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MEXICO – Tax Relief Program to Incentivize Nearshoring
October 13, 2023
The Government of Mexico issued a decree on 11 October to promote investments through nearshoring, allowing the accelerated deduction of investments, from 56 percent to 89 percent in 2023 and 2024. This decree establishes tax incentives for companies wishing to relocate anywhere in Mexico and applying to ten key sectors of the Mexican economy. The decree provides the previous incentive to taxpayers who are engaged in any of the following activities:
- Products intended for human and animal nutrition.
- Fertilizers and agrochemicals.
- Raw materials for the pharmaceutical industry and pharmaceutical preparations.
- Electronic components, such as simple or complex circuit cards, circuits, capacitors, condensers, resistors, connectors and semiconductors, coils, transformers, harnesses and computer and telephone modems.
- Machinery for watches, measuring, control and navigation instruments, and electronic medical equipment for medical use.
- Batteries, accumulators, electrical conduction cables, plugs, contacts, fuses, and accessories for electrical installations.
- Gasoline, hybrid and alternative fuel engines for use in cars, vans, and trucks.
- Electrical and electronic equipment, steering systems, suspension, brakes, transmission systems, seats, interior accessories, and die-cast metal parts, for automobiles, vans, trucks, trains, ships, and aircraft.
- Internal combustion engines, turbines, and transmissions for aircraft.
- Non-electronic equipment and devices for medical, dental and laboratory use, disposable material for medical use and optical items for ophthalmic use.
The tax incentive also is granted to taxpayers who are engaged in the production of copyrighted cinematographic or audiovisual works that are that are exported.
All taxpayers who apply the benefits of this decree can claim an additional 25% of their incremental expense of training for each employee during the years 2023, 2024, and 2025. The incremental is measured considering the average training expense of years 2020, 2021 and 2022.
This decree represents a good opportunity for companies that are involve in exporting activities in Mexico. Please feel free to reach out to Germán Vega with any additional requests for information.
