U.S. Foreign Tax Creditability of the Mexican Cash Deposits Tax

The Mexican government enacted the cash deposits tax (IDE) in 2007. This tax has the potential to affect several kinds of businesses in Mexico significantly, including US companies that have large retail subsidiaries there, and intermediary entities in Mexico that hold cash for third parties or for...

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Bibliographic Details
Published in:Journal of International Taxation 2013-10, Vol.24 (10), p.36
Main Authors: Warren, Matthew, Scott, Eileen, Fischl, Alan, Dimas, Sergio Lugo
Format: Article
Language:English
Subjects:
Dividend distributions
Estimated taxes
Excise taxes
Financial institutions
Foreign operations of US corporations
Foreign subsidiaries
Foreign tax credits
Income taxes
International relations-US
International taxation
Tax credits
Tax evasion
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Summary:The Mexican government enacted the cash deposits tax (IDE) in 2007. This tax has the potential to affect several kinds of businesses in Mexico significantly, including US companies that have large retail subsidiaries there, and intermediary entities in Mexico that hold cash for third parties or for their own accounts. Due to the relationship between the US and Mexican economies, it is important to consider the creditability implications of this tax. This article considers the creditability of the IDE for US income tax purposes under Section 901, which allows a credit for the amount of income, war profits, or excess profits tax paid to any foreign country or US possession (foreign income tax), and under Section 903, which provides that income, war profits, and excess profits taxes otherwise generally imposed by any foreign country or US possession.
ISSN:1049-6378