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 Business News | December 2007 
Mexico Says US Government to Recognize Its New Corporate Tax
 Anthony Harrup - Dow Jones
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Mexico City - A new minimum corporate tax that forms the backbone of Mexico's fiscal reform passed by Congress in September will be recognized by the U.S. government for purposes of avoiding double taxation, the Finance Ministry said Monday.
The ministry said in a press release that U.S. Treasury Department and Internal Revenue Service will allow U.S. companies to accredit the IETU tax paid in Mexico against their U.S. income taxes.
When the Congress passed the minimum corporate tax, some business groups expressed concern that it could lead to double taxation for transnational companies.
The minimum tax will start in 2008 at 16.5%, rising to 17% in 2009 and 17.5% in 2010. The government had initially proposed 16% in 2008 and 19% from 2009 on.
The U.S. government will study the tax and its effects when it comes into full force, the Finance Ministry said, adding that any foreign tax credits applied during that period won't be subject to challenge at a later period.
The ministry said others have also agreed to take the new tax into consideration, including Canada, Germany, the U.K., Japan and other European, Asian, and Latin American countries.
With the tax reform passed in September, the Mexican government expects to boost its 2008 non-oil revenue by 128 billion pesos ($11.9 billion), including MXN70 billion from the IETU tax.
anthony.harrup(at)dowjones.com |
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