Corporative Report

Year 6. Number 62.

AVOIDANCE AGREEMENT FOR THE DOUBLE TAXATION AND PREVENTION OF THE TAX EVASION OF INCOME TAX BETWEEN MEXICO AND HONG KONG.

On June 18, 2012 the Mexican Treasury Ministry and the Hong Kong Finance Secretary, John Tsang, signed the "Avoidance Agreement for the Double Taxation and Prevention of Tax Evasion of Income Tax".

The purpose of this agreement is to harmonize the tax systems of the two countries and provide legal certainty regarding the tax system applicable to Mexican and Hong Kong investment, and to establish methods to eliminate the effects of double taxation.

Depending on the type of income, the agreement will state the taxes that should be payable on the State of source or residence that could be: corporate profits, capital gains, pensions, income earned by artists and athletes, students and others. Moreover, in cases of interest and royalties, the agreement stipulates that such taxation shall be shared by both countries, which establishes a maximum rate of retention in the State of source of 4.9% and 10% for interest and 10% for royalties.

In addition, to combat the tax evasion the agreement will promote the exchange of information between competent authorities of the signatory countries. The latter will be of great importance, because these countries may not refuse to exchange information only by the fact that it is held by banks or financial institutions.

Last but not least, the Agreement includes various anti-abuse provisions to prevent the exempt income in a Contracting State also be waived in the other State by virtue of this Agreement.


ARGENTINA SUSPENDED THE TRADE AGREEMENT (ACE55) SIGNED WITH MEXICO

Argentina Government published on June 9, 2012 in the Official Gazette Decree No. 969/2012, of the Economic Complementation Agreement (ACE 55), the suspension for three years, including its Annexes and Appendix Bilateral I, in force since 2002.

Argentina it aims to impose additional requirements and conditions to those under the Agreement, thus affecting the legal certainty in bilateral trade, because according to the Argentina Government, Argentina's deficit with Mexico in the automotive sector was 995 million dollars.0

Mexico exported under the ECA 55 light cars such as the March, Tiida and Nissan Sentra, Ford's Fusion, Fiat 500 and Volkswagen Jetta.

The Secretary of Economy, Bruno Ferrari, mentioned that "The absence of competitiveness of the economy of Argentina results in the lack of seriousness to fulfill their business commitments and at the same time an increase in the application of trade restrictive measures."

Mexico will invite to Argentina to reconsider its position regarding its intention to discontinue the ACE 55.


THE WORLD TRADE ORGANIZATION GRANT TO LABEL COPUNTRY ORIGIN FOR MEAT PRODUCTS

The World Trade Organization (WTO) resolved the verdict in favor of Mexico over the dispute concerning the requirements for Country of Origin Labeling (COOL) that the United States of America (USA) requires meat products, specifically the cattle born in Mexico and exported to the United States for fattening and meat production.

As a result of this, America must change its measures into conformity with WTO rules to ensure equal conditions of competition to Mexican cattle than those accorded to U.S., cattle, this should include, the gap of up to $95 USD per cattle head from those countries.

Mexico will benefit the Mexican cattle industry, which in 2011 exported about 1.4 million calves to the United States, over $600 million dollars.

Mexico reiterated its commitment to combating practices contrary to international commitments by trading partners who wrongfully put a disadvantage to our productive sector, as example Mexico has won other cases before the WTO as Tuna against the U.S. and Raw Materials against China.


ELECTION OF JULY 1, 2012

Mexico lived again, as every six years, an election day in which the highlight was that citizens registered a 63.17% historical participation of a nominal list of 76,693,783 million people registered.

Currently, the count of the vote of the President of the Republic gives the winner to Mr. Enrique Peña Nieto of the PRI, although the opposition parties seek ways to nullify the election because of alleged irregularities in the election, which, we will wait for the Federal Electoral Tribunal to resolve.

Also, on Sunday July 1, 2012 the Football National Representative of Spain won the European Championship second time in a row, in order to achieve the historic treble that no one had achieved before (European Championship, World Cup and European Championship).


CREDIT CARD WITH CHIP

In 2011 the National Commission for Protection and Defense of Users of Financial Services (by its acronym in Spanish CONDUSEF) reported an increase in fraud on credit and debit cards which generated losses in the banking sector by 800 million pesos per year.

These scams are through cyber criminals through cloning, a method of copying the data contained in the magnetic stripe of the card to slide by an electronic device known as skimmer.

Given the above, the Bank of Mexico and the National Banking and Securities Commission (by its acronym in Spanish CNBV) put a deadline in December 2013 that all financial institutions will have to change their plastic magnetic strip to plastic chip, ensuring to cardholders greater security.

Financial institutions that do not comply with these regulations must absorb the breakdown to fraud transactions and to pay the customer.