On November 19, 2012, the Ministry of Finance of Mexico (“SHCP”) and the U.S. Treasury Department signed the Agreement to Improve International Tax Compliance with Respect to the Foreign Account Tax Compliance Act (“FATCA”).The foregoing was announced by the SHCP through a press release made the day following the signing of this Agreement.  

According to the SHCP, after two years of negotiations, finally the Mexican and the U.S. governments agreed to substantially improve both the banking and financial exchange of information mechanisms in order to verify the compliance with tax obligations of its respective taxpayers.  

The press release states that with the signing of this Agreement Mexico, is now included within the group of countries with the best exchange of information practices as urged by the Organization for Economic Cooperation and Development (OECD) and the G20. The SHCP pointed out that Mexico is the third country to achieve the exchange of information standards in a FATCA context, thus the tax authorities of both countries will increase their audit capacity and therefore an increase in levels of tax compliance is expected.