I OVERVIEW

Since 1997, Mexican tax authorities have recognised the arm's-length principle for benchmarking related-party transactions, establishing transfer pricing provisions for these purposes.

Certain aspects regarding transfer pricing were introduced to the Mexican Income Tax Law (MITL) in 2001, 2002 and 2006, such as the transactional approach and recognition of the Organisation for Economic Co-operation and Development (OECD) Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (the OECD Guidelines) for transfer pricing interpretation purposes, as well as the hierarchy for the application of the methods.

Currently, the Mexican transfer pricing provisions contained in Article 76, Section XII of the MITL state that corporations that undertake transactions with related parties are required to determine their accumulated income and authorised deductions, taking into account the prices that would have been established with or between independent parties in comparable transactions (i.e., related-party transactions must comply with the arm's-length principle).

Article 179 of the MITL sets out that two or more persons or entities are related parties when one of them participates directly or indirectly in the management, control or capital of the other, when a person or group of persons participates directly or indirectly in the management, control or capital of those persons, or when there is a link between them pursuant to customs legislation. In this sense, an individual may also be a party related to another person and therefore subject to Mexican transfer pricing provisions.

The MITL establishes that, for the interpretation of the Mexican transfer pricing provisions, the OECD Guidelines approved by the Council of the OECD will be applicable as long as they are consistent with the provisions of the MITL and the treaties entered into by Mexico.

The Mexican transfer pricing provisions contained in the MITL do not specify the definition of the arm's-length principle; however, the OECD Guidelines, as a source of interpretation for transfer pricing issues, state that the arm's-length principle is reached if the conditions between related parties were made or imposed for their business or financial relations and do not differ from those that would have been used with or between independent parties.

Additionally, Article 179 of the MITL states that tax authorities may determine the accumulated income and authorised deductions of the taxpayers that have not been determined in transactions carried out between related parties, taking into account the prices that would have been established with or between independent parties in comparable transactions. Moreover, if the tax authorities determine that a taxpayer did not undertake transactions with related parties at arm's length, the median of the price, amount or margin range obtained from the application of any of the transfer pricing methods is considered to be the price or amount of the consideration that independent parties would have established.

ii FILING REQUIREMENTS

In general terms, the contemporaneous transfer pricing documentation for transactions carried out with Mexican and foreign related parties is not submitted to the tax authorities, unless this is formally required in an audit process.

Notwithstanding this, there is certain documentation that taxpayers must file with the Mexican tax authorities regarding transactions carried out between related parties; the principal filings that Mexican taxpayers must submit are described in this section.

When taxpayers undertake transactions with non-resident related parties, Article 76, Section IX of the MITL states that taxpayers must procure and maintain2 the supporting documentation that demonstrates that the amount of their accumulated income and authorised deductions derived from such transactions were made on an arm's-length basis. The evidentiary documentation shall contain the following:

  1. the name, domicile and tax residence of the related parties with which the transactions were undertaken, as well as the documentation showing the direct and indirect relation between the related parties;
  2. information regarding the functions or activities, assets and risks assumed by the taxpayer per type of transaction;
  3. information and documentation on the main transactions with related parties and the amounts thereof by each party in a relationship and per type of transaction; and
  4. the method applied in accordance with Article 180 of the MITL, including the information and documentation on comparable operations and enterprises, per type of transaction.

In practice, and on the basis of a statutory criterion issued by the tax authorities,3 the requirement to procure and maintain supporting documentation that demonstrates that transactions carried out with related parties were made on an arm's-length basis applies for both domestic and foreign transactions; that is, the evidentiary documentation must include all transactions undertaken between related parties.

Pursuant to Article 76-A of the MITL, which has been in force since fiscal year 2016, taxpayers that in the immediately previous year obtained operating revenues equal to or exceeding 755,898,920 Mexican pesos,4 as well as those that had shares exchanged in the stock market, companies that applied for the optional tax regime for corporate groups, state companies of the federal public administration and foreign residents with permanent establishment in Mexico that undertook transactions with related parties in that year, would be required to file, no later than 31 December of the next year, the following transfer pricing information in line with the OECD's Base Erosion and Profit Shifting (BEPS) Action Plan 13:

  1. the master file: information on the business multinational enterprise group, including an overview of the multinational enterprise group, overall transfer pricing policies, global allocation of revenue and economic activities;
  2. the local file: information on related parties, including specific transfer pricing information on the group in Mexico; and
  3. a country-by-country report: aggregate tax jurisdiction-wide information on the business multinational enterprise group, related to global allocation of revenue, taxes paid and indicators of the location of economic activities, among other things.

Article 76-A of the MITL states that Mexican taxpayers that qualify as multinational controlling entities (the ultimate holding resident in Mexico) are not required to submit the country-by-country report if the annual consolidated revenue of the multinational enterprise group in the immediately previous fiscal year is lower than 12 billion Mexican pesos.

Non-controlling Mexican taxpayers may still be required to file this report when appointed by the foreign parent company. In addition, the Mexican tax authorities could request other foreign tax authorities to file the country-by-country report through an information exchange mechanism.

Specific administrative rules for master and local files, as well as for the country-by-country report, were published in April 2017.

In addition, Mexican taxpayers that undertake transactions with non-resident related parties are required to file Appendix 9 of the Multiple Information Statement (DIM),5 which requests information on the related party, percentage of profit or loss obtained by operation, rate or percentage agreed (interest, royalties, commissions, among others), income statement by operation, type of range used, interquartile range and SIC codes used. The transfer pricing analyses required on the aforementioned documentation must be performed for each type of transaction carried out by the taxpayer and must be submitted before the Mexican tax authorities on an annual basis.

iii PRESENTING THE CASE

Article 180 of the MITL establishes that, for the purposes of the transfer pricing provisions, the following methods should be applied:

  1. comparable uncontrolled price method (CUP);
  2. resale price method (RPM);
  3. cost-plus method (CPLM);
  4. profit split method (PSM);
  5. residual profit split method (RPSM); and
  6. transactional net margin method (TNMM).

As can be seen, the MITL establishes six transfer pricing methods, differentiating the PSM from the RPSM, which in the OECD Guidelines are considered to be a single method.

Article 180 of the MITL also states that for the determination of prices for transactions carried out with related parties, taxpayers should consider the CUP as the first option and only use any of the other methods when it is proven that the CUP is not appropriate to determine that the transaction complies with the arm's-length principle. Likewise, it has to be demonstrated that the method used is the most appropriate or the most reliable according to the available information, giving preference to the RPM and CPLM. These provisions are established in accordance with the OECD Guidelines.

In practice, the RPM is applied generally to distributing companies that do not apply complex productive processes to the products they distribute, because it compares the gross margins obtained for the distribution of products.

Likewise, the CPLM is mainly used to analyse manufacturing and rendering of services transactions since it compares the markup obtained over the cost of goods sold by independent parties in comparable transactions, in connection with the markup obtained over the cost of goods sold by a company.

The PSM and RPSM are usually applied when inter-company transactions are broadly related, and for this reason it is not possible to segregate financial information related to the operation. Additionally, the RSPM is applied to analyse transactions that involve non-routine intangible assets.

The TNMM is mainly used to analyse transactions with a significant level of costs and expenses, since this method takes into account transactional factors such as assets, sales, costs of goods sold, operating expenses and cash flows.

To determine the most appropriate transfer pricing method and the suitable profitability factor, the business approach of the transaction and its business cycle should be considered.

Article 179 of the MITL establishes that the operations or companies used in the application of a transfer pricing methodology should be comparable when there are no important differences between them that distort the price or amount of the consideration, or margin established. To assess any differences, it is necessary to take into account relevant elements that are required according to the method used, such as the characteristics of the operations, the functions or activities, including the assets used and risks assumed in the transactions of each of the related parties involved, as well as the unique contributions of value involved in the controlled transactions,6 and the contractual terms, economic circumstances and business strategies.

In general, the Mexican tax authorities consider public information when exercising their power of scrutiny over taxpayers' transfer pricing methodologies; consequently, they can request key information on resident and non-resident companies, and they can use import summaries information. The analyses carried out by the Mexican tax authorities focus on the functions performed, assets used and risks assumed in the transactions scrutinised.

In practice, taxpayers and the Mexican tax authorities consider it reasonable to use foreign information for comparable companies and comparable transactions purposes, given the lack of publicly available information regarding Mexican companies and transactions.

On 30 November 2018, the Mexican tax authorities issued a specific statutory criterion7 for the application of the interquartile method making it an improper practice for taxpayers to modify considerations that are already within the adjusted range obtained by the interquartile method with the sole purpose of obtaining a benefit.

iv INTANGIBLE ASSETS

Article 179 of the MITL recognises that transactions between related parties involving the exploitation or transfer of intangible assets should be determined at arm's length, taking into consideration not only the type (patent, trademark, trade name or transfer of technology), but also the duration and degree of protection of the intangible.

In accordance with the transfer pricing provisions, the RPSM should be used to analyse inter-company transactions that involve non-routine intangible assets, which in general terms consist in the determination of a minimum profit generated by each company involved in a transaction to determine the minimum profit that each party must generate by routine contributions. The excess profit of the routine profit is defined as the residual profit, which is attributable to intangible assets owned by one or more of the parties involved in the transaction. The residual profit is split among the parties according to the relative value of the intangible property that each party involved contributed to or utilised in the transaction.

In practice, financial valuation methodologies are used to establish arm's-length considerations for transactions carried out between related parties that involve intangible assets, since the results reflect the prices at which independent third parties would be willing to acquire such assets. In this sense, the price of an asset determined with a valuation methodology would be consistent with CUP application, and the value of an asset established with the mentioned methodologies would comply with the arm's-length principle.

As discussed, the Mexican transfer pricing provisions included in the MITL regarding intangible assets are limited and do not provide broad guidelines for transactions between related parties involving such assets. However, and as previously mentioned, for Mexican tax purposes the OECD Guidelines are a source for interpretation regarding transfer pricing issues that may arise.

To have a broader understanding of the intangible assets analysis, Mexican transfer pricing provisions on intangible assets should be regarded as complementary to Chapter VI of the OECD Guidelines, as contemplated in Action 8 of the OECD's BEPS Action Plan. However, queries arise regarding certain valuations in hard-to-value intangibles methodologies, which are mentioned in Action 8 of the OECD's BEPS Action Plan (i.e., ex ante and ex post approaches).

The ex ante approach to pricing arrangements relates to the relevance, enforceability and sustainability of a project considered before making an investment; in contrast, the ex post approach is taken after the investment is concluded, namely when there is no information available before the implementation of the project in question.

The Mexican tax authorities, when scrutinising taxpayers' choice of the CUP or the RPSM method to analyse transactions involving intangibles, usually focus on the differences between the taxpayers' projected income used in the chosen methodology and their actual income.

v SETTLEMENTS

In 2014, as part of the effort by the Mexican government to provide relief and support to taxpayers faced with a complex tax system with excessive formal requirements and subject to periodic amendments, the Federal Tax Code was amended to introduce a settlement procedure called a 'conclusive agreement'; this procedure is conducted by the Mexican taxpayers' ombudsman, which acts as a mediator between the taxpayer and the tax authorities.

This procedure is intended to allow taxpayers to submit evidence to the tax authorities to clarify alleged omissions identified during an audit procedure, before a tax deficiency is assessed, allowing both parties (taxpayer and tax authorities) to reach an agreement in which alleged omissions are clarified or the omitted tax paid. The agreement reached in cases of this kind is binding and cannot be challenged by the parties.

If a petition of a conclusive agreement is filed, the audit procedure is suspended, and in the event that ultimately an agreement is not reached or only a partial agreement is signed, the audit procedure will continue from the stage at which it was suspended.

Additionally, during the audit process, it is possible to reach an agreement directly with the tax authorities by adjusting the considerations settled between related parties in accordance with the arm's-length principle. Nevertheless, at present the conclusive agreement procedure has been one of the most important means for the Mexican tax authorities and taxpayers to reach agreement.

vi INVESTIGATIONS

Article 67 of the Federal Tax Code states that the power of the tax authority to determine tax omissions, as well as to impose penalties for violations of the tax provisions, is extinguished within five years of the date on which the annual return of the tax year assessed was filed or ought to have been filed. Thus, the time limit for the tax authorities to open a transfer pricing investigation is five years from the given fiscal year.

Typically, during a transfer pricing audit, the Mexican tax authorities have one year to carry out the review of the annual tax return in assessment and to request information from the taxpayer. Likewise, the tax authorities have two years to issue an official letter of observation or a final act with the results of the transfer pricing audit.

During a transfer pricing audit, the tax authorities may determine whether a transaction carried out by a taxpayer with related parties was made at arm's length or not. As mentioned above, if the tax authorities were to determine that the transactions under consideration were not made at arm's length, they would make a transfer pricing adjustment.

Once the official letter of observations or final act with the results of the transfer pricing audit is received, the taxpayer will have two months to appeal and present evidence or liquidate the tax assessment. In the event the taxpayer presents additional evidence or appeals, the tax authorities will have six months to determine the final tax regarding the transfer pricing adjustments.

In practice, the tax authorities review a series of economic indicators based on the taxpayer's transactions with its related parties, such as the leverage level, to start an audit process.

Recently, the number of transfer pricing audits has increased following the alignment of Mexican transfer pricing provisions with the OECD's BEPS Action Plan. The Mexican tax authorities have publicly announced that they are carrying out auditing programmes to review taxpayers that may be involved in aggressive tax planning strategies.

Various multinational enterprises have restructured their operations in Mexico under the supply chain concept by establishing a contract manufacturer or a limited-risk distributor, or both, and ensuring the provision of various services with the intention of transferring profits to non-resident entities. These taxpayers may be audited by the Mexican tax authorities, with a view to changing these structures and returning the taxable profits to Mexico.

Taxpayers that are licensees and pay royalties for the use of trademarks and other intangibles that incur advertising and promotion expenses are also likely to be audited by the tax authorities, who have stated that such expenses must be absorbed by the licensor.

The Mexican tax authorities also focus on auditing pro rata expenses,8 verifying that such expense deductions fulfil the tax authorities' requirements, which in practice are very difficult for taxpayers to comply with. Additionally, the Mexican tax authorities have been auditing certain restructurings carried out in the mining sector in past years.

Currently, the Mexican tax authorities have adopted another mechanism to perform its verification attributions, issuing an invitation letter to taxpayers to encourage them to comply with its tax obligations, or to review some information or figure in which the authorities recognise inconsistencies. These invitation letters could derive from a tax self-assessment.

vii LITIGATION9

i Procedure

There are two legal remedies by which taxpayers can challenge a tax-deficiency assessment. The first is by filing an administrative appeal with the tax authorities, and the second option is through an annulment complaint before the Federal Tax Court.

Administrative appeal

Ordinary procedure

Before going to court, the taxpayer can challenge a tax-deficiency assessment through an administrative appeal, which must be filed within 30 business days of the date on which the taxpayer is notified of the tax assessment, and which should include any additional evidence that the assessment is illegal.

After all the evidence is submitted, the tax authorities are required to issue a resolution within a three-month period.

One of the benefits of the administrative appeal under the Federal Tax Code is that the taxpayer is not compelled to lodge any kind of security (such as a bond deposit, or administrative asset seizure) with the tax authorities prior to the resolution of the appeal.

In the event of obtaining an unfavourable resolution in this procedure (or in the substantive procedure), the taxpayer may file an annulment complaint before the Federal Tax Court within 30 business days of the date of notification of the ordinary procedure decision.

Substantive procedure

In 2017, a new procedure was created whereby taxpayers can challenge tax-deficiency assessments exceeding approximately 5 million pesos through an optional procedure in which only substantive arguments against the legality of the deficiency assessment can be made (with no consideration to be given to questions regarding procedural formalities).

Pursuant to the Federal Tax Code, substantive arguments are understood as those that relate to the taxpayer, the activities subject to taxation, and the rates and payment period.

This type of administrative appeal must also be filed within 30 business days of the date on which the tax assessment is notified to the taxpayer, and should include any additional evidence to demonstrate that the assessment is illegal; as in the ordinary procedure, taxpayers are not required to lodge any kind of security with the appeal.

As with the ordinary procedure, in the event of obtaining an unfavourable resolution, taxpayers may file an annulment complaint before the Federal Tax Court within 30 business days of the date of notification of the substantive procedure decision.

Annulment complaint

Ordinary procedure

The annulment complaint must be filed before the Federal Tax Court within 30 business days of the tax assessment or of the notification of the (ordinary or substantive procedure) administrative appeal decision.

In the event of an administrative appeal decision in favour of the taxpayer, the tax authorities may file an appeal or, in the event of a decision in favour of the tax authorities, the taxpayer may file an amparo lawsuit, challenging the first appeal decision; the appeal or the amparo lawsuit challenging the first decision must be filed within 15 business days of the date of the notification of the decision, and will be decided definitively by a collegiate tribunal.

When filing an annulment complaint, the taxpayer should lodge security with the tax authorities in one of the forms established in the Federal Tax Code (bond, deposit, administrative asset seizure, payment, etc.) within 30 business days of the date of the notification of the decision to the company, or within 10 business days of the resolution of the administrative appeal.

Substantive procedure

In 2017, a new procedure was created whereby taxpayers can challenge tax-deficiency assessments exceeding approximately 5 million pesos through specialised judges in an optional procedure in which only substantive arguments against the legality of the deficiency assessment can be made (with no consideration to be given to questions regarding procedural formalities).

This claim must also be filed within 30 business days of the date on which the tax assessment is notified to the taxpayer, and an important benefit of this procedure (in contrast to the ordinary procedure) is that the taxpayer is not required to lodge any kind of security until a resolution is rendered.

As in the ordinary procedure, in the event of an administrative appeal decision in favour of the taxpayer, the tax authorities may file an appeal or, in the event of a decision in favour of the tax authorities, the taxpayer may file an amparo lawsuit, challenging the first appeal decision; the appeal or the amparo lawsuit challenging the first decision must be filed within 15 business days of the date of the notification of the decision, and will be decided definitively by a collegiate tribunal.

ii Recent cases

There are some cases being discussed concerning transfer pricing disputes with regard to the following fees:

  1. research and development;
  2. cost sharing;
  3. services fees;
  4. information and technology;
  5. advertising and promotion; and
  6. travel and training expenses, all paid to related parties.

viii SECONDARY ADJUSTMENT AND PENALTIES

In general, there are certain transactions whereby the taxable basis may be eroded between the different jurisdictions included in transfer pricing adjustments, which in turn may lead to increases in revenue and decreases in deductions or decreases in revenue and increases in deductions for each of the entities involved in the underlying transactions.

In July 2018, the Mexican tax authorities issued administrative rules establishing the definition of transfer pricing adjustments, including both virtual adjustments made for tax purposes only and real adjustments with an effect on the taxpayer's accounting. These adjustments can present the following variants:

  1. voluntary or compensatory;
  2. primary;
  3. corresponding domestic;
  4. corresponding foreign; and
  5. secondary.

These administrative rules include specific regulations on the application of compensatory and corresponding transfer pricing adjustments that increase or decrease the price, amount or margin of the taxpayer, leading to an increase or decrease of taxable income or authorised deductions.

Additionally, Article 184 of the MITL establishes that tax authorities of countries with which Mexico has a treaty to avoid double taxation may determine an adjustment to the prices or considerations of a taxpayer resident in that country; in this context, the Mexican related party may perform the corresponding adjustment, provided that the Mexican tax authorities accept the adjustment.

Certainly, this should not be taken to mean that Mexican taxpayers are not allowed to carry out transfer pricing adjustments for Mexican tax purposes, but tax uncertainty exists when implementing such adjustments. To obtain tax certainty, taxpayers may request rulings from the Mexican tax authorities providing legal certainty for diverse tax implications, and taxpayers have even entered into mutual agreement procedures (MAPs) to obtain a higher level of security from a tax perspective.

Article 184 of the MITL establishes a mechanism whereby a Mexican taxpayer can apply a corresponding adjustment derived from a primary adjustment, determined for a foreign-based related party resident in a country with which Mexico has a tax treaty.

This mechanism consists of filing an amended tax return in Mexico to recognise the corresponding adjustment. Such an adjustment will only be recognised by the Mexican tax authorities to the extent that they fully agree with it. This adjustment would not count for tax-return-submission limitation purposes.

Furthermore, on this basis, the MITL recognises the application of corresponding adjustments, although at this stage it only recognises those derived from primary adjustments that have been carried out by the tax authorities in a country with which Mexico has a tax treaty. Such recognition may be obtained by means of a MAP involving the Mexican and foreign tax authorities. Therefore, in a non-tax-treaty context this situation may lead to double taxation.

Recently, the Mexican Tax Authority issued specific rules with respect to primary and corresponding adjustments.

Current Mexican legislation does not include specific rules regardingsecondary adjustments, so should Mexican taxpayers have to apply these adjustments, there are no rules providing certainty of their application.

ix BROADER TAXATION ISSUES

That there are international mechanisms between jurisdictions for taxpayers to avoid double taxation is fundamental; in addition to tax treaties between jurisdictions to avoid double taxation, the most used mechanism is the MAP, which allows designated representatives from the governments of contracting states to interact to resolve international tax disputes.

In these international disputes, most transfer pricing MAP issues concern associated economic double taxation incurred by companies in multinational enterprise groups because of an adjustment by one or more tax administrations to the income from intra-group transactions.

Currently, Appendix 1-A of Fiscal Miscellaneous Resolution for 2019 establishes the filing requirements to initiate a MAP application procedure.

In relation to this matter, Action 6 of the BEPS Action Plan stipulates, among other measures, an inter-country agreement to adopt a series of minimum standards in tax treaties to avoid treaty shopping.10 The implementation of such standards will deny treaty benefits to certain commonly used holding structures.

Derived from Action 6 of the BEPS Action Plan, countries have agreed to include anti-abuse provisions in their tax treaties, including a minimum standard to provide a minimum level of protection against treaty shopping. The minimum standard requires countries to include a statement in the preamble of their tax treaties that they are not intended to be used to generate double non-taxation.

Often transfer pricing transactions may be treated as or mistaken for customs inquiries in Mexico. Transfer pricing provisions included in the MITL are considered only for the purpose of the Law – that is, transfer pricing provisions included therein apply only for income tax purposes.

The Mexican Customs Law (MCL) establishes that import and export taxes are computed on the customs value. The MCL establishes specific methods for determining the customs value in cases where a related-party transaction may have an impact on the customs value. In this context, in general, transfer pricing methods and customs methods are different, although in certain cases they are similar in their application. Therefore, in general terms, transfer pricing analysis or documentation is not valid for customs valuation purposes, and vice versa.

x OUTLOOK AND CONCLUSIONS

Mexican legislation follows the OECD Guidelines regarding transfer pricing issues. Adjustments have recently been made to adopt properly the BEPS Action Plan. Regarding dispute resolution mechanisms, the conclusive agreement procedure has proven very effective in the audit process, since it offers an alternative to mediation between the taxpayer and the tax authorities.

Currently, because of the Mexican tax authorities' focus on transfer pricing matters, a risk model is being implemented to address audit processes from a transactional and business perspective, focusing on the substance and not on the form and presentation as used to be the case in the past. This risk model includes further detail given the information filed by taxpayers through local file, master file and country-by-country report.

The number of transfer pricing audits has increased following the alignment of Mexican transfer pricing provisions with the OECD's BEPS Action Plan. Additionally, the Mexican tax authorities have publicly announced that they are carrying out auditing programmes to review taxpayers potentially involved in aggressive tax planning strategies, and they have shown particular interest in transfer pricing matters.

During 2018, the Mexican tax authorities issued specific rules with the aim of enforcing laws to implement transfer pricing adjustments, providing taxpayers with the option to carry out certain adjustments; however, secondary adjustments are still not included in the Mexican legislation.


Footnotes

1 Oscar Campero P San Vicente is a partner and Alejandra Castillón Contreras is an associate at Chevez, Ruiz, Zamarripa y Cia, SC.

2 They are not required to submit this information.

3 Statutory criterion 00/2012/ISR.

4 Amount for tax year 2018, which will be updated each tax year.

5 DIM is an annual filing for companies, regarding their main information for tax purposes.

6 Statutory criterion 39/ISR/NV.

7 Statutory criterion 40/ISR/NV.

8 Expenses incurred abroad on a pro rata basis by a Mexican taxpayer will not be considered deductible for income tax purposes. However, the consideration as deductible expenses incurred on a pro rata basis may not apply if certain requirements are met, such as demonstrating that the services that generated the expense have been effectively rendered; the price or consideration has been determined on an arm's-length basis; there is a reasonable relationship between the expenses incurred; and the benefit obtained or expected to be obtained has been obtained.

9 The authors are grateful for the collaboration of Diego Marvan Mas, associate at Chevez, Ruiz, Zamarripa y Cia, SC, in the production of this section.

10 Treaty shopping involves strategies through which a person who is not a resident of a state attempts to obtain the benefits of a tax treaty concluded by that state.