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2008 Mexican Tax Report - English

12.18.07

INCOME TAX LAW

A. CORPORATE ENTITIES

Taxable income

The Income Tax Law considers, as taxable income, the amounts received in cash, in local or foreign currency, as loans, contributions for future capital increases or capital increases, as long as they are over $600,000.00 pesos, whenever tax authorities are not informed thereof within the 15 days following the date in which they are received.

Deductions

The deductible amount of the donations is limited when establishing that the total amount of the donations shall be deductible up to an amount that does not exceed 7% percent of the taxable profit obtained by the taxpayer during the fiscal year preceding the one in which the deduction is carried out.

Loss resulting from the sale of shares

The limitation to deduce losses resulting from the sale of shares survives so their deduction shall not exceed the amount of profits obtained there-from. The Income Tax Law includes the requirements that were provided by article 54 of the Regulations to the Income Tax Law ("RLISR") due to its abbreviation in Spanish) for the deduction of losses in a sale of shares. There is a possibility that, through the fulfillment of certain requirements, holding companies may deduct losses resulting from the sale of shares, from the income they generate.

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