Agreement by exchange of notes between the Ministry of Foreign Affairs of the Russian Federation and the Embassy of the United Mexican States in the Russian Federation amended the Russian text of the Protocol
The English text shall not be amended as the Government of the United Mexican States consider it inadvisable
At the moment of signing the Agreement for the avoidance of double taxation with respect to taxes on income, this day concluded between the Government of the Russian Federation and the Government of the United Mexican States, the undersigned have agreed that the following provisions shall form an integral part of the Agreement:
1. With regard to Article 4,
It is understood that a partnership or a trust (other than a trust the income of which is exempt from taxation under the law of a Contracting State relating to its tax) shall not be treated as a resident of a Contracting State except to the extent that the income is subject to tax in that State as the income of a resident of that State either in the hands of a partner or beneficiary, or, if that income is exempt from tax in that State, it is so exempt solely because it is subject to tax in the other State.
2. With regard to paragraph 3 of Article 7,
It is understood that expenses allowed as a deduction include a reasonable allocation of research and development expenses, interest, and other expenses incurred in the taxable year for the purpose of the enterprise as a whole (or the part thereof which includes the permanent establishment), regardless of where incurred, but only to the extent that such expenses have not been deducted by such enterprise and are not reflected in other deductions allowed to the permanent establishment, such as the deduction for the cost of goods sold or of the value of the purchases.
3. With regard to Article 10, and Article 11,
If the law of a Contracting State calls for a payment to be characterized in whole or in part as a dividend or limits the deductibility of such payment because of thin capitalization rules or because the relevant debt instrument includes an equity interest, the Contracting State may treat such payment in accordance with such law.
4. With regard to Article 11,
The provisions of paragraph 2 shall not apply to interest derived from back-to-back loans. In such case, the interest shall be taxable in accordance with the domestic law of the State in which it arises.
For the purposes of the provisions in the second part of paragraph 6 of Article 11, if the loan is incurred by the head office of the enterprise and the amount question affects several permanent establishments or fixed bases situated in different countries, then the interest shall be deemed to arise in the Contracting State in which the permanent establishment or fixed base is situated, but only so much of the interest payment as is borne by such permanent establishment or fixed base.
5. With regard to Article 12,
a) For the purposes of paragraph 3 of Article 12, it is understood that payments relating to software fall within the scope of the Article where less than the full rights to software are transferred either if the payments are in consideration for the right to use a copyright on software for commercial exploitation or if they related to software acquired for the business use of the purchaser;
b) For the purposes of the provisions in the second part of paragraph 5 of Article 12, where the obligation to pay the royalties is incurred by the head office of the enterprise and the right or property in respect of which they are paid is effectively connected with several permanent establishments or fixed bases situated in different countries, then the royalties shall be deemed to arise in the Contracting State in which the permanent establishment or fixed base is situated, but only so much of the royalty payment as is borne by such permanent establishment or fixed base.
6. With regard to Article 14,
a) It is understood that a fixed base shall be treated for tax purposes in accordance with the principles applicable to a permanent establishment;
b) For purposes of paragraph 1, it is understood that Article 14 shall also apply to income derived by a company which is a resident of a Contracting State from the furnishing of personal services through a fixed base in the other Contracting State in accordance with subparagraph (a) of paragraph 1.
7. With regard to Article 30,
When the competent authority of one of the Contracting States considers that the law of the other Contracting State is or may be applied in a manner that eliminates or significantly limits a benefit provided by the Agreement, that State shall inform the other Contracting State in a timely manner and may request consultations with a view to restoring the balance of benefits of the Agreement. It so requested, the other State shall begin such consultations within six months of the date of such request.
If the Contracting States are unable to agree on the way in which the Agreement should be modified to restore the balance of benefits, the affected State may terminate the Agreement in accordance with the procedures of paragraph 1, notwithstanding the five year period referred to in that paragraph.
8. It is understood that the Contracting States shall endeavour to apply the provisions of this Agreement in accordance with the Commentaries on the Articles of the Model Tax Convention on Income and on Capital drawn up from time to time by the OECD Committee on Fiscal Affairs to the extent the provisions contained in the Agreement correspond to those set forth such Model.
Signed at Mexico City, on the 7th day of June of the year two thousand and four in two original copies, in the Russian, Spanish and English languages, being all texts equally authentic. In case of divergence in the interpretation of this Agreement, the English text shall prevail.
for the Government
for the Government of
of the Russian Federation
the United Mexican States