990s (when Mexico started to sign tax treaties), the GDP has shown a sound increase, with some steps back in 1995 (due to a profound national economic crisis) and 2009 (due to the aftermath of the global economic crisis and the outbreak of swine flu). Traditionally, the sectors that have been major contributors to the GDP are the energy, building and manufacturing industries, trade, financial services (including insurance), tourism and mass media. In the last decade, the most dynamic sectors have included financial services (with the highest growth), trade, mass media. and the manufacturing and transportation industries. Agriculture showed an untypical upturn in 2012. © Cambridge University Press 2017.