HK Cap. 112CD — Inland Revenue (Double Taxation Relief and Prevention of Fiscal Evasion with respect to Taxes on Income) (United Mexican States) Order

Inland Revenue (Double Taxation Relief and Prevention of Fiscal Evasion with respect to Taxes on Income) (United Mexican States) Order ( Cap. 112, section 49(1A) ) (Enacting provision omitted— E.R. 1 of 2013 ) [14 December 2012] 1. (Omitted as spent— E.R. 1 of 2013 ) 2. Declaration under section 49(1A) For the purposes of section 49(1A) of the Ordinance, it is declared— (a) that the arrangements specified in section 3(1) have been made with the Government of the United Mexican States with a view to affording relief from double taxation in relation to income tax and any tax of a similar character imposed by the laws of the United Mexican States; and (b) that it is expedient that those arrangements should have effect. 3. Arrangements specified (1) The arrangements specified for the purposes of section 2(a) are the arrangements in— (a) Articles 1 to 29 of the agreement titled “Agreement between the Government of the Hong Kong Special Administrative Region of the People’s Republic of China and the Government of the United Mexican States for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income”, done in duplicate at Los Cabos on 18 June 2012 in the Chinese, Spanish and English languages; and (b) Paragraphs 1 to 13 of the protocol to the agreement, done in duplicate at Los Cabos on 18 June 2012 in the Chinese, Spanish and English languages. (2) The English text of the Articles referred to in subsection (1)(a) is reproduced in Part 1 of the Schedule . (3) The English text of the Paragraphs referred to in subsection (1)(b) is reproduced in Part 2 of the Schedule . Schedule [ s. 3 ] Part 1 Articles 1 to 29 of the Agreement between the Government of the Hong Kong Special Administrative Region of the People’s Republic of China and the Government of the United Mexican States for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income Article 1 Persons Covered This Agreement shall apply to persons who are residents of one or both of the Contracting Parties. Article 2 Taxes Covered 1. This Agreement shall apply to taxes on income imposed on behalf of a Contracting Party, irrespective of the manner in which they are levied. 2. There shall be regarded as taxes on income all taxes imposed on total income or on elements of income, including taxes on gains from the alienation of movable or immovable property. 3. The existing taxes to which the Agreement shall apply are: (a) in the case of the Hong Kong Special Administrative Region, (i) profits tax; (ii) salaries tax; and (iii) property tax; whether or not charged under personal assessment; (b) in the case of Mexico, (i) the federal income tax; and (ii) the business flat rate tax. 4. The Agreement shall apply also to any identical or substantially similar taxes that are imposed after the date of signature of the Agreement in addition to, or in place of, the existing taxes, as well as any other taxes falling within paragraphs 1 and 2 which a Contracting Party may impose in future. The competent authorities of the Contracting Parties shall notify each other of any significant changes that have been made in their taxation laws. 5. The existing taxes, together with the taxes imposed after the signature of the Agreement, are hereinafter referred to as “ Hong Kong Special Administrative Region tax ” or “ Mexican tax ”, as the context requires. Article 3 General Definitions 1. For the purposes of this Agreement, unless the context otherwise requires: (a) (i) the term “ Hong Kong Special Administrative Region ” means any territory where the tax laws of the Hong Kong Special Administrative Region of the People’s Republic of China apply; (ii) the term “ Mexico ” means the United Mexican States, when used in a geographical sense, means the territory of the United Mexican States as defined in its Constitution, including any area beyond its territorial sea where the United Mexican States may exercise its sovereign rights of exploration and exploitation of the natural resources of the seabed, sub-soil and the supra-jacent waters, in accordance with international law; (b) the term “ company ” means any body corporate or any entity that is treated as a body corporate for tax purposes; (c) the term “ competent authority ” means: (i) in the case of the Hong Kong Special Administrative Region, the Commissioner of Inland Revenue or his authorized representative; (ii) in the case of Mexico, the Ministry of Finance and Public Credit; (d) the terms “ a Contracting Party ” and “ the other Contracting Party ” mean the Hong Kong Special Administrative Region or Mexico, as the context requires; (e) the terms “ enterprise of a Contracting Party ” and “ enterprise of the other Contracting Party ” mean respectively an enterprise carried on by a resident of a Contracting Party and an enterprise carried on by a resident of the other Contracting Party; (f) the term “ international traffic ” means any transport by a ship or aircraft operated by an enterprise of a Contracting Party, except when the ship or aircraft is operated solely between places in the other Contracting Party; (g) the term “ national ”, in relation to Mexico, means: (i) any individual possessing the nationality of Mexico; and (ii) any legal person, partnership or association deriving its status as such from the laws in force in Mexico; (h) the term “ person ” includes an individual, a company and any other body of persons. 2. As regards the application of the Agreement at any time by a Contracting Party, any term not defined therein shall, unless the context otherwise requires, have the meaning that it has at that time under the law of that Party for the purposes of the taxes to which the Agreement applies, any meaning under the applicable tax laws of that Party prevailing over a meaning given to the term under other laws of that Party. Article 4 Resident 1. For the purposes of this Agreement, the term “ resident of a Contracting Party ” means: (a) in the case of the Hong Kong Special Administrative Region, (i) any individual who ordinarily resides in the Hong Kong Special Administrative Region; (ii) any individual who stays in the Hong Kong Special Administrative Region for more than 180 days during a year of assessment or for more than 300 days in two consecutive years of assessment one of which is the relevant year of assessment; (iii) a company incorporated in the Hong Kong Special Administrative Region or, if incorporated outside the Hong Kong Special Administrative Region, being normally managed or controlled in the Hong Kong Special Administrative Region; (iv) any other person constituted under the laws of the Hong Kong Special Administrative Region or, if constituted outside the Hong Kong Special Administrative Region, being normally managed or controlled in the Hong Kong Special Administrative Region; (b) in the case of Mexico, any person who, under the laws of Mexico, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature. This term, however, does not include any person who is liable to tax in Mexico in respect only of income from sources in Mexico; (c) the Government of a Contracting Party or a political subdivision or local authority thereof. 2. Where by reason of the provisions of paragraph 1 , an individual is a resident of both Contracting Parties, then his status shall be determined as follows: (a) he shall be deemed to be a resident only of the Party in which he has a permanent home available to him; if he has a permanent home available to him in both Parties, he shall be deemed to be a resident only of the Party with which his personal and economic relations are closer (“centre of vital interests”); (b) if the Party in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either Party, he shall be deemed to be a resident only of the Party in which he has an habitual abode; (c) if he has an habitual abode in both Parties or in neither of them, he shall be deemed to be a resident only of the Party in which he has the right of abode (in the case of the Hong Kong Special Administrative Region) or of which he is a national (in the case of Mexico); (d) if he has the right of abode in the Hong Kong Special Administrative Region and is also a national of Mexico, or if he does not have the right of abode in the Hong Kong Special Administrative Region nor is he a national of Mexico, the competent authorities of the Contracting Parties shall settle the question by mutual agreement. 3. Where by reason of the provisions of paragraph 1 , a person other than an individual is a resident of both Contracting Parties, the competent authorities of the Contracting Parties shall by mutual agreement endeavour to settle the question and to determine the mode of application of the Agreement to such person. In the absence of such agreement, such person shall not be entitled to claim any benefits under the Agreement. Article 5 Permanent Establishment 1. For the purposes of this Agreement, the term “ permanent establishment ” means a fixed place of business through which the business of an enterprise is wholly or partly carried on. 2. The term “ permanent establishment ” includes especially: (a) a place of management; (b) a branch; (c) an office; (d) a factory; (e) a workshop; and (f) a mine, an oil or gas well, a quarry or any other place of extraction of natural resources. 3. The term “ permanent establishment ” also encompasses: (a) a building site, a construction, assembly or installation project or supervisory activities in connection therewith, but only where such site, project or activities last more than six months; (b) the furnishing of services, including consultancy services, by an enterprise through employees or other personnel engaged by the enterprise for such purpose, but only where activities of that nature continue (for the same or a connected project) within a Contracting Party for a period or periods aggregating more than 183 days within any twelve-month period. 4. Notwithstanding the preceding provisions of this Article, the term “ permanent establishment ” shall be deemed not to include: (a) the use of facilities solely for the purpose of storage or display of goods or merchandise belonging to the enterprise; (b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage or display; (c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise; (d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise or of collecting information, for the enterprise; (e) the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiliary character; (f) the maintenance of a fixed place of business solely for any combination of activities mentioned in sub-paragraphs (a) to (e), provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character. 5. Notwithstanding the provisions of paragraphs 1 and 2 , where a person - other than an agent of an independent status to whom paragraph 6 applies - is acting in a Contracting Party on behalf of an enterprise of the other Contracting Party, that enterprise shall be deemed to have a permanent establishment in the first-mentioned Contracting Party in respect of any activities which that person undertakes for the enterprise, if such a person: (a) has, and habitually exercises, in the first-mentioned Contracting Party an authority to conclude contracts in the name of the enterprise, unless the activities of such person are limited to those mentioned in paragraph 4 which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph, or (b) has no such authority, but habitually maintains in the first-mentioned Party a stock of goods or merchandise from which he regularly delivers goods or merchandise on behalf of the enterprise. 6. An enterprise shall not be deemed to have a permanent establishment in a Contracting Party merely because it carries on business in that Party through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business. However, when the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise, and conditions are made or imposed between that enterprise and the agent in their commercial and financial relations which differ from those which would have been made between independent enterprises, he will not be considered an agent of an independent status within the meaning of this paragraph. 7. The fact that a company which is a resident of a Contracting Party controls or is controlled by a company which is a resident of the other Contracting Party, or which carries on business in that other Party (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other. Article 6 Income from Immovable Property 1. Income derived by a resident of a Contracting Party from immovable property (including income from agriculture or forestry) situated in the other Contracting Party may be taxed in that other Party. 2. The term “ immovable property ” shall have the meaning which it has under the law of the Contracting Party in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, quarries, sources and other natural resources; ships, boats and aircraft shall not be regarded as immovable property. 3. The provisions of paragraph 1 shall apply to income derived from the direct use, letting, or use in any other form of immovable property. 4. The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of independent personal services. Article 7 Business Profits 1. The profits of an enterprise of a Contracting Party shall be taxable only in that Party unless the enterprise carries on business in the other Contracting Party through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other Party, but only so much of them as is attributable to: (a) that permanent establishment; or (b) sales in that other Party of goods or merchandise of the same or similar kind as the goods or merchandise sold through that permanent establishment. However, subparagraph (b) shall not apply if the enterprise demonstrates that such sales have been carried out for reasons other than obtaining benefits under this Agreement. 2. Subject to the provisions of paragraph 3 , where an enterprise of a Contracting Party carries on business in the other Contracting Party through a permanent establishment situated therein, there shall in each Contracting Party be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment. 3. In determining the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the business of the permanent establishment, including executive and general administrative expenses so incurred, whether in the Party in which the permanent establishment is situated or elsewhere. However, no such deduction shall be allowed in respect of amounts, if any, paid (otherwise than towards reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission, for specific services performed or for management, or, except in the case of a banking enterprise, by way of interest on moneys lent to the permanent establishment. Likewise, no account shall be taken, in the determination of the profits of a permanent establishment, for amounts charged (otherwise than towards reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission for specific services performed or for management, or, except in the case of a banking enterprise, by way of interest on moneys lent to the head office of the enterprise or any of its other offices. 4. Insofar as it has been customary in a Contracting Party to determine the profits to be attributed to a permanent establishment on the basis of an apportionment of the total profits of the enterprise to its various parts, nothing in paragraph 2 shall preclude that Contracting Party from determining the profits to be taxed by such an apportionment as may be customary; the method of apportionment adopted shall, however, be such that the result shall be in accordance with the principles contained in this Article. 5. No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise. 6. For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary. 7. Where profits include items of income which are dealt with separately in other Articles of the Agreement, then the provisions of those Articles shall not be affected by the provisions of this Article. Article 8 Shipping and Air Transport 1. Profits of an enterprise of a Contracting Party from the operation of ships or aircraft in international traffic shall be taxable only in that Party. 2. The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency. Article 9 Associated Enterprises 1. Where: (a) an enterprise of a Contracting Party participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting Party, or (b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting Party and an enterprise of the other Contracting Party, and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly. 2. Where a Contracting Party includes in the profits of an enterprise of that Party - and taxes accordingly - profits on which an enterprise of the other Contracting Party has been charged to tax in that other Party and the profits so included are profits which would have accrued to the enterprise of the first-mentioned Party if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other Party shall make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of this Agreement and the competent authorities of the Contracting Parties shall if necessary consult each other. Article 10 Dividends 1. Dividends paid by a company which is a resident of a Contracting Party to a resident of the other Contracting Party shall be taxable only in that other Party. This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid. 2. The term “ dividends ” as used in this Article means income from shares, “jouissance” shares or “jouissance” rights, mining shares, founders’ shares or other rights, not being debt-claims, participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the Party of which the company making the distribution is a resident. 3. The provisions of paragraph 1 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting Party, carries on business in the other Contracting Party of which the company paying the dividends is a resident, through a permanent establishment situated therein, or performs in that other Party independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply. 4. Where a company which is a resident of a Contracting Party derives profits or income from the other Contracting Party, that other Party may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid to a resident of that other Party or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other Party, nor subject the company’s undistributed profits to a tax on the company’s undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other Party. Article 11 Interest 1. Interest arising in a Contracting Party and paid to a resident of the other Contracting Party may be taxed in that other Party. 2. However, such interest may also be taxed in the Contracting Party in which it arises and according to the laws of that Party, but if the beneficial owner of the interest is a resident of the other Contracting Party, the tax so charged shall not exceed: (a) 4.9% of the gross amount of the interest if the beneficial owner is a bank; (b) 10% of the gross amount of the interest in all other cases. 3. Notwithstanding the provisions of paragraph 2 , interest arising in a Contracting Party shall be taxable only in the other Contracting Party if: (a) in the case of the Hong Kong Special Administrative Region, (i) the beneficial owner of the interest is the Government of the Hong Kong Special Administrative Region, the Hong Kong Monetary Authority or a financial establishment appointed by the Government of the Hong Kong Special Administrative Region and mutually agreed upon by the competent authorities of the Contracting Parties; (ii) the interest is paid by any of the entities mentioned in item (a)(i) ; or (iii) the interest arises in Mexico and is paid in respect of a loan for a period of not less than three years granted by any institution as may be agreed from time to time between the competent authorities of the Contracting Parties; (b) in the case of Mexico, (i) the beneficial owner of the interest is the Government, a political subdivision or a local authority, or Banco de México; (ii) the interest is paid by any of the entities mentioned in item (b)(i) ; or (iii) the interest arises in the Hong Kong Special Administrative Region and is paid in respect of a loan for a period of not less than three years granted by Banco Nacional de Comercio Exterior, S.N.C., Nacional Financiera, S.N.C. or Banco Nacional de Obras y Servicios Públicos, S.N.C., or by any other institution as may be agreed from time to time between the competent authorities of the Contracting Parties. 4. The term “ interest ” as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor’s profits, and in particular, income from government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures, as well as all other income that is treated as income from money lent by the laws of the Contracting Party in which the income arises. The term “interest” shall not include any item of income which is considered as a dividend under the provisions of paragraph 2 of Article 10. 5. The provisions of paragraphs 1 , 2 and 3 shall not apply if the beneficial owner of the interest, being a resident of a Contracting Party, carries on business in the other Contracting Party in which the interest arises, through a permanent establishment situated therein, or performs in that other Party independent personal services from a fixed base situated therein, and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply. 6. Interest shall be deemed to arise in a Contracting Party when the payer is a resident of that Party. Where, however, the person paying the interest, whether he is a resident of a Contracting Party or not, has in a Contracting Party a permanent establishment or a fixed base in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment or fixed base, then such interest shall be deemed to arise in the Party in which the permanent establishment or fixed base is situated. 7. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest exceeds, for whatever reasons, the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting Party, due regard being had to the other provisions of this Agreement. Article 12 Royalties 1. Royalties arising in a Contracting Party and paid to a resident of the other Contracting Party may be taxed in that other Party. 2. However, such royalties may also be taxed in the Contracting Party in which they arise and according to the laws of that Party, but if the beneficial owner of the royalties is a resident of the other Contracting Party, the tax so charged shall not exceed 10 per cent of the gross amount of the royalties. 3. The term “ royalties ” as used in this Article means payments of any kind received as a consideration for: (a) the use of, or the right to use, any patent, trade mark, design or model, plan, secret formula or process; (b) the use of, or the right to use, any industrial, commercial or scientific equipment; (c) the supply of information concerning industrial, commercial or scientific experience; (d) the use of, or the right to use, any copyright of literary, artistic or scientific work including cinematograph films, or films or tapes used for radio or television broadcasting; (e) the reception of, or the right to receive, visual images or sounds, or both, for the purpose of transmission by: (i) satellite; (ii) cable, optic fibre or similar technology; or (f) the use of, or the right to use, in connection with television or radio broadcasting, visual images or sounds, or both, for the purpose of transmission to the public by: (i) satellite; (ii) cable, optic fibre or similar technology. The term “royalties” also includes gains derived from the alienation of any such right or property which are contingent on the productivity, use or disposition thereof. 4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties, being a resident of a Contracting Party, carries on business in the other Contracting Party in which the royalties arise, through a permanent establishment situated therein, or performs in that other Party independent personal services from a fixed base situated therein, and the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply. 5. Royalties shall be deemed to arise in a Contracting Party when the payer is a resident of that Party. Where, however, the person paying the royalties, whether he is a resident of a Contracting Party or not, has in a Contracting Party a permanent establishment or a fixed base in connection with which the liability to pay the royalties was incurred, and such royalties are borne by such permanent establishment or fixed base, then such royalties shall be deemed to arise in the Party in which the permanent establishment or a fixed base is situated. 6. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties exceeds, for whatever reasons, the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting Party, due regard being had to the other provisions of this Agreement. Article 13 Capital Gains 1. Gains derived by a resident of a Contracting Party from the alienation of immovable property referred to in Article 6 and situated in the other Contracting Party may be taxed in that other Party. 2. Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting Party has in the other Contracting Party or of movable property pertaining to a fixed base available to a resident of a Contracting Party in the other Contracting Party for the purpose of performing independent personal services, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise) or of such fixed base, may be taxed in that other Party. 3. Gains derived by an enterprise of a Contracting Party from the alienation of ships or aircraft operated in international traffic, or of movable property pertaining to the operation of such ships or aircraft, shall be taxable only in that Party. 4. Gains derived by a resident of a Contracting Party from the alienation of shares, or other similar rights, in a company deriving more than 50 per cent of its asset value directly or indirectly from immovable property situated in the other Contracting Party may be taxed in that other Party. However, no tax shall apply in the case of transfer of property between members of the same group of companies, to the extent that the consideration received by the transferor consists of participation or other rights in the capital of the transferee or of another company resident in the same Contracting Party that owns directly or indirectly 80 per cent or more of the voting rights and value of the transferee, if: (a) the transferor and transferee are companies resident in the same Contracting Party; (b) before and immediately after the transfer, the transferor or the transferee owns, directly or indirectly, 80 per cent or more of the voting rights and value of the other, or a company resident in the same Contracting Party owns directly or indirectly (through companies resident in the same Contracting Party) 80 per cent or more of the voting rights and value of each of them; and (c) for the purpose of determining gain on any subsequent disposition, (i) the initial cost of the asset for the transferee is determined based on the cost it had for the transferor, increased by any cash or other property paid; or (ii) the gain is measured by another method that gives substantially the same result. 5. Gains from the alienation of shares other than those mentioned in paragraph 4 representing a participation in a company which is a resident of a Contracting Party may be taxed in that Party. 6. Gains from the alienation of any property, other than that referred to in the preceding paragraphs of this Article, shall be taxable only in the Contracting Party of which the alienator is a resident. Article 14 Independent Personal Services 1. Income derived by a resident of a Contracting Party in respect of professional services or other activities of an independent character shall be taxable only in that Party except in the following circumstances, when such income may also be taxed in the other Contracting Party: (a) if he has a fixed base regularly available to him in the other Contracting Party for the purpose of performing his activities; in that case, only so much of the income as is attributable to that fixed base may be taxed in that other Contracting Party; or (b) if his stay in the other Contracting Party is for a period or periods amounting to or exceeding in the aggregate 183 days in any twelve-month period commencing or ending in the taxable period concerned; in that case, only so much of the income as is derived from his activities performed in that other Party may be taxed in that other Party. 2. The term “ professional services ” includes especially independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, lawyers, engineers, architects, dentists and accountants. Article 15 Dependent Personal Services 1. Subject to the provisions of Articles 16, 18 and 19, salaries, wages and other similar remuneration derived by a resident of a Contracting Party in respect of an employment shall be taxable only in that Party unless the employment is exercised in the other Contracting Party. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other Party. 2. Notwithstanding the provisions of paragraph 1 , remuneration derived by a resident of a Contracting Party in respect of an employment exercised in the other Contracting Party shall be taxable only in the first-mentioned Party if: (a) the recipient is present in the other Party for a period or periods not exceeding in the aggregate 183 days in any twelve-month period commencing or ending in the taxable period concerned, and (b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other Party, and (c) the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other Party. 3. Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic by an enterprise of a Contracting Party may be taxed in that Party. Article 16 Directors’ Fees Directors’ fees and other similar payments derived by a resident of a Contracting Party in his capacity as a member of the board of directors or the supervisory organ of a company which is a resident of the other Contracting Party may be taxed in that other Party. Article 17 Artistes and Sportspersons 1. Notwithstanding the provisions of Articles 14 and 15, income derived by a resident of a Contracting Party as an entertainer, such as a theatre, motion picture, radio or television artiste, or a musician, or as a sportsperson, from his personal activities as such exercised in the other Contracting Party, may be taxed in that other Party. 2. Where income in respect of personal activities exercised by an entertainer or a sportsperson in his capacity as such accrues not to the entertainer or sportsperson himself but to another person, that income may, notwithstanding the provisions of Articles 7, 14 and 15, be taxed in the Contracting Party in which the activities of the entertainer or sportsperson are exercised. Article 18 Pensions 1. Subject to the provisions of paragraph 2 of Article 19, pensions and other similar remuneration (including a lump sum payment) paid to a resident of a Contracting Party in consideration of past employment or self-employment shall be taxable only in that Party. 2. Notwithstanding the provisions of paragraph 1 , pensions and other similar remuneration (including a lump sum payment) made under a pension or retirement scheme which is: (a) a public scheme which is part of the social security system of a Contracting Party; or (b) a scheme in which individuals may participate to secure retirement benefits and which is recognized for tax purposes in a Contracting Party, shall be taxable only in that Contracting Party. Article 19 Government Service 1. (a) Salaries, wages and other similar remuneration, other than a pension, paid by the Government of a Contracting Party or a political subdivision or a local authority thereof to an individual in respect of services rendered to that Party or subdivision or authority shall be taxable only in that Party. (b) However, such salaries, wages and other similar remuneration shall be taxable only in the other Contracting Party if the services are rendered in that Party and the individual is a resident of that Party or subdivision or authority who: (i) in the case of the Hong Kong Special Administrative Region, has the right of abode therein and in the case of Mexico, is a national thereof; or (ii) did not become a resident of that Party solely for the purpose of rendering the services. 2. (a) Any pension (including a lump sum payment) and other similar remuneration paid by, or paid out of funds created or contributed by, the Government of a Contracting Party or a political subdivision or a local authority thereof to an individual in respect of services rendered to that Party shall be taxable only in that Party. (b) However, if the individual who rendered the services is a resident of the other Contracting Party and the case falls within subparagraph (b) of paragraph 1 of this Article, any corresponding pension (whether a payment in lump sum or by instalments) and other similar remuneration shall be taxable only in that other Contracting Party. 3. The provisions of Articles 15, 16, 17 and 18 shall apply to salaries, wages, pensions (including a lump sum payment), and other similar remuneration, in respect of services rendered in connection with a business carried on by the Government of a Contracting Party or a political subdivision or a local authority thereof. Article 20 Students Payments which a student who is or was immediately before visiting a Contracting Party a resident of the other Contracting Party and who is present in the first-mentioned Party solely for the purpose of his education receives for the purpose of his maintenance or education shall not be taxed in that Party, provided that such payments arise from sources outside that Party. Article 21 Other Income 1. Items of income beneficially owned by a resident of a Contracting Party, wherever arising, not dealt with in the foregoing Articles of this Agreement shall be taxable only in that Party. 2. The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of Article 6, if the beneficial owner of such income, being a resident of a Contracting Party, carries on business in the other Contracting Party through a permanent establishment situated therein, or performs in that other Party independent personal services from a fixed base situated therein, and the right or property in respect of which the income is paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply. 3. Notwithstanding the provisions of paragraphs 1 and 2 , items of income not dealt with in the foregoing Articles of the Agreement derived by a resident of a Contracting Party from sources in the other Contracting Party may also be taxed in that other Party, and according to the laws of that Party. Article 22 Methods for Elimination of Double Taxation 1. Subject to the provisions of the laws of the Hong Kong Special Administrative Region relating to the allowance of a credit against Hong Kong Special Administrative Region tax of tax paid in a jurisdiction outside the Hong Kong Special Administrative Region (which shall not affect the general principle of this Article), Mexican tax paid under the laws of Mexico and in accordance with this Agreement, whether directly or by deduction, in respect of income derived by a person who is a resident of the Hong Kong Special Administrative Region from sources in Mexico, shall be allowed as a credit against Hong Kong Special Administrative Region tax payable in respect of that income, provided that the credit so allowed does not exceed the amount of Hong Kong Special Administrative Region tax computed in respect of that income in accordance with the tax laws of the Hong Kong Special Administrative Region. 2. In accordance with the provisions and subject to the limitations of the laws of Mexico, as may be amended from time to time without changing the general principle hereof, Mexico shall allow its residents as a credit against the Mexican tax: (a) Hong Kong Special Administrative Region tax paid on income arising in the Hong Kong Special Administrative Region, in an amount not exceeding the tax payable in Mexico on such income; and (b) in the case of a company owning at least 10 per cent of the capital of a company which is a resident of the Hong Kong Special Administrative Region and from which the first-mentioned company receives dividends, Hong Kong Special Administrative Region tax paid by the distributing company with respect to the profits out of which the dividends are paid. 3. Where in accordance with any provision of the Agreement, income derived by a resident of a Contracting Party is exempt from tax in that Party, such Party may nevertheless, in calculating the amount of tax on the remaining income of such resident, take into account the exempted income. Article 23 Non-Discrimination 1. Persons who, in the case of the Hong Kong Special Administrative Region, have the right of abode or are incorporated or otherwise constituted therein, and, in the case of Mexico, are Mexican nationals, shall not be subjected in the other Contracting Party to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to which persons who have the right of abode or are incorporated or otherwise constituted in that other Party (where that other Party is the Hong Kong Special Administrative Region) or nationals of that other Party (where that other Party is Mexico) in the same circumstances, in particular with respect to residence, are or may be subjected. This provision shall, notwithstanding the provisions of Article 1, also apply to persons who are not residents of one or both of the Contracting Parties. 2. Stateless persons who are residents of a Contracting Party shall not be subjected in either Contracting Party to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to which persons who have the right of abode in the Party (where the Party is the Hong Kong Special Administrative Region) or nationals of the Party (where the Party is Mexico) in the same circumstances, in particular with respect to residence, are or may be subjected. 3. The taxation on a permanent establishment which an enterprise of a Contracting Party has in the other Contracting Party shall not be less favourably levied in that other Party than the taxation levied on enterprises of that other Party carrying on the same activities. This provision shall not be construed as obliging a Contracting Party to grant to residents of the other Contracting Party any personal allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents. 4. Except where the provisions of paragraph l of Article 9, paragraph 7 of Article 11, or paragraph 6 of Article 12, apply, interest, royalties and other disbursements paid by an enterprise of a Contracting Party to a resident of the other Contracting Party shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the first-mentioned Party. 5. Enterprises of a Contracting Party, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting Party, shall not be subjected in the first-mentioned Party to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of the first-mentioned Party are or may be subjected. 6. The provisions of this Article shall, notwithstanding the provisions of Article 2, apply to taxes of every kind and description. Article 24 Mutual Agreement Procedure 1. Where a person considers that the actions of one or both of the Contracting Parties result or will result for him in taxation not in accordance with the provisions of this Agreement, he may, irrespective of the remedies provided by the domestic laws of those Parties, present his case to the competent authority of the Contracting Party of which he is a resident or, if his case comes under paragraph 1 of Article 23, to that of the Contracting Party in which he has the right of abode or is incorporated or otherwise constituted (in the case of the Hong Kong Special Administrative Region) or of which he is a national (in the case of Mexico). The case must be presented within three years from the first notification of the action resulting in taxation not in accordance with the provisions of the Agreement. 2. The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting Party, with a view to the avoidance of taxation which is not in accordance with the Agreement. In such case, any agreement reached shall be implemented within the time limits as provided in the laws of the respective Contracting Parties. 3. The competent authorities of the Contracting Parties shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of the Agreement. They may also consult together for the elimination of double taxation in cases not provided for in the Agreement. 4. The competent authorities of the Contracting Parties may communicate with each other directly, including through a joint commission consisting of themselves or their representatives, for the purpose of reaching an agreement in the sense of the preceding paragraphs. Article 25 Exchange of Information 1. The competent authorities of the Contracting Parties shall exchange such information as is foreseeably relevant for carrying out the provisions of this Agreement or to the administration or enforcement of the domestic laws concerning taxes of every kind and description imposed on behalf of the Contracting Parties, insofar as the taxation thereunder is not contrary to the Agreement. The exchange of information is not restricted by Article 1. 2. Any information received under paragraph 1 by a Contracting Party shall be treated as secret in the same manner as information obtained under the domestic laws of that Party and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to the taxes referred to in paragraph 1 . Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions. 3. In no case shall the provisions of paragraphs 1 and 2 be construed so as to impose on a Contracting Party the obligation: (a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting Party; (b) to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting Party; (c) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information the disclosure of which would be contrary to public policy (ordre public). 4. If information is requested by a Contracting Party in accordance with this Article, the other Contracting Party shall use its information gathering measures to obtain the requested information, even though that other Party may not need such information for its own tax purposes. The obligation contained in the preceding sentence is subject to the limitations of paragraph 3 but in no case shall such limitations be construed to permit a Contracting Party to decline to supply information solely because it has no domestic interest in such information. 5. In no case shall the provisions of paragraph 3 be construed to permit a Contracting Party to decline to supply information solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity or because it relates to ownership interests in a person. Article 26 Members of Government Missions Nothing in this Agreement shall affect the fiscal privileges of members of government missions, including consular posts, under the general rules of international law or under the provisions of special agreements. Article 27 Miscellaneous Rules Nothing in this Agreement shall prejudice the right of each Contracting Party to apply its domestic laws and measures concerning tax avoidance, whether or not described as such. Article 28 Entry into Force 1. Each of the Contracting Parties shall notify each other in writing, through appropriate channels, the completion of the procedures required by its domestic laws for the bringing into force of this Agreement. The Agreement shall enter into force thirty days after the date of receipt of the later of these notifications. 2. The provisions of the Agreement shall thereupon have effect: (a) in the Hong Kong Special Administrative Region: in respect of Hong Kong Special Administrative Region tax, for any year of assessment beginning on or after the first day of April in the calendar year next following that in which the Agreement enters into force; (b) in Mexico: (i) in respect of taxes withheld at source, to income paid or credited on or after the first day of January in the calendar year next following that in which the Agreement enters into force; (ii) in respect of other taxes, for any taxable year beginning on or after the first day of January in the calendar year next following that in which the Agreement enters into force. Article 29 Termination This Agreement shall remain in force until terminated by a Contracting Party. Either Contracting Party may terminate the Agreement at any time after five years from the date on which the Agreement enters into force, provided that at least six months prior written notice of termination has been given through appropriate channels. In such event, the Agreement shall cease to have effect: (a) in the Hong Kong Special Administrative Region: in respect of Hong Kong Special Administrative Region tax, for any year of assessment beginning on or after the first day of April in the calendar year next following that in which the notice is given; (b) in Mexico: (i) in respect of taxes withheld at source, to income paid or credited on or after the first day of January in the calendar year next following that in which the notice is given; (ii) in respect of other taxes, for any taxable year beginning on or after the first day of January in the calendar year next following that in which the notice is given. Part 2 Paragraphs 1 to 13 of the Protocol to the Agreement between the Government of the Hong Kong Special Administrative Region of the People’s Republic of China and the Government of the United Mexican States for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income 1. It is understood that provisions of the Agreement which have been formulated on the basis of the corresponding provisions of the United Nations Model Double Taxation Convention between Developed and Developing Countries (“UN Model Tax Convention”) or the Model Tax Convention on Income and on Capital of the Organisation for Economic Co-operation and Development (“OECD Model Tax Convention”) shall generally be considered to have the same meaning as expressed in the Commentaries on the articles of the UN Model Tax Convention or the OECD Model Tax Convention. The understanding in the preceding sentence shall not apply with respect to the following: (a) any reservations or observations to the UN Model Tax Convention or the OECD Model Tax Convention, or Commentaries on the articles thereof, by either Contracting Party; (b) any contrary interpretation as provided for in this Protocol; (c) any contrary interpretation agreed to by the competent authorities after the entry into force of the Agreement. The Commentaries on the articles of the UN Model Tax Convention and the OECD Model Tax Convention, as may be revised from time to time, constitute a means of interpretation in the sense of the Vienna Convention on the Law of Treaties 1969. 2. With reference to the term “ fixed base ” in the Agreement, it is understood that for tax purposes, the fixed base shall be treated in accordance with the principles that apply to permanent establishments. 3. In respect of paragraph 5 of Article 2 of the Agreement, the terms “ Hong Kong Special Administrative Region tax ” and “ Mexican tax ” do not include any penalty or interest (including, in the case of the Hong Kong Special Administrative Region, any sum added to the Hong Kong Special Administrative Region tax by reason of default and recovered therewith and “additional tax” under section 82A of the Inland Revenue Ordinance) imposed under the laws of either Contracting Party relating to the taxes to which the Agreement applies by virtue of Article 2. 4. In respect of paragraph 1(h) of Article 3 of the Agreement, the term “ person ”, in relation to the Hong Kong Special Administrative Region, includes a trust. 5. Nothing in Articles 5 and 7 of the Agreement shall affect any provisions of the laws of either Contracting Party at any time in force as they affect the taxation of any income derived from any form of insurance activities. 6. For the purposes of computing the duration of activities under paragraph 3 of Article 5 of the Agreement, the activities carried on by an enterprise associated with another enterprise within the meaning of Article 9 of the Agreement shall be aggregated with the period during which the activities are carried on by the associated enterprise, if the activities of both enterprises are identical or substantially similar. 7. Profits referred to in paragraph 1 of Article 8 of the Agreement shall not include profits from the use of land transport. 8. For the purpose of the provisions in the second sentence of paragraph 6 of Article 11 of the Agreement and the second sentence of paragraph 5 of Article 12 of the Agreement, if the loan or the royalty is incurred by the head office of the enterprise and the amount in question affects several permanent establishments or fixed bases situated in different jurisdictions, then the interest or royalty, as the case may be, shall be deemed to arise in the Contracting Party in which the permanent establishment or fixed base is situated, but only so much of the interest or royalty payment as is borne by such permanent establishment or fixed base. 9. The provisions of Articles 10, 11 and 12 of the Agreement shall not apply in respect of any dividends, interest or royalties paid in the course of a transaction or series of transactions which is structured in such a way that a resident of a Contracting Party entitled to the benefits of the Agreement receives an item of income arising in the other Contracting Party but the resident pays, directly or indirectly, at least 50 per cent of that income (at any time or in any form) to another person who is not a resident of either Contracting Party and who, if it received that item of income directly from the other Contracting Party, would not be entitled under an agreement for the avoidance of double taxation between the Party in which that other person is resident and the Contracting Party in which the income arises, or otherwise, to benefits with respect to that item of income which are equivalent to, or more favourable than, those available under the Agreement to a resident of a Contracting Party and the main purpose of such structuring is obtaining benefits under the Agreement. 10. In respect of paragraph 1 of Article 25 of the Agreement, a Contracting Party is not obliged to exchange information concerning taxes other than those covered by Article 2 of the Agreement for the purposes of carrying out the provisions of the Agreement or of the administration or enforcement of the domestic laws of the other Contracting Party. 11. In respect of Article 25 of the Agreement, it is understood that information requested under that Article shall not be disclosed to any other person or authority, including those in places other than the Contracting Parties, for any purpose. It is also understood that the Article does not obligate the Contracting Parties to exchange information on a spontaneous or automatic basis. 12. In respect of Article 27 of the Agreement, it is understood that in the case of Mexico, its domestic laws and measures concerning tax avoidance include the laws and measures regarding thin capitalisation, controlled foreign corporation (preferential tax regimes) and back to back loans. 13. Each of the Contracting Parties shall keep the right of taxing in accordance with its domestic laws any income where double exemption results from a divergent classification of the income concerned.