Mexican Government increases tax rates for depreciation in new investments, to increase nearshoring investment in Mexico.
Nearshoring tax benefits in Mexico
The trend of Nearshoring in our country has led the government at all three levels to encourage and, in some cases, even compete to provide certain benefits or incentives that are considered more attractive for attracting foreign capital.
This is done with the aim of increasing income and revenue, which can then be projected into future budgets and used for day-to-day administrative tasks.
As a result, the Federal Executive recently published a decree in the Official Gazette of the Federation, granting tax incentives to key sectors of the export industry.
These incentives include immediate deduction of investment in new fixed assets and additional deduction for training expenses, which we will discuss below.
Who can apply for these incentives?
This applies only if these taxpayers are solely engaged in the production, processing, or industrial manufacturing of the following goods and also export them:
- Products for human and animal consumption.
- Fertilizers and agrochemicals.
- Raw materials for the pharmaceutical industry and pharmaceutical preparations.
- Electronic components.
- Machinery for watches, measuring instruments, control and navigation, and electronic medical equipment for medical use.
- Batteries, accumulators, batteries, electrical conductors, plugs, contacts, fuses, and accessories for electrical installations.
- Gasoline, hybrid, and alternative fuel engines for automobiles, vans, and trucks.
- Internal combustion engines, turbines, and transmissions for aircraft.
- Non-electronic equipment and devices for medical, dental, and laboratory use.
- Production of cinematographic or audiovisual works, provided these works are exported.
What deduction percentages can be applied?
According to the text of the decree, the maximum deduction percentages that taxpayers can apply for the investments specified in the first article are as follows:
a) 86% for automobiles, buses, cargo trucks, tractor-trailers, forklifts, and trailers.
b) 86% for aircraft used for agricultural aerial spraying.
c) 88% for personal desktop and laptop computers, servers, and others. d) 89% for dies, dies, molds, matrices, and tooling.
e) 89% for machinery and equipment directly used for research on new products or technology development in the country.
Maximum percentages for machinery and equipment, based on the specific activity they are used for and different from those mentioned above, range from 56% to 88%.
Additionally, there is a 25% deduction for the increase in training expenses incurred by employees related to the company’s business activities.
What is the timeline?
The incentive allows for immediate deduction of the investment in new assets acquired from the effective date of the decree (October 14, 2023) until December 31, 2024.
Are there any additional requirements?
In addition to the common requirements (having a positive compliance opinion, not being on the 69-B list, not having tax credits, among others), the decree specifies some specific guidelines. These include considering goods as new if they are used for the first time in Mexico and using the assets for a minimum period of two years, among others.
If you are a business owner and fall under any of the categories mentioned here, we recommend contacting us and scheduling a meeting with our tax specialists who can answer your questions.