Schedule 4. — Credits

22. The taxpayers included in this schedule are those who normally or occasionally receive the following items of income:

23. Exemptions. — The following, however, are excluded from liability:

24. Allowable Deductions. — The tax is imposed on the gross amount of the income included under this schedule except that, in the case of leasing commercial, industrial or agricultural enterprises, the taxpayer may deduct from the leasing value the allowable deductions for amortisation or depreciation for the leasing of real or personal property.

25. Payment of Tax. — The tax must be paid by the creditor, and any agreement to the contrary is void. The creditor who receives interest on a loan, represented by a public instrument, or which is payable at a fixed period greater than one year must give a stamped receipt in duplicate of the amount received, and must file, in the months of January and July, a statement of the interest obtained in the preceding half-year, together with a copy of each of the contracts and of the receipts given.

26. If the loan is for a year or less, and is represented by a private document, the tax is paid by cancelling stamps on the same document. If the creditor extends the term of the loan for a year or less, the tax is paid by cancelling stamps on the same document. If the loan is for an indefinite time, the creditor will stamp the document for an amount equal to the tax corresponding to the interest of a half-year, and if the loan continues beyond this time without a new document being made, the tax is payable by stamping within the first fifteen days from the beginning of each new half-year.

27. If the document representing a loan does not specify the rate of interest payable, or indicates a rate lower than 6 per cent or states that the creditor will receive no interest, the tax will be computed at the rate of 6 per cent annually on the capital. Exceptions to this rule include deposits made to guarantee contracts, provided no interest is payable thereon, deposits made in courts and those made in the Treasury of the Federal Government, of the States and of the municipalities. In the case of Mexican and foreign bonds, and bonds issued by banks and by public service enterprises and bearer bonds issued in conformity with the law on companies, the agreed interest serves as basis for the tax.

28. In the case of current accounts, the tax is calculated on the interest due half-yearly, or for the period of less than a half-year that the account has run. If the debtor credits interest to the account of the creditor, he must send him a notice and cancel affixed stamps to the value of the tax. This rule applies in the case of interest on current accounts, the tax being retained by the debtor.

29. When the taxpayer resides abroad, the debtor will retain the amount of the tax and deliver it to the Public Treasury, except that public service enterprises and those whose debts are guaranteed by the Federal Government may obtain an exemption from this obligation if they prove to the Finance Department that, in accordance with contracts concluded abroad and because of their economic situation or other reasons of this character, they are not in a position to effect the withholding; in this case, however, such interest may not be deducted in computing the taxable profits (Reg., Article 52).

30. Credit institutions, banking companies, exchange and stock brokers who make payments for the account of others or receive, on commission for collection, coupons, dividends, bonds or any other instrument of credit, are required to retain the tax and are jointly liable with the recipient for the payment.