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except for money exchange firms, and (d) the income of individuals not earned on aregular basis.Finally, in order to avoid the decrease of the taxable base through unjustified deductions,the lawmaker established the existence of income not subject to this tax whichshould not be taken into consideration at all for the calculation of the payment of thetax. Included in such income are royalties between related parties and interest that is notincluded in the price, as well as derivative financial operations, when the underlyingoperation is not taxed by the IETU.In relation to royalties between related parties, only the payments between related partiesfor the temporary use or enjoyment of industrial, commercial, or scientific equipmentwill be taxed income and therefore authorized deductions. Royalty paymentsbetween independent parties are considered taxed.3.4.2. DeductionsBased on the above classification of the taxpayer’s income under the IETU, in order todetermine the result the authorized deductions should be applied. In very general terms,all expenditures resulting from the execution of the activities subject to the tax can bededucted and the following are the requirements for doing so:a) That they correspond to the activities subject to the tax;b) That they are strictly indispensable;c) That they comply with the deductibility requirements established in the ISR law;d) That they have been actually paid.123Tax RegimeSome authorized deductions are regulated separately, as with the deduction of investments.In fact, this special regulation is one of the concepts that make the bases for thepayment of the IETU and the ISR different.Investments made from January 1, 2008 on, will be deducted in their entirety (100percent) in the fiscal year in which they are actually paid, while in the ISR law it is providedthat investments are deducted by depreciation in each fiscal year, applying thepercentages authorized by said law.With respect to new investments and inventories of fiscal years prior to 2008 that arenot yet totally deducted for the ISR, the IETU provides for a system that permits the taxpayerto have a partial benefit, except in the case of new investments made during thelast quarter of 2007, which can be deducted in their entirety in three parts during threefiscal years beginning in 2008.3.4.3. Credit for excess deductionsWhen the deductions authorized in a fiscal year are greater than the taxed income, thetaxpayer has the right to the credit against the IETU determined by the amount resulting