Article 27 of the Convention provides for the exchange of information under the…

Exchange of Information with Respect to Taxes between the United States and Mexico, signed on November 9, 1989. The Additional Protocol will amend Article 27 to broaden the scope of tax information exchange with Mexico. The Protocol provides that the administrative authorities of each Party are authorized to exchange information in accordance with and with respect to any tax covered by any tax information exchange agreement. Information exchange under the treaty will also apply to taxes imposed at all levels of government.

The treaty Protocol will be of significant benefit to the United States by enabling state tax administrations to streamline procedures and thereby encourage cross border commerce. At the same time, more comprehensive tax compliance programs can be developed targeting the underground economies on both sides of the border.

The Protocol will enter into force when both governments have completed their constitutional and statutory procedures and have notified each other to that effect.

The current Agreement Between the United States of America and the United Mexican States for the Exchange of Information with Respect to Taxes, which now applies only to federal taxes, is also being amended by a protocol to provide for the exchange of information to administer and enforce tax laws at all levels of government. This protocol will enter into force only after the Additional Protocol to the Convention has been ratified.

A technical memorandum explaining in detail the provisions of the Protocol is being prepared by the Department of Treasury and will be submitted separately to the Senate Committee on Foreign Relations. That memorandum will attach a copy of the protocol amending the Agreement for the Exchange of Information with Respect to Taxes.

The Department of the Treasury and the Department of State cooperated in the negotiation of the Additional Protocol. It has the full approval of both Departments.

Respectfully submitted,

WARREN CHRISTOPHER.

LETTER OF TRANSMITTAL (PROTOCOL 2)

THE WHITE HOUSE, September 19, 1994.

To the Senate of the United States:

I transmit herewith for Senate advice and consent to ratification the Additional Protocol that Modifies the Convention Between the Government of the United States of America and the Government of the United Mexican States for the Avoidance of Double Taxation and the Prevention of

Fiscal Evasion with Respect to Taxes on Income, signed at Washington on September 18, 1992. The Additional Protocol was signed at Mexico City on September 8, 1994. Also transmitted for the information of the Senate is the report of the Department of State with respect to the Additional Protocol.

The Additional Protocol will amend the tax treaty provisions to broaden the scope of tax information exchange with Mexico. The Protocol will authorize the exchange of tax information under any tax information exchange agreement between the two countries and will provide for information exchange under the treaty for taxes at all levels of government.

The current Agreement Between the United States of America and the United Mexican States for the Exchange of Information with Respect to Taxes, which now applies only to Federal taxes, is also being amended by a protocol to provide for the exchange of information to administer and enforce tax laws at all levels of government. This protocol, which was also signed at Mexico City on September 8, 1994, will enter into force only after the Protocol to the Convention has been ratified.

I recommend that the Senate give early and favorable consideration to the Additional Protocol and give its advice and consent to ratification.

WILLIAM J. CLINTON.

ADDITIONAL PROTOCOL THAT MODIFIES THE CONVENTION BETWEEN THE GOVERNMENT OF THE UNITED STATES OF AMERICA AND THE GOVERNMENT OF THE UNITED MEXICAN STATES FOR THE AVOIDANCE

OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME, SIGNED AT WASHINGTON, D.C.,

ON SEPTEMBER 18, 1992

The Government of the United States of America and the Government of the United Mexican States, desiring to amend the Convention between the United States of America and the United Mexican States for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income, signed on September 18, 1992, have agreed upon the following provisions which shall be an integral part of the Convention: