November 19, 2012: 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.
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. Deemed-Compliant status for local FFIs was not included in this IGA. Lastly, Annex II declares personal retirement plans, insurance premiums for retirement and pension funds as Exempt Products.
Mexico is 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. Mexico was also included in a recent list published by the U.S. Treasury to be one of the countries it was actively negotiating with to conclude an IGA by year-end. According to the same announcement, the U.S. expects to conclude an additional fifteen IGAs by the end of 2012.