Mexico has announced proposals that would change the rules in respect of the taxation of amounts relating to hydrocarbon exploration and extraction. The rules would take effect from 1 January 2015. The additional government revenue would be raised from contract and assignment agreements and designated to a trust that would administer the funds.
Holders of contract and assignment agreements would not have to share profits with employees but there would be other similar incentives. Wages paid to individuals in respect of activities in Mexico for more than 30 days in a twelve month period, paid by a foreign entity without a permanent establishment, would be subject to income tax if related to a hydrocarbon contract or assignment agreement. Foreign entities operating in the sector for more than 30 days would have a deemed permanent establishment in Mexico.
