It was said that the DTA will provide tax certainty, and remove the fiscal burdens that could hinder investment flows between the two countries. For example, in the case of interest and royalties, the agreement provides for a maximum withholding tax rate of 10 percent.
The DTA ensures that businesses of one country will be taxed in the other country under the same conditions as the latter’s home businesses. Mexico has agreed that it will allow to a Mexican taxpayer the crediting of taxes paid in Lithuania, up to an amount not exceeding the tax that would have been payable if the income had been earned in Mexico.
The DTA also incorporates the internationally-agreed Organization for Economic Cooperation and Development standard for the exchange of information for tax purposes. That clause gives the two countries’ tax authorities a greater ability to exchange taxpayer information and to exchange that information on a wider range of taxes.
The agreement will enter into force following confirmation of the completion of ratification procedures in both countries.
