Mexico City, January 2025
On January 21, 2025, a decree issued by Mexico’s President, Claudia Sheinbaum, was published in the Official Gazette of the Federation, granting various tax incentives as part of the national strategy called “Plan Mexico” (the “Decree”), whose objective establishes, among other goals, strengthening the national industry for the local and regional market; expanding import substitution with value chains; generating jobs; and strengthening scientific, technological development and national innovation.
The tax incentive consists of the possibility of making the immediate deduction of the investment in new fixed assets*, acquired from the effective date of the Decree until September 30, 2030, deducting in the fiscal year in which the investment is made the amount resulting from applying to the original amount of the investment the percentages established in Article Two of the Decree in substitution of those established in the Income Tax Law.
1. Requirements to apply for the tax incentive:
- Registration: The taxpayer must be registered in the Federal Taxpayer Registry (RFC) and have the tax mailbox enabled.
- Tax Compliance: Have a positive tax compliance opinion.
- Project: Submit an investment project, a collaboration agreement with the Ministry of Public Education (in terms of dual training programs), or a project for certification (as applicable).
- Approval: Obtain a compliance certificate from the Evaluation Committee.
- Guidelines: Comply with the guidelines established by the Evaluation Committee.
2. Restrictions:
- It is only granted to legal entities that are taxed in terms of the Income Tax Law under the general regime of Title II or under the Simplified Trust Regime, as well as to individuals with business and professional activities.
- It does not apply to certain assets, such as office furniture and equipment, conventional vehicles, automobile armoring equipment, or fixed assets that cannot be individually identified, as well as airplanes that are not dedicated to agricultural aerial spraying.
- The assets must be used for a minimum period of two years immediately following the year in which the deduction is made.
3. Tax Incentives:
- Article Second of the Decree establishes the percentages that may be applied to deduct investments, varying from 35% to 91% depending on the type of good or the activity for which they are used and the year of investment.
- For value-added tax purposes, the immediate deduction established in the Decree is considered a fully deductible expense.
- An additional deduction is granted equivalent to 25% of the increase in expenses incurred for employee training (provided they are registered with the Mexican Social Security Institute) or innovation expenses (related to investment projects for inventions or for obtaining initial certifications required to join value chains) with respect to the average expenses incurred in the last three fiscal years.
4. Evaluation Committee:
An Evaluation Committee is created under the Decree, composed of one representative from the Ministry of Economy, one from the Regional Economic Development and Relocation Advisory Council (without voting rights), and one from the Ministry of Finance and Public Credit, whose purpose is to administer the application of these tax incentives, validate the projects, and establish the guidelines for the deductions.
5. Limitations and exclusions:
- Companies in liquidation, with tax credits, or related to undue tax practices cannot access the tax incentives.
- The investment (acquisition of new fixed assets) must be strictly used for the development of the taxpayer's main activity.
6. Term and supervision:
- Companies must register investments and training carried out to maintain eligibility.
- The tax incentives are applicable until September 2030, with a total amount available of up to 30 billion pesos.
- The Decree overrules the “Nearshoring Decree” published on October 11, 2023.
- The Tax Administration Service may additionally issue general rules for the application of the Decree.
With these incentives related to Plan Mexico, the federal executive seeks to promote investment in Mexico in strategic sectors, encouraging domestic companies to integrate into value chains and thus promoting Mexico's economic development. The aim is to transform the Mexican economy through tax incentives intended to attract investment, generate jobs, and prioritize and promote technological development and innovation, towards a more competitive and sustainable economic model.