Mexico:
Corporate Borrowings - Inflation Adjustments And Debt-To-Equity Rules
08 December 1997
Deloitte & Touche
To print this article, all you need is to be registered or login on Mondaq.com.
If a Mexican resident company obtains loans or credits from its parent company or from a financial entity abroad, interest on the debt (including foreign exchange losses) must be reduced by an inflation adjustment with respect to all debts (including non-interest-bearing debts). This adjustment may exceed the interest expense and create a corresponding taxable gain.
Although there are currently no specific debt-to-equity rules in Mexican tax law, Mexican tax provisions that have been in effect since 1 January 1997 require that loan transactions between related parties be on an arm's length basis. Under these provisions, interest charged at an excessive rate and interest on back-to-back loans may be treated as a dividend.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
For further information contact Rodolfo Calvo, Galaz, Gomez, Morfin, Chavero, Yamazaki, Mexico City, Mexico on Fax: +52 5 281 5184
O "Brasília em Pauta" é um boletim semanal preparado pela equipe de Contencioso de Brasília, contendo os principais casos a serem julgados pelo Supremo Tribunal Federal (STF)...
In 2021, the IRS started an enforcement campaign to investigate individuals claiming the benefits of Puerto Rico Act 20, Act 22, Act 60 and presumably other Puerto Rico incentives acts.
FREE News Alerts
Sign Up for our free News Alerts - All the latest articles on your chosen topics condensed into a free bi-weekly email.