The Internal Revenue Service and the Treasury Department are evaluating the single-rate business tax recently adopted by Mexico to determine whether it can be credited under the terms of a treaty aimed at avoiding double taxation.

One of the treaty's articles provides that the U.S. allow a credit for income tax paid to Mexico by or on behalf of a U.S. resident. Taxes described in the treaty are treated as eligible for the credit, including those imposed by Mexico's Income Tax Law and any substantially similar taxes imposed in addition to, or in place of, the taxes listed.

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