The IBFD has received the text of the comprehensive tax treaty between Venezuela and Mexico, signed on 6 February 1997. The treaty was concluded in the Spanish language only.
Under the treaty, the maximum withholding tax rates are:
- 5% on dividends;
- 15% on interest, but reduced rates of 4.95% and 10% apply to certain qualifying interest, and the usual exemptions for interest paid to public bodies, etc. apply; and
- 10% on royalties.
A building site or a construction or installation project constitutes a permanent establishment only if it lasts for more than 9 months. An insurance enterprise of a contracting state, except with regard to reinsurance, is deemed to have a permanent establishment in the other contracting state if it collects premiums in that other state or insures risks situated therein through a person other than a independent agent.
As to the elimination of double taxation, Mexico will grant an ordinary credit and, in respect of dividends, will further grant a credit for the underlying tax if the Mexican company receiving the dividends holds at least 10% of the voting shares of the paying company. Venezuela will apply the exemption method. If, however, Venezuela changes from its territorial system to a world-wide system of taxation, it will generally apply the ordinary credit method.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
For further information contact Rodolfo Calvo, Galaz, Gomez, Morfin, Chavero, Yamazaki, Mexico City, Mexico on Fax: +52 5 281 5184
