Australian Tax Treaties
Dividends paid by a company which is a resident of a Contracting State, being dividends to which a resident of the other Contracting State is beneficially entitled, may be taxed only in that other State.
2
However, those dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident, and according to the law of that State, but the tax so charged shall not exceed:
(a) nil per cent of the gross amount of so much of the dividends as are paid out of profits that have borne the normal rate of company tax, if the person beneficially entitled to those dividends is a company (other than a partnership) which holds directly at least 10 per cent of the voting power in the company paying the dividends; and
(b) 15 per cent of the gross amount of the dividends to the extent to which those dividends are not within paragraph (a),
provided that if the relevant law in either Contracting State at the date of signature of this Agreement is varied otherwise than in minor respects so as not to affect its general character, the Contracting States shall consult each other with a view to agreeing to any amendment of this paragraph that may be appropriate.
3
For the purposes of paragraph 2, profits have borne the normal rate of company tax:
(a) in Mexico, to the extent to which the dividends have been paid from the net profit account; and
(b) in Australia, to the extent to which the dividends have been " franked " in accordance with its law relating to tax.
4
The provisions of paragraph 1 and paragraph 2 shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.
5
The term " dividends " in this Article means income from shares and other income assimilated to income from shares by the law, relating to tax, of the Contracting State of which the company making the distribution is a resident.
6
The provisions of paragraphs 1 and 2 shall not apply if the person beneficially entitled to the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated in that other State, or performs in that other State independent personal services from a fixed base situated in that other State, and the holding in respect of which the dividends are paid is effectively connected with that permanent establishment or fixed base. In that case the provisions of Article 7 or Article 14, as the case may be, shall apply.
7
Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company - being dividends to which a person who is not a resident of the other Contracting State is beneficially entitled - except insofar as the holding in respect of which such dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other State, nor subject the company ' s undistributed profits to a tax on the company ' s undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State.
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