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HMRC internal manual

Double Taxation Relief Manual

Mexico: Tax spared

The agreement provides for credit to be given for tax `spared’ (see INTM161270 and INTM161280) in Mexico under the provisions of Mexican laws set out in Article 22(4).

Relief is, however, limited to tax `spared’ in Mexico for a period of twelve years in respect of any one source of income.

Moreover, the credit for tax spared is to be given only in respect of income arising during the first twelve years after the agreement entered into force (15 December 1994). Although the wording of paragraph (5) of Article 22 does not make this clear, relief for tax spared will be available in respect of relevant Mexican income which arose before 16 December 2006, even if, for example, a dividend was declared by a Mexican subsidiary of a United Kingdom company out of pre-16 December 2006 profits after the cut-off date.

Amounts of tax spared for which credit relief is given should be reported as mentioned in INTM161290.