Mexican Court Rules on Application of Permanent Establishment Concept

January 25, 2011

In May 2010, the Mexican Circuit Court1 issued a ruling in a constitutional amparo procedure regarding the interpretation and application of the permanent establishment concept in the Mexican Income Tax Law (MITL) and Mexico’s income tax treaties for services rendered in Mexico by a foreign (U.S.) resident for a period exceeding 12 months.2
The case is of great practical importance considering that Mexico is a large importer of services in a wide range of industries. It is also one of the few cases when a higher court really goes into the substance of the interpretation of tax treaties. Even though the ruling is not always clear and consistent, it creates a hopeful precedent for future international tax cases in Mexico.

In May 2010, the Mexican Circuit Court issued a ruling in a constitutional amparo procedure regarding the interpretation and application of the permanent establishment concept in the Mexican Income Tax Law (MITL) and Mexico’s income tax treaties for services rendered in Mexico by a foreign (U.S.) resident for a period exceeding 12 months.

The case is of great practical importance considering that Mexico is a large importer of services in a wide range of industries. It is also one of the few cases when a higher court really goes into the substance of the interpretation of tax treaties.

Even though the ruling is not always clear and consistent, it creates a hopeful precedent for future international tax cases in Mexico.

Further details are available using the link below:

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