Introduction to the Tax Incentives Decree
On January 21, Mexico’s President Claudia Sheinbaum announced a series of tax incentives aimed at attracting foreign companies to the country. These incentives, according to investment strategists, are a significant step forward in maintaining the interest of foreign investors in Mexico.
Objectives and Expert Opinions
The primary goal of these incentives, as per analysts from the Fundar Research and Analysis Center, is to strengthen labor skills training and technological development. The federal administration views these incentives as a key strategy to redirect the national economy’s trajectory, especially amidst rising tariff threats and protectionist measures from the U.S. government.
Types of Incentives
The incentives are categorized into two types: those that facilitate accelerated deductions on certain investments and those that allow deductions in expenses when a company provides training to its employees.
Details of the Incentives
According to the plan, there are immediate deductions for new fixed assets purchased starting January 2025 until September 2030. The incentives total 30 billion pesos, with 28.5 billion allocated for tax breaks in new fixed asset acquisitions and the remaining 1.5 billion for additional deductions in training and innovation expenses.
The depreciation percentages vary based on the type of fixed asset. For machinery and equipment, depreciation rates depend on their specific use, as per experts from EY consultancy.
Who Benefits?
The tax incentives apply to moral persons taxed under Mexico’s Simplified Regime of Trust for Moral Persons, as stated in the decree. Additionally, individual taxpayers engaged in business or professional activities under Mexico’s Income Tax Law (ISR) with the following criteria will also benefit:
- Registered in the Federal Taxpayer Registry with a taxpayer mailbox enabled.
- Possess a positive compliance opinion regarding fiscal obligations.
- Submit the investment project, collaboration agreement with the Secretariat of Public Education on dual education.
- Hold a compliance certificate from the Evaluation Committee to apply the tax incentives outlined in the decree.
Advantages and Risks
The Mexican Institute of Certified Public Accountants (IMCP) acknowledges that the plan’s proposals, such as updating the IMMEX program, help integrate automation and artificial intelligence into manufacturing processes.
IMCP President Héctor Amaya Estrella believes that this program modernizes tax-related procedures, like IVA and IEPS certifications, to enhance the country’s competitiveness.
However, transparency risks exist. The government must ensure complete transparency, including disclosure of beneficiaries of the support measures.
Key Questions and Answers
- What are the tax incentives for? To attract foreign investments and strengthen labor skills training and technological development in Mexico.
- Who can benefit from these incentives? Moral persons taxed under the Simplified Regime of Trust for Moral Persons and individual taxpayers with specific criteria under the Income Tax Law (ISR).
- What types of incentives are there? Accelerated deductions on certain investments and deductions in expenses for employee training.
- What are the risks associated with these incentives? Ensuring transparency, including disclosure of beneficiaries and complete information on the application process.
