New tax in Mexico recognizes tax benefits for NPOs

3 October 2007

In a victory for the efforts of our Mexican partners, in September the Mexican Congress approved the new Impuesto de Contribución Empresarial de Tasa Única (IETU, formerly known as CETU). The IETU is a tax that organizations and individuals would pay on business activities as an alternative to the income tax. As originally proposed by the Executive in June, the IETU did not include tax deductions for donations to charitable organizations and taxed the sale of goods and the provision of services by them.

Our Mexican partners feared that the IETU would prove to be a disincentive to charitable giving in an already challenging fiscal environment for civil society. Thus they began engaging with Mexican legislators to retain deductions for donations to charitable organizations, and to exempt from IETU the sale of goods and the provision of services by charitable organizations. These efforts paid off, as the revised IETU, which includes deductions for donations and exempts the sale of goods and the provisions of services by charitable organizations, was approved by a substantial margin. ICNL was pleased to have the opportunity to provide comparative information to support our Mexican partners in their initiative.


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