This Informational Notice refers to the Agreement to Improve International Tax Compliance including with respect to FATCA (Foreign Account Tax Compliance Act) (the "Agreement") signed on November 19, 2012 in Washington, U.S.A. between the Department of the Treasury of the United States of America and the Ministry of Finance and Public Credit of the United Mexican States ("Mexico").
1. Scope of the Agreement
The Agreement is of utmost importance due to the extraterritorial implications of the content of FATCA and the consequences that taxpayers in Mexico may sustain thereof.
In first glance, the Agreement seems to merely be a broader agreement for the exchange of information than the one signed on November 9, 1989 between the Government of the United States of America and the Government of Mexico; however, the audit faculties of the Competent Authorities, namely, the Department of the Treasury of the United States of America and the Ministry of Finance and Public Credit acting through the Tax Administration Service (the "SAT", and jointly with the Department of the Treasury of the United States of America, the "Competent Authorities"), include information available in Financial Institutions to which previously a foreign authority had no access.
Generally, Financial Institutions are required, through the SAT, no later than within 9 (nine) months of each calendar year, to automatically provide the Department of the Treasury of the United States of America, the requested information (the "Information") of the following accounts managed by said Financial Institutions: (i) accounts in the United States of America opened by individuals considered Mexican residents for tax purposes and which receive more than US$10 (Ten Dollars, Legal Currency of the United States of America) annual interest; and, (ii) accounts in Mexico opened by individuals or legal entities residents in the United States of America, which are not expressly excluded in the Agreement.
2. Information to be provided to the Competent Authorities
2.1. The information that must be submitted to the Competent Authority by Financial Institutions is, as follows:
2.1.1. Name of the holders of the accounts in the United States belonging to individuals considered residents in Mexico for tax purposes, address, Federal Tax Number (Registro Federal de Contribuyentes), account number, name and identification number of the Financial Institution, total gross amount of interest, total amount of dividends and total amount of income from any source of the United States of America; and,
2.1.2. Name of the holders of the accounts opened in Mexico by individuals or legal entities considered residents in the United States of America for tax purposes, address, TIN (Tax Identification Number), account number, name and identification number of the Financial Institution, monthly average value held in the account, total amount of gross interest (as of 2015), total amount of dividends (as of 2015) and products of the alienation of property (as of 2016).
Accounts existing prior to January 1, 2013 will be subject to an audit process for purposes of determining whether the information should be provided on those accounts using the exchange process. In general terms, accounts that do not exceed the amount of US$50,000 (Fifty Thousand Dollars, Currency of the United States of America) are not subject to exchange procedure.
3. Entry into force
The Agreement will enter into force on January 1, 2013.
4. Federal Personal Protection Data Law
Notwithstanding the obligations and the scope envisaged by the Agreement, the provisions of the Federal Personal Protection Data Law (Ley Federal de Protección de Datos en Posesión de los Particulares) shall be taken into consideration.
1. Pursuant Annex II of the Agreement, the Pension Funds (Administradoras de Fondos para el Retiro), the Investment Companies Specialized in Retirement Funds (Sociedades de Inversión Especializadas en Fondos para el Retiro) and certain Trusts, among others, are not considered as Financial Institutions for purposes of the Agreement.
2. Pursuant to the Agreement, the responsible party for providing information of the Financial Institutions to the Department of Treasury of the United States of America is the Ministry of Finance and Public Credit (the "SHCP"); therefore, it must be understood that Financial Institutions are in compliance with the provisions set forth in the U.S. Internal Revenue Code in the event that the corresponding Financial Institutions provide the relevant information to the SHCP and the latter transfers said information to the Department of the Treasury of the United States of America.