April 17, 2014: Mexico FATCA Intergovernmental Agreement
Foreign Account Tax Compliance Act (FATCA)
Mexico and the United States sign Intergovernmental Agreement
On November 19, 2012, Mexico and the United States signed an Intergovernmental Agreement (IGA) to improve international tax compliance including with respect to FATCA. The agreement includes reciprocal reporting obligations for the United States. Mexico was the third country to sign an IGA with the U.S. after the U.K signed in September and Denmark signed in November, and further bolsters the U.S.’s position to solve the global FATCA compliance problem using the IGA methodology.
On November 4, 2013, the The U.S. Treasury published a revised version of the Model 1 IGA. On April 17, 2014, Mexico replaced the IGA signed in 2012 to conform to the IRS’ standard terms provided in the newest Model 1A Agreement.
Annex II of the Agreement identifies the Mexican Government, the Central Bank of Mexico and certain Mexican pension funds as Exempt Beneficial Owners. The category of Deemed-Compliant entities under Annex II includes certain exempt organizations, certain trusts ("fideicomisos") including those acting solely as escrows and those with only real property assets, and certain collective investment vehicles. Lastly, Annex II declares personal retirement plans, insurance premiums for retirement and pension funds as Exempt Products.