Global Daily Tax News, Mexico Introduces Tax Breaks For Exporters, (Oct 17, 2023)

Mexico has enacted legislation to introduce new tax incentives for exporters of manufactured or processed goods.

The Decree provides that businesses engaged in certain sectors may immediately deduct a substantial portion of their investments in new fixed assets in a single year, for purchases until December 31, 2024. The percentage that may be deducted – ranging from 56 percent to 89 percent – depends on the nature of a business's economic activity, as set out in the second Article of the Decree.

Further, the law provides for an additional deduction of 25 percent of increased spending on expenses to train workers for the fiscal years 2023, 2024, and 2025, compared with the average spending in the three years 2020, 2021, and 2022.

The incentive is being provided to businesses engaged in the production, processing, or industrial manufacturing of the following goods, which they export:

• Products intended for human and animal consumption;

• Fertilizers and agrochemicals;

• Raw materials for the pharmaceutical industry and pharmaceutical preparations;

• Electronic components;

• Machinery for watches, measuring, control and navigation instruments, and medical equipment;

• Components for electronic installations, including batteries, fuses, cables, and plugs;

• Gasoline, hybrid and alternative fuel engines for cars, vans, and trucks;

• Key vehicle components, including electrical and electronic equipment, for use in automobiles, vans, trucks, trains, ships, and aircraft;

• Internal combustion engines, turbines, and transmissions for aircraft; and

• Non-electronic equipment and devices for medical, dental and laboratory use, disposable material for medical use and optical items for ophthalmic use.

The tax break may also be accessed by taxpayers engaged in the production of cinematographic or audiovisual works, providing the rights to these works are sold overseas.

To be eligible, taxpayers' exports must make up at least 50 percent of their turnover during the fiscal years 2023 and 2024.

The Decree became effective on October 11, 2023.