North American Free Trade & Investment Report Issue Archives

Download PDF of June 15, 2010 Issue of North American Free Trade & Investment Report
15 Jun 2010

IN THIS ISSUE:

While the rules governing NAFTA audits apply equally in all three NAFTA parties (the United States, Canada and Mexico), each Government conducts its NAFTA audit in a slightly different manner. NAFTIR provides insight on the particularities of a NAFTA audit conducted by Mexico’s Tax Administration Service. Page 1

The significant tax incentives available for foreign investment in Canadian renewable energy projects provide a foreign investor with the opportunity to both generate tax sheltered cash flow during the ownership period and minimize Canadian corporate tax on the investor’s eventual exit from the investment. Page 1

The recently unveiled Tax Extenders Bill extended beneficial treatment to many companies with crossborder activities, but the bill also imposes complex new revenue raising proposals, several of which are appearing for the first time. Page 3

The Canadian government is considering opening up Canada's telecom industry to more foreign involvement while retaining protection for the broadcasting sector. Page 12

IN THIS ISSUE:

NAFTIR takes a look at Mexico's NAFTA origin verification process and suggests four actions U.S. and Canadian exporters should take now to protect their Mexico-bound exports. Page 1

Why you should care about the statutory cause of action for secondary market liability in Ontario and the three other provinces that have enacted similar legislation. Page 1

The Canadian government’s recent decision in Amazon illustrates a new willingness to engage foreign investors in the book sector. Importantly, this may provide new opportunities to foreign investors who are interested in entering the Canadian market. Page 3

U.S. administration officials have recently called for passage of the pending Free Trade Agreements (FTAs) with Panama, Colombia and South Korea, although efforts to push passage remain limited. Page 8

Mexico plans to make 10 years worth of bankruptcy court documents available online, a plan that would bring a new level of transparency to a judicial system often tangled in red tape and uncertainty. Page 16

IN THIS ISSUE:

NAFTIR takes a look at the new procurement rules for oil and gas upstream activities in Mexico. Page 1

Although the foreign tax credit (FTC) is simple in concept, its computation can be complex. NAFTIR provides some guidance to claiming a FTC in Mexico and the U.S. Page 1

IN THIS ISSUE:

NAFTIR takes a look at how the Limitation on Benefits rules in the recently revised Canada-U.S. Income Tax Treaty could impact Latin American investments in North America. Page 1

Companies seeking to boost exports with government support should tread carefully. Under World Trade Organization (WTO) law, relying on government assistance, including subsidies, to prop exports up is an “unfair trade practice.” Page 1

IN THIS ISSUE:

NAFTIR evaluates the benefits of Spanish companies investing in the U.S. through Mexican holding companies and also the possibility of U.S. investment in Spain through Mexico. Page 1

There is little meaningful discussion between the governments of Mexico and the United States on migration policy, despite the fact that it is one of the most important issues in the relationship. Page 1

NAFTIR reviews recent tax developments in Mexico, including changes to the consolidation regulations and proposed stricter requirements for companies requesting conversion to maquiladoras. Page 4

The Tax Court of Canada holds that a limited liability company (LLC) that was fiscally transparent for US tax purposes was a resident of the US under the Canada-United States Income Tax Convention (the US Treaty). Page 13

IN THIS ISSUE:

Two recent developments indicate that changes to sector-specific rules governing foreign investment in Canada may now be on the horizon. Page 1

NAFTIR outlines five steps for navigating NAFTA's technical barriers to trade. Page 1

In an exclusive interview with NAFTIR, Fred Barrett of PricewaterhouseCoopers discusses Mexico's thin cap rules and other problem areas for deducting interest such as back-to-back loans. Page 3

A look at how the new U.S. Foreign Account Tax Compliance Act provisions affect Mexican residential trusts. Page 7

The upcoming G20 meeting in Canada in June 2010 presents a perfect opportunity for Canada to join ICSID. It is one of a few countries which has not ratified the agreement. The provision has important provisions for international investors such as arbitration benefits. Page 8

IN THIS ISSUE:

To date, the U.S. Administration has not provided any signal that it intends to move for Congressional approval for pending U.S. FTAs with Colombia, Panama and South Korea. Page 1

A report on Mexican venture equity in 2009 indicates activity in the health care, microfinance and hospitality areas. Page 1

An amendment to the 2010 Revenue Law and recent Supreme Court Decision raises the question of whether Mexico's IETU should  continue being considered complementary to the income tax. If it is not, foreign companies need to confirm if the tax agencies of their countries will continue considering this tax as creditable for foreign tax purposes. Observations are also made concerning the recent tax reform. Page 3

US Customs and Border Protection withdraws proposal to modify key DR-CAFTA ruling. Page 10

Canada's 2010 budget proposes some significant changes to Canada's international tax rules. Page 11

IN THIS ISSUE:

Many Mexicans and Americans display vague misgivings about the North American Free Trade Agreement; their comments indicate that this is largely because the agreement did not turn out to be a development panacea. Page 1

NAFTIR reviews the radical break in Canada's tax policy relating to tax information exchange agreements, which leads to some puzzling results. Page 1

Proposed legislation provides tax breaks to foreign investments in U.S. real estate. The legislation, if passed, would amend the FIRPTA rules to permit foreign investors to avoid U.S. tax when they sell interests in U.S. REITs, RICs, and other U.S. companies that predominately own real property. Page 3

On February 4, the U.S. Treasury Department announced the signing of a new income tax treaty between the U.S. and Chile. Page 5

Mexico’s pension fund regulator Consar said it would relax investment rules to give fund managers more freedom to confront market volatility and buy more Mexican stocks. Page 12

IN THIS ISSUE:

The concept of the Mexican flat tax legal liability is being analyzed by the Mexican Supreme Court because of its widespread rejection in the business sector. NAFTIR focuses on issues of concern to companies of various sizes and sectors. Page 1

The U.S. IRS has recently announced disclosure requirements for businesses with uncertain tax positions. The measures will require taxpayers to fully describe, in specific detail, any FIN 48 uncertain tax positions, including a company’s estimate of its tax liability if the position is disallowed. Page 1

IN THIS ISSUE:

Canada has a significant interest in U.S. energy and climate policy and has repeatedly expressed intentions to align energy and climate policies with those adopted by the United States. NAFTIR examines the major features of US climate change and energy policies currently being contemplated at federal and state levels and speculate on their implications for Canada. Page 1

Perhaps the stars are aligned for meaningful export control reform as never before given President Obama’s support for reform. Most of the recommendations the industry supports can be accomplished without legislation. However, past efforts have failed to produce results. Page 1

A major argument in favor of arbitration when doing business in Mexico is the fact that the enforcement of a foreign arbitral award takes  less time and is far less complicated than the enforcement of a judgment. Page 3

More and more companies, especially foreign-based businesses, are taking advantage of ITC Section 337 to block competitors from selling infringing imported products in the U.S. market. Page 8

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