04 / 08 / 22
Granting of tax incentives for attracting new investments to the Isthmus of Tehuantepec.
MEXICO CITY, MEXICO, August 4th, 2024 – To generate productive investments, job creation and economic growth in the Isthmus of Tehuantepec, on June 5th, 2023, the “Decree promoting the investment of taxpayers who carry out productive economic activities within the Poles of Development for the Wellbeing of the Isthmus of Tehuantepec” was published in the Federal Official Gazette.
The purpose of the aforementioned Decree is to encourage and attract new investments to the Poles of Development for the Wellbeing located in the Isthmus of Tehuantepec, integrated by Coatzacoalcos I, Coatzacoalcos II, Salinas Cruz, San Blas Atempa, San Juan Evangelista and Texistepec. The above, for the economic development of the region by means of the following productive economic activities: electrical and electronics, semiconductors, automotive (electromobility), auto parts and transportation equipment, medical devices, pharmaceuticals, agroindustry, electric power generation and distribution equipment (clean energy), machinery and equipment, information and communication technologies, metals and petrochemicals, among others.
Mapa que representa en verde la región de los polos de bienestar y en rojo el corredor interoceánico.
To comply with the above, the Federal Government grants, through the Decree in question, several tax invectives to those taxpayers that carry out productive economic activities within the Poles of Development for the Wellbeing and determined as such by means of a certificate issued by the Inter-Oceanic Corridor of the Isthmus of Tehuantepec, as follows:
- To those taxpayers, individuals and legal entities residents in Mexico for tax purposes or residents abroad with a permanent establishment in Mexico that pay taxes under the business and professional activities regime for individuals, the general regime for legal entities, or the simplified trust regime for legal entities, that earn income from productive economic activities carried out within the Poles of Development for the Wellbeing:
- Tax credit equal to 100% of the income tax incurred and creditable against the same, during the first three fiscal years from the date the certificate is issued by the Inter-Oceanic Corridor of the Isthmus of Tehuantepec;
- Tax credit equal to 50% of the income tax incurred and creditable against the same, during the following three fiscal years. Said tax credit will be up to 90% of the income tax incurred in the event the minimum employment levels are exceeded; and,
- Immediate deduction of 100% of the original investment amount of new fixed assets used in the Poles of Development for the Wellbeing for the development of productive economic activities during six fiscal years, from the date the certificate is issued by the Inter-Oceanic Corridor of the Isthmus of Tehuantepec.
In this regard, the immediate deduction of investments may be made in the tax year in which they begin to be used or in the following year.
- To those taxpayers who sell goods, provide independent services, or grant the temporary use or enjoyment of goods to other persons who carry out productive economic activities within the same or a different Pole of Development for the Wellbeing:
- Tax credit equal to 100% of the value added tax payable on the sale of goods, the rendering of independent services or the granting of the temporary use or enjoyment of goods, creditable against the tax payable on such activities during the four fiscal years following the effective date of the Decree in question.
Said taxpayers may apply the aforementioned tax incentives, provided that: (i) they are current in the compliance of their tax obligations; (ii) they have a valid concession title or are owners of an area within a Pole of Development for the Wellbeing; (iii) they submit, if applicable, the investment project for which the aforementioned concession title was granted; and (iv) they have their tax domicile in the Pole of Development for the Wellbeing where they carry out their productive economic activities.
There are certain issues that need to be considered that are not mentioned in the Decree in question, such as the tax treatment for the Net Taxable Profit Account (CUFIN, for its acronym in Spanish) and the tax consequences that could arise in the event of a dividend distribution.
SMPS Legal analyzes …
As a result of Nearshoring, Mexico has been considered by several companies as an attractive location for the relocation of their supply chains, mainly due to its geographical proximity to the United States and its various trade agreements with several countries around the world.
Due to the above, a growing demand for industrial warehouses, mainly in the north and center of the country, is causing a shortage in the various industrial parks in these locations. The government, in order to promote other regions of the country, has issued a decree with tax incentives in order to promote investments within the Isthmus of Tehuantepec, located in the southeast of the country, covering the States of Oaxaca and Veracruz, in order to trigger economic and social development in the region.
We have seen a particular interest on the side of companies in investing in the south of Veracruz, as its geomorphology is flat and not very rugged; its proximity to the Gulf of Mexico, to the third most important port in the country (the port of Veracruz) and to the inter-oceanic corridor.