Argentina: Income tax treaty with Mexico | KPMG | GLOBAL
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Argentina: Income tax treaty with Mexico

Argentina: Income tax treaty with Mexico

The Argentina-Mexico income tax treaty—expected to enter into force in 2018, after the completion of the ratification procedures—generally follows the OECD Model Tax Convention and allows for reduced rates of withholding tax on dividends, interest, royalties, capital gains, and certain other items of income. The treaty also contains a non-discrimination clause that allows taxpayers to fully deduct certain expenses without limitations.


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KPMG observation

The potential implications of the pending income tax treaty need to be considered with respect to financing arrangements, intellectual property ownership, and the rendering of cross-border services both in existing and future structures.

Withholding tax rates

The income tax treaty between Argentina and Mexico provide the following measures concerning the withholding tax rates on:

  • Dividends—10% or 15% (the 15% rate would apply in instances of a less-than-25% ownership). The tax treaty does not provide relief from the application of the Argentine equalization tax.
  • Interest—12%. 
  • Royalties—10% or 15% depending on the type of royalty (e.g., payments for the use of intangibles, certain software licenses, know-how, and technical assistance).
  • Capital gains derived from the sale of shares—10% in the case of a direct participation of at least 25% and 15% in all other instances.

Non-discrimination clause

The treaty’s “non-discrimination clause” provision states that it may be enforced in situations concerning the deduction of interest, royalties, and other expenses, provided that the related contracts are properly registered or authorized in accordance with domestic requirements. Also, the treaty provides that the non-discrimination clause would not apply to allow taxpayers to avoid the application of the thin capitalization rules.

Other provisions

  • The tax treaty include provisions concerning the exchange of information, the elimination of double taxation, and permanent establishment rules.
  • The tax treaty also includes a limitation of benefits (LOB) provision addressing treaty abuse and double non-taxation scenarios.

Ratification provisions, entry into force

The signatory countries must notify each other when the necessary procedures for the treaty’s entry into force under the respective internal laws have been satisfied. The tax treaty would then enter into force 30 days after these notifications have been exchanged, and the treaty’s provisions would be effective from 1 January of the calendar year following the date of the notification exchange. The tax treaty is expected to be effective starting 1 January 2018.


For more information, contact a tax professional with KPMG’s Latin America Markets Tax practice or with the KPMG member firm in Argentina:

Alfonso A-Pallete | +1 (305) 913 2789 |

Rodolfo Canese | + (5411) 4316-5753 | 

Violeta Lagos | + (5411) 4316-5740 |

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