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Once it is determined that one of the double taxation treaties signed by Mexico isapplicable, then it must be seen if the relevant treaty stipulates rate reductions, exemptionsor special treatment and the requirements in order to be entitled to them. At theend of this chapter there is a table which shows the withholding rates for dividends,interest and royalties in the double taxation treaties entered into by Mexico as of 2007.3. Single Rate Business Tax3.1. GeneralOn October 1, 2007 the law covering the Single Rate Business Tax (Impuesto Empresariala Tasa Única, IETU) was published in the Official Federal Gazette (Diario Oficial de laFederación) and it will enter into force on January 1, 2008.This tax is characterized basically by the following aspects:a) It takes the place of the Asset Tax (Impuesto al Activo, IMPAC) and therefore, theIMPAC law is repealed as of fiscal year 2008. As was the IMPAC, the IETU is a complementarytax to the Income Tax (Impuesto Sobre la Renta, ISR) and in fact, the lawprovides for the crediting of the ISR to the IETU;b) It taxes at a fixed rate the taxable profits resulting from business activities, under acash flow scheme;c) To determine the taxable base it provides for limited deductions to accruableincome, but in order to coordinate its determination with that of the ISR, it also providesfor the application of direct credits against the IETU;d) Its payment is calculated by fiscal year and is paid by a declaration that must befiled within the same time period as the ISR;e) To define most of its concepts, the IETU law refers to the concepts of the ISR law andthe Value Added Tax law, there being a correlation among these laws.121Tax Regime3.2. Persons Subject to the Tax and Activities TaxedIndividuals and entities with tax residence in Mexico, as well as residents abroad with apermanent establishment in the country, are obligated to pay the IETU on the income theyobtain, regardless of where it is generated, as a result of the following activities:a) Alienation of goods;b) Provision of independent services;c) Granting of the temporary use or enjoyment of goods.Residents abroad with a permanent establishment in the country must pay the IETU forincome attributable to said establishment resulting from the mentioned activities.