10 / 12 / 23
Decree granting tax incentives to key sectors of the export industry
MEXICO CITY, MEXICO, October 12th, 2023 – On October 11, 2023, the “Decree granting tax incentives to key sectors of the export industry, consisting of accelerated depreciation of investment in new fixed assets and additional deduction of training expenses” (the “Decree”) was published in the Federal Official Gazette.
The Decree grants certain tax incentives to legal entities, individuals engaged in business activities and legal entities subject under the simplified trust regime, who are engaged in the production and export of certain goods, including products for human and animal consumption, fertilizers and agrochemicals, raw materials for the pharmaceutical industry, electronic components such as simple or loaded cards, circuits, capacitors, resistors, connectors, semiconductors, coils, transformers, harnesses, and computer and telephone modems, as well as machinery for watches, measuring, control and navigation instruments, and electronic medical equipment for medical use.
It also includes batteries, accumulators, electrical conductors, plugs, contacts, fuses, and accessories for electrical installations, gasoline, hybrid and alternative fuel engines for cars, vans, and trucks, electrical and electronic equipment, steering systems, suspension, brakes, transmission systems, seats, interior accessories, and stamped metal parts for cars, vans, trucks, trains, boats, and aircraft.
Additionally, the Decree applies to internal combustion engines, turbines, and transmissions for aircraft, non-electronic equipment, and devices for medical, dental, and laboratory use, disposable medical supplies, and optical articles for ophthalmic use, as well as the production of cinematographic or audiovisual works whose content is protected by copyright under applicable regulations, provided that these works are exported.
In general terms, the Decree grants: (i) a tax incentive allowing for the accelerated depreciation of investments in new fixed assets acquired from October 12, 2023 (date of entry into force the Decree) through December 31, 2024; and, (ii) a tax incentive consisting on an additional deduction equal to 25% of the increase in expenses, if any, incurred by taxpayers eligible to apply the Decree during 2023, 2024 and 2025, for the training of their employees during these fiscal years, in connection with technical or scientific knowledge relevant to the taxpayer’s business.
As part of the requirements that taxpayers must meet to apply the benefits granted by the Decree, they must: (i) be registered before the Federal Taxpayer Registry (RFC) and have their Taxpayer Mailbox enabled; (ii) have a positive compliance opinion regarding tax obligations, and (iii) submit a notice stating their choice to apply the tax incentives under the Decree.
It is important to mention that the purpose of the Decree is to promote the practice known as nearshoring through the relocation of production points of major companies to Mexico, taking advantage of its proximity to relevant markets, particularly the United States of America.
The SMPS Legal team is at your disposal in case you require further details of the Decree and to review the applicability in each sector for its possible implementation.