On June 5, 2023, the so-called “Decree fostering the investment of taxpayers that carry out productive economic activities within the Development Poles for the Well-Being of the Isthmus of Tehuantepec” was published in the Official Gazette of the Federation (DOF). This decree grants significant tax benefits and administrative facilities to taxpayers that carry out certain productive economic activities in said poles.
All taxpayers are eligible, both individuals and legal entities, tax residents in Mexico and residents abroad with a Permanent Establishment in the country. To be eligible, they must have, among other things, a valid concession title or be owners of an area within the so-called “Development Poles for the Well-Being” (“Development Poles”) and have their tax domicile there. The identification of these poles and their location will be carried out through the corresponding declaration to be published in the DOF. The contemplated economic activities are: (i) Electrical and electronics; (ii) Semiconductors; (iii) Automotive (Electromobility); (iv) Auto parts and transportation equipment; (v) Medical devices; (vi) Pharmaceutical; (vii) Agroindustry; (viii) Electric power generation and distribution equipment (clean energy); (ix) Machinery and equipment; (x) Information and communication technologies; (xi) Metals and petrochemicals; and (xii) those not included in the foregoing but that are determined subsequently. Tax benefits The benefits include: 1. A tax incentive equivalent to 100% of the Income Tax is granted on the income derived from the economic activities carried out in the “Development Poles” during the three fiscal years following the one in which the eligibility certificate was obtained. For the following three fiscal years, the incentive will be reduced to 50%, unless the minimum employment levels to be determined subsequently are exceeded, in which case the incentive will be 90%. 2. During the six fiscal years of application of the foregoing incentive, taxpayers may apply the immediate deduction of 100% of the original amount of the investment in new fixed-asset goods that they use for the development of productive activities in the established zones. Goods used for the first time in Mexico will be considered new. 3. A tax incentive is granted consisting of a tax credit equivalent to 100% of the Value Added Tax that must be paid for the sale of goods, the rendering of independent services, or the granting of the temporary use or enjoyment of goods carried out with taxpayers located within the same development pole or in others. This incentive will be applicable during the four years from the entry into force of the decree or from the date on which the declaration of a development pole is published in the DOF. This is the first step in establishing the legal framework governing the operation of the tax benefits and facilities in the development poles. Therefore, it is necessary to await the issuance of the general rules necessary for their proper and correct application. It appears that the federal government’s objective of promoting investment that drives growth in certain areas of the southeast is beginning to materialize, at least from a legal perspective. We believe that the benefits described are so significant that it is worth considering the possibility of establishing production units within the development poles, even with the incipient logistics infrastructure and the scarce skilled labor. For additional information, please contact our partners of the Tax and Foreign Trade practice area: Alejandro Torres, Partner: +52 (55) 5258 1072 | ajtorres@vwys.com.mx Luis Miguel Jiménez, Partner: +52 (55) 5258-1058 | lmjimenez@vwys.com.mx
