The Double Taxation Relief (Taxes on Income) (Mexico) Order 1994

ARTICLE 22 Elimination of double taxation

(1) In accordance with the provisions and subject to the limitations of the laws of Mexico, as may be amended from time to time without changing the general principle hereof, Mexico shall allow its residents as a credit against the Mexican tax:

(a) the income tax paid to the United Kingdom by or on behalf of such resident; and

(b) in the case of a company owning at least 10 per cent of the voting stock of a company which is a resident of the United Kingdom and from which the first-mentioned company receives dividends, the income tax paid to the United Kingdom by or on behalf of the distributing company with respect to the profits out of which the dividends are paid.

(2) Subject to the provisions of the law of the United Kingdom regarding the allowance as a credit against United Kingdom tax of tax payable in a territory outside the United Kingdom (which shall not affect the general principle hereof):

(a) Mexican tax payable under the laws of Mexico and in accordance with this Convention, whether directly or by deduction, on profits, income or chargeable gains from sources within Mexico (excluding in the case of a dividend, tax payable in respect of the profits out of which the dividend is paid) shall be allowed as a credit against any United Kingdom tax computed by reference to the same profits, income or chargeable gains by reference to which the Mexican tax is computed;

(b) in the case of a dividend paid by company which is a resident of Mexico to a company which is a resident of the United Kingdom and which controls directly or indirectly at least 10 per cent of the voting power in the company paying the dividend, the credit shall take into account (in addition to any Mexican tax for which credit may be allowed under the provisions of sub-paragraph (a) of this paragraph) the Mexican tax payable by the company in respect of the profits out of which such dividend is paid.

(3) For the purposes of paragraph (2) of this Article, profits, income and capital gains owned by a resident of a Contracting State which may be taxed in the other Contracting State in accordance with this Convention shall be deemed to arise from sources in that other Contracting State.

(4) For the purposes of paragraph (2) of this Article, the term “Mexican tax payable” shall be deemed to include any amount which would have been payable as Mexican tax for any year but for a reduction of tax granted for that year or any part thereof as a result of the application of the following provisions of Mexican law:

(a) Articles 13, 51, 51-A and 143 of the Income Tax Law of Mexico so far as they were in force on, and have not been modified since, the date of signature of this Convention, or have been modified only in minor respects so as not to affect their general character; or

(b) any other provision which may subsequently be made granting a reduction of tax which is agreed by the competent authorities of the Contracting States to be of a substantially similar character, if it has not been modified thereafter or has been modified only in minor aspects so as not to affect its general character.

• Provided that relief from United Kingdom tax shall not be given by virtue of this paragraph in respect of income from any source if the income arises in a period starting more than twelve years after the reduction of Mexican tax was first granted in respect of that source.

(5) Relief from United Kingdom tax by virtue of paragraph (4) of this Article shall be given for a period of twelve years only, beginning with the date on which this Convention entered into force.

(6) The period referred to in paragraph (5) of this Article may be extended by agreement between the Contracting States.