Mexico enacted the Single Rate Business Tax, Impuesto Empresarial a Tasa Unica (IETU), or flat tax, late in 2007. Mexico designed the new measure to strengthen its tax system and to replace the much-criticized assets tax. The new law offers taxpayers an alternative solution designed, from the government’s perspective, for the purpose of eliminating the use of tax havens and discouraging financial planning for tax evasion. The Single Rate Business Tax operates much like an alternative minimum tax. The IRS gave tentative creditability to the Single Rate Business Tax on January 14, 2008.
Understanding Mexico’s Single Rate Business Tax