BDO Corporate Tax News

Mexico - New tax incentives announced for export sector

A decree published by the Mexican government on 11 October 2023 grants two new tax incentives to individuals and companies carrying out activities in key export sectors: an immediate deduction for the acquisition of fixed assets and another deduction for certain training activities. The decree applies as from 12 October.
Overview of the decree
  • Covered taxpayers: The tax incentives are granted to legal entities that pay tax under Mexico’s Income Tax Law (LISR) and that are engaged in the production or industrial manufacturing of specific goods intended for export, as well as to individuals engaged in business in the export sector. The covered product categories are as follows:
    • Products intended for human and animal nutrition;
    • Fertilizers and agrochemicals;
    • Raw materials for the pharmaceutical industry and pharmaceutical preparations;
    • Electronic components, such as simple or loaded cards, circuits, capacitors, capacitors, resistors, connectors and semiconductors, coils, transformers, harnesses and modem for computer and telephone;
    • Clock machinery, measuring, control and navigation instruments and electronic medical equipment, for medical use;
    • Batteries, accumulators, batteries, electrical conduction cables, 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 die-cast metal parts for automobiles, vans, trucks, trains, ships and aircraft;
    • Internal combustion engines, turbines and transmissions for aircraft;
    • Non-electronic equipment and devices for medical, dental and laboratory use, disposable materials for medical use and optical articles for ophthalmic use; and
    • Copyrighted cinematographic or audiovisual works (such works are deemed to be exported when the owner grants a license of the works or transmits exploitation rights for dissemination abroad).
  • Tax incentives: The following tax incentives are available to qualified persons:
    • Accelerated depreciation for investment in new fixed assets acquired during the period 12 October 2023 and 31 December 2024, provided the deduction is taken in the year of the investment. The depreciation is calculated as a percentage of the cost price of the new asset and the percentage ranges from 56% to 89%, depending on the asset and the taxpayer’s business activities. It should be noted that the immediate deduction is not available for the acquisition of office furniture and equipment, automobiles powered by internal combustion engines, automobile armouring equipment or any fixed asset that is not individually identifiable, or for aircraft other than aircraft used for aerial agricultural fumigation.
    • Additional deduction equal to 25% of increased expenditure on technical or scientific knowledge training relating to the taxpayer’s business of active employees who are registered with the Social Security Institute (as compared to such expenditure incurred in 2020, 2021 and 2022). The 25% deduction can be claimed on the tax return for fiscal years 2023, 2024 and 2025 but it must be taken in the year the expense is incurred.
  • Requirements to benefit from the incentives: A number of requirements must be met for a taxpayer to benefit from the incentives, including the following:
    • During fiscal years 2023 and 2024, the taxpayer’s income from the exports of goods will represent at least 50% of their total annual turnover;
    • The taxpayer must be registered in the Mexican Federal Taxpayer’s Registry and be in compliance with its tax obligations;
    • The taxpayer must notify the Mexican tax authorities that it intends to apply the benefits of the incentives;
    • The assets must be “new,” meaning they are used for the first time in Mexico;
    • The taxpayer must keep the acquired fixed assets in use for at least two years following the year the deduction is taken; and
    • The taxpayer must maintain specific records and documentation of investments/trainings.

Jaime Zaga Hadid
BDO in Mexico