JANUARY 2007 EDITION ARCHIVE
Legal Updates
Precautions for Sublessees
In recent years it has been common practice in the Mexican real estate industry for a lessor to grant use of real property through a sublease, which allows for various tax and legal strategies of developers. In this respect, one must keep in mind that a sublease agreement is a contract that is subordinated to the lease agreement on which the sublease is based. The general nature of the state civil codes in force throughout the Mexican Republic establishes that a lessee may not sublease property or... [Read More]Mexico and Brazil Enter Into Treaty to Avoid Double Taxation
On January 1, 2007. the Decree Promulgating a Treaty between the Governments of the United Mexican States and Federal Republic of Brazil to Avoid Double Income Taxation and Prevent Tax Evasion was published in the Official Journal of the Federation, along with its protocol, signed in Mexico City on September 25, 2003. With this, Mexico will allow its tax residents to credit against Mexican income tax owed those taxes that have been paid in Brazil. This is the same treatment provided under... [Read More]Strategic Alliance Agreement reached between Mexico and Chile
A Strategic Alliance Agreement between Mexico and Chile was published in the Official Journal of the Federation on December 19, 2006 and entered into force on December 27, 2006. The agreement seeks to strengthen the bilateral relationship through a strategic alliance in political, economic, commercial and cooperation areas between Mexico and Chile. In the political arena, it seeks to strengthen dialogue in furtherance of the bilateral relationship, as well as to encourage acting jointly... [Read More]Potential Deductibility of Employment Benefits Confirmed
The Supreme Court of Justice of Mexico has ruled that Article 31, Paragraph XII of the Income Tax Law (Ley de Impuesto Sobre la Renta), which limits and conditions the possibility of deducting employee benefit expenses if the employees are unionized or not, and according to the amount of contributions or payments to Social Security, is unconstitutional and violates the principle of tax fairness, in view of the fact that taxpayers that are in the same position for purposes of Mexican income tax receive... [Read More]Mexican Federal District Courts, with the assistance of directive given by the Supreme Court of Justice of Mexico, have established that a substitution of employer takes place when the party acting as the employer transfers directly or indirectly its busi
According to the concept of employment substitution, the transferring employer is jointly responsible with the transferee employer regarding all labor and Social Security obligations for a term of six months with respect to any acts or obligations arising prior to the transfer. With respect to housing benefits, the joint liability has a term of two years. Various causes may lead to a substitution of employer, including some of the most common: i) when a company or individual acquires... [Read More]Business & Politics Outlook
President Felipe Calderon orders military and police operations in Michoacan and Tijuana
Placing the fight against violence and narco-trafficking as priorities of his new administration, President Felipe Calderon began his term giving clear signals that he will use all available police and military means to order strong security operations in his birth state, Michoacan, as well as the city of Tijuana. Additionally, Calderon has proposed merging the Federal Preventive Police and the Federal Investigation Agency into one organization, and promoting deep reforms in the Mexican criminal... [Read More]Increases in the price of tortillas in Mexico and reaction from the Department of the Economy
In recent weeks, the price of a kilogram of tortillas has increased significantly, owing to higher demand for corn as a raw material for generating bio-fuel (ethanol) in the United States and China. The increase threatens to affect Mexican tortilla consumers and the related chain of production of corn tortillas. In this regard, the Department of the Economy and the Department of Agriculture, Ranching, Rural Development, Fisheries and Foodstuffs (SAGARPA) have announced various actions designed... [Read More]Economic Indicators
Pesos/Dollar Exchange Rate
The quoted exchange rate as of January 11, 2007 was $11.03 pesos per dollar.Mexican Stock Exchange
The Mexican Stock Exchange (BMV) closed on January 11, 2007 at 26,247.90 points.Interest Rates
On January 11, 2007, the Average Interbank Interest Rate (TIEE) for a 28-day period was at 7.3950%.Feature Website
www.cbot.com
We recommend that our readers visit the web page of the Chicago Board of Trade at www.cbot.com, where they may obtain information on the international corn market and other basic commodities quoted on international financial markets.