Copyright 1996
InterAm Database
National Law Center for Inter-American Free Trade


November 9, 1989

Entry into Force: 18 January 1990
 
Effective Date: 18 January 1990 (see Article 7)

Agreement Between the United States of America and the United Mexican 
States for the Exchange of Information with Respect to Taxes

The United States of America and the United Mexican States, desiring
to conclude an Agreement for the exchange of information with respect
to taxes (hereinafter refereed to as the "Agreement"), have agreed as
follows:
 

LIST-OF-ARTICLES:

Article 1               Object and scope
Article 2               Taxes covered
Article 3               Definitions
Article 4               Exchange of information
Article 5               Mutual agreement procedure
Article 6               Costs
Article 7               Entry into force
Article 8               Termination
PROTOCOL (1994)


ARTICLES:
Article 1 Object and scope

   1.  The objective of this Agreement is to facilitate the exchange of
information between the Contracting States on the assessment and
collection of taxes, with a view to better enable them to prevent,
within their respective jurisdictions, fiscal evasion and fraud, and
develop improved information sources for tax matters.
 

2.  The Contracting States shall cooperate with each other to carry
out the objective of this Agreement, in conformity with and subject
to the limitations of their respective national laws and regulations.
 
3.  Pursuant to the provision of paragraph 2 of this Article,
requests for assistance under this Agreement will be executed, except
to the extent that:
(a) execution of the request would require the requested State to
exceed its legal authority or would otherwise be prohibited by
legal provisions in force in that State, or when the information
requested is not obtainable under the laws or in the normal
course of the administration of the requested state or of the
other Contracting State, in which case the competent authorities
of both Contracting States shall consult with each other to
agree upon alterative lawful means for securing assistance;
(b) execution of the request would in the judgment of the requested
State be contrary to its national security or public policy;
(c) to supply information would disclose any trade, business,
industrial, commercial, or professional secret or trade process;
(d) to supply information requested by the applicant State to
administer or enforce a provision of the tax law of the
applicant State, or any requirement connected therewith, would
discriminate against a national of the requested State. A
provision of tax law, or connected requirement, will be
considered to be discriminatory against a national of the
requested State if it is more burdensome with respect to a
national of the requested State than with respect to a national
of the applicant State in the same circumstances. For purposes
of the preceding sentence, a national of the applicant State who
is subject to tax on worldwide income is not in the same
circumstances as a national of the requested State who is not
subject to such taxation. The provision of this sub-paragraph
shall not be construed to prevent the exchange of information
with respect to the taxes imposed by the United States or Mexico
on branch profits or the excess interest of a branch or on the
premium income of foreign insurers;
(e) the request does not comply with the provisions of this
Agreement.
 
4.  The Contracting State shall provide assistance through exchange
of information authorized pursuant to Article 4 and such related
measures as may be agreed upon by the competent authorities pursuant
to Article 5.
 
5.  Information shall be exchanged to fulfill the purpose of this
Agreement without regard to whether the person to whom the
information relates is, or whether the information is held by, a
resident or national of a Contracting State.
 
Article 2 Taxes covered

   1.  This Agreement shall apply to the following taxes imposed by or
on behalf of a Contracting State:
(a) in the case of the United States of America:
(i) federal income taxes;

(ii) federal taxes on employment income;
(iii) federal taxes on transfers to avoid income tax;
(iv) federal estate and gift taxes;
(v) federal excise taxes; and
(b) in the case of Mexico:
(i) federal income taxes;
(ii) federal taxes on employment income;
(iii) federal taxes on business assets;
(iv) federal value added taxes; and
(v) federal excise taxes.
 
2.  This Agreement shall apply also to any identical or
substantially similar taxes imposed after the date of signature of
the Agreement in addition to or in place of the existing taxes. The
competent authority of each Contracting State shall notify the other
of changes in laws which may affect the obligations of that State
pursuant to this Agreement.
 
3.  This Agreement shall not apply to the extent that an action or
proceeding concerning taxes covered by this Agreement is barred by
the applicant State's statute of limitations.
 
4.  This Agreement shall not apply to taxes imposed by states,
municipalities or other political subdivisions, or possessions of a
Contracting State.
 
Article 3 Definitions

   1.  In this Agreement, unless otherwise defined:
(a) the term "competent authority" means:
(i) in the case of the United States of America, the Secretary
of the Treasury or his delegate; and
(ii) in the case of Mexico, the Secretary of Finance and Public
Credit or his delegate;
(b) the term "national" means:
(i) in the case of the United States, any United States citizen
and any legal person, partnership, corporation, trust,
estate, association, or other entity deriving its status as
such from the laws in force in the United States; and
(ii) in the case of Mexico, any Mexican citizen and any legal
person, partnership, corporation, trust, estate,
association, or other entity deriving its status as such
from the laws in force in Mexico;
(c) the term "person" includes an individual and any legal person,
including a partnership, corporation, trust, estate, or
association;
(d) the term "tax" means any tax to which the Agreement applies;
(e) the term "information" means any fact or statement, in any form
whatever, that may be relevant or material to tax administration
and enforcement, including (but not limited to):
(i) testimony of an individual; and
(ii) documents, records or other personal property of a person
or Contracting State;
(f) the terms "applicant State" and "requested State" mean,
respectively, the Contracting State applying for or receiving

information and the Contracting State providing or requested to
provide such information;
(g) for purposes of determining the geographical area within which
jurisdiction to compel production of information may be
exercised, the term "United States" means the United States of
America;
(h) for purposes of determining the geographical area within which
jurisdiction to compel production of information may be
exercised, the term "Mexico" means the United Mexican States.
 
2.  Any term not defined in this Agreement, unless the context
otherwise requires or the competent authorities agree to a common
meaning pursuant to the provisions of Article 5, shall have the
meaning which it has under the laws of the Contracting State relating
to the taxes which are the subject to this Agreement.
 
Article 4 Exchange of information

   1.  The competent authorities of the Contracting States shall
exchange information to administer and enforce the domestic laws of
the Contracting States concerning taxes covered by this Agreement,
including information to effect the determination, assessment, and
collection of tax, the recovery and enforcement of tax claims, or the
investigation or prosecution of tax crimes or crimes involving the
contravention of tax administration.
 
2.  The competent authority of the Contracting States shall
automatically transmit information to each other for the purposes
referred to in paragraph 1. The competent authorities shall determine
the items of information to be exchanged pursuant to this paragraph
and the procedure to be used to exchange such items of information.
 
3.  The competent authority of a Contracting State shall
spontaneously transmit to the competent authority of the other State
information which has come to the attention of the first-mentioned
State and which is likely to be relevant to, and hear significantly
on, accomplishment of the purposes referred to in paragraph 1. The
competent authorities shall determine the information to be exchanged
pursuant to this paragraph and take such measures and implement such
procedures as are necessary to ensure that the information is
forwarded to the competent authority of the other State.
 
4.  The competent authority of the requested State shall provide
information upon request by the authority of the applicant State for
the purposes referred to in paragraph 1. If the information available
in the tax files of the requested State is not sufficient to enable
compliance with the request, that State shall take all relevant
measures to provide the applicant State with the information
requested.
(a) The requested State shall have or has the authority to:
(i) examine any books, papers, records, or other tangible
property which may be relevant or material to such
inquiry;
(ii) question any person having knowledge or in possession,
custody or control of information which may be relevant

or material to such inquiry;
(iii) compel any person having knowledge or in possession,
custody or control of information which may be relevant
or material to such inquiry to appear at a stated time
and place and testify under oath and produce books,
papers, records, or other tangible property;
(iv) take such testimony or any individual under oath.
(b) If the United States is requested to obtain the types of
information covered by section 3402 of the Right of Financial
Privacy Act of 1978 (11 USCA 3402) as in effect at the time of
signing this Agreement, it shall obtain the requested
information pursuant to that provision. If Mexico is requested
to obtain the types of information covered by Article 93 of the
Regulatory Law and Banking and Credit Public Service as in
effect at the time of signing this Agreement, it shall obtain
the requested information pursuant to that provision. Laws or
practices of the requested State do not prevent or otherwise
affect the authority of the competent authority of the requested
State to obtain and provide the types of information covered by
the above-cited provisions pursuant to this Agreement.
(c) Privileges under the laws or practices of the applicant State
shall not apply in the requested State in the execution of a
request. Claims of privilege under the laws or practices of the
applicant State shall be determined exclusively by the courts of
that State, and claims of privilege under the laws or practices
of the requested State shall be determined exclusively by the
courts of that State.
 
5.  If information is requested by a Contracting State pursuant to
paragraph 4, the requested State shall obtain the information
requested in the same manner, and provide it in the same form, as if
the tax of the applicant State were the tax of the requested State
and were being imposed by the requested State. However, if
specifically requested by the competent authority of the applicant
State, the requested State shall:
(a) specify the time and place for the taking of testimony or the
production of books, papers, records, and other tangible
property;
(b) place the individual giving testimony or producing books,
papers, records and other tangible property under oath;
(c) permit the presence of individuals designated by the competent
authority of the applicant State as being involved in or
affected by execution of the request. The individual giving
testimony or the accused may be accompanied by his counsel;
(d) provide such individuals described in subparagraph (c) with an
opportunity to question the individual giving testimony or
producing books, papers, records and other tangible property:
(i) if Mexico is the applicant State, directly or through the
executing authority; and
(ii) if the United States is the applicant State, through the
executing authority;
(e) secure original and unedited books, papers, and records, and
other tangible property;
(f) secure or produce true and correct copies of original and
unedited books, papers and records;

 (g) determine the authenticity of books, papers, records and other
tangible property produced;
(h) examine the individual producing books, papers, records and
other tangible property regarding the purpose for which and the
manner in which the item produced is or was maintained;
(i) permit the competent authority of the applicant State to provide
written questions through the executing authorities of the
requested State to which the individual producing books, papers,
records and other tangible property is to respond regarding the
item produced;
(j) perform any other act not in violation of the laws or at
variance with the administrative practice of the requested
State;
(k) certify either that procedures requested by the competent
authority of the applicant State were followed or that the
procedures requested could not be followed, with an explanation
of the deviation and the reason therefor.
 
6.  The provisions of the preceding paragraphs shall be construed so
as to impose on a Contracting State the obligation to use all legal
means and its best efforts to execute a request. A Contracting State
may, in its discretion, take measures to obtain and transmit to the
other State information which, pursuant to paragraph 3 of Article 1,
it has no obligation to transmit.
 
7.  Any information received by a Contracting State shall be treated
as secret in the same manner as information obtained under the
domestic laws of that State and shall be disclosed only to
individuals or authorities (including judicial and administrative
bodies) involved in the determination, assessment, collection, and
administration of, the recovery and collection of claims derived
from, the enforcement or prosecution in respect of, or the
determination of appeals in respect of, the taxes which are the
subject of this Agreement, or the oversight of the above. Such
individuals or authorities shall use the information only for such
purposes. These individuals or authorities may disclose the
information in public court proceedings or in judicial decisions.
 
Article 5 Mutual agreement procedure

   1.  The competent authorities of the Contracting States shall agree
to implement a program to carry out the purposes of this Agreement.
This program may include, in addition to exchanges specified in
Article 4, other measures to improve tax compliance, such as
exchanges of technical know-how, development of new audit techniques
(including simultaneous examinations and simultaneous criminal
investigations in their respective jurisdictions and by their
respective competent authorities), identification of new areas of
non-compliance, and joint studies of non-compliance areas.
 
2.  The competent authorities of the Contracting States shall
endeavor to resolve by mutual agreement any difficulties or doubts
arising as to the interpretation or application of this Agreement. In
particular, the competent authorities may agree to a common meaning
of a term and may determine when costs are extraordinary for purposes

of Article 6.
 
3.  The competent authorities of the Contracting States may
communicate with each other directly for the purposes of reaching an
agreement under this Article.
 
Article 6 Costs

   Unless the competent authorities of the Contracting States otherwise
agree, ordinary costs incurred in providing assistance shall be borne
by the requested State and extraordinary costs incurred in providing
assistance shall be borne by the applicant State.
 
Article 7 Entry into force

   This Agreement shall enter into force upon an exchange of notes by
the duly authorized representatives of the Contracting States
confirming their mutual agreement that both sides have met all
constitutional and statutory requirements necessary to effectuate
this Agreement.
 
Article 8 Termination

   This Agreement shall remain in force until terminated by one of the
Contracting States. Either Contracting State may terminate the
Agreement at any time after the Agreement enters into force provided
that at least 3 months prior notice of termination has been given
through diplomatic channels.
 
Done at Washington, D.C., this 9th day of November 1989, in duplicate, 
in the English and Spanish languages, the two texts having equal
authenticity.
 
 
For the United States of America:
 
Nicholas F. Brady
 
For the United Mexican States:
 
Pedro Sispe