IRS Studies New Mexican Corporate Tax

by Carla Johnson, Investors Offshore.com, London

12 December 2007

A single-rate business tax set to come into force next year in Mexico has come under review by both the US Internal Revenue Service and the Treasury Department.

The departments are seeking to ascertain whether the 'impuesto empresarial a tasa unica' (or IETU) will qualify for a tax credit under the tax treaty currently in place between the United States and Mexico.

The IRS has, according to a WebCPA report, stated that it will not - when the tax initially comes into force in January 2008 - challenge taxpayer assertions that the new business tax is eligible for a credit under the US-Mexico Income Tax Treaty.

Any changes in the treatment of the IETU for the purposes of tax credits will only apply following the issuing of further guidance on the matter, WebCPA quoted the US tax department as explaining.

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