WASHINGTON – The U.S. Internal Revenue Service will credit corporate taxes paid to the Mexican government while the IRS undertakes a study of that nation’s new corporate tax law.

Mexico's flat tax, called the IETU tax, went into effect Jan. 1. According to the previously issued U.S. IRS Notice 2008-3, the agency has not determined whether the IETU is qualified as an income tax under Article 24(1) of the US-Mexico Tax Treaty and is thus creditable. The agency is studying the new tax to make a determination. 

The U.S. is Mexico's largest trading partner, buying about 80% of all exports.

Agreements are in place with the U.K., Italy, India, South Africa and the Bahamas on the new tax law.