Industry News

Mexico Trade Barriers Removed as Bahamas Elevated to Positive List

Friday April 15th, 2011

Category: Newsletter Articles, International Issues, Industry Information, BFSB News

Wendy C. Warren, BFSB CEO & Executive Director

Wendy C. Warren, BFSB CEO & Executive Director

The bringing into force of The Bahamas-Mexico Tax Information Exchange Agreement serves to offset the impact of The Bahamas’ inclusion on the so-called Mexican blacklist, opening the door for a broader business exchange between the two countries.

The benefits that can spur foreign direct investment in real estate and through to business and financial services can be traced to the elimination of a previously punitive treatment of investments in The Bahamas by Mexican authorities. Specifically, effective January 1, 2011:

• Mexican nationals with investments in The Bahamas will no longer be required to submit information returns to their Tax Authority;

• Payments by Mexican residents to related parties in The Bahamas will not be subject to a 40 percent withholding tax;

• Income tax from the alienation of shares during a reorganization by a resident of The Bahamas will be deferred;

• For income tax purposes, the underlying credit at the 2nd corporate level is granted when a Mexican company complies with other requirements of Mexican tax law.

“We are very pleased with this development,” says Wendy Warren, The Bahamas Financial Services Board's CEO and Executive Director. “The Bahamas like Mexico shares a border with the United States of America. Mexicans conduct substantial business in the USA and we are now eligible to facilitate these investments and financial activities of this important world economy.”

The Bahamas’ TIEA with Mexico, like its TIEA agreements with 23 other countries, includes all standard means to ensure due process is followed in tax information requests to The Bahamas. While the agreement meets the global standard, there were some in Mexico who wondered if Mexico would indeed remove these barriers to investment through The Bahamas. Ms. Warren continues, “Clearly the government recognised the importance of boosting the Bahamas reputation with Mexican investors. BFSB is very appreciative of this effort.”