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Abstract
Each Mexican company is required to maintain two accounts that are used to determine whether, and to what extent, a company-level tax on distributions by the company to its shareholders is imposed. The first account is the Cuenta de Utilidad Fiscal Neta (CUFIN) account. The CUFIN balance represents the amount of a company's profit that has been subjected to Mexican income tax. The CUFIN balance is calculated under Article 88 of the Mexican Income Tax Law. The second account is the Cuenta de Capital de Aportación (CUCA) account. The CUCA account is calculated pursuant to Article 89 of the Mexican Income Tax Law and represents the capital contributed by the shareholders (or quota holders, in the case of a società anónima) to a Mexican company. It would be extraordinarily helpful if the US government were to offer a clarification of the Treaty language, and indicate that what they meant to say was that the Article 11 tax is creditable provided that the Mexican entity making the distribution has earnings and profits for US tax purposes. This clarification could conceivably take the form of a competent authority agreement entered into by the US and Mexican competent authorities (since the issue of the credibility of the Article 11 tax certainly should be of importance to Mexico).