Pedro José Godinez Hurtado – Partner of the Civil, Commercial and Corporate Law Department at HGAbogados.

The trend of Nearshoring in our country has detonated that the government in its three levels encourages and (even in some cases) competes to grant certain benefits or incentives that are considered more attractive for the attraction of foreign capital, this, with the objective of increasing the income and dispose it in the administrative work of the day to day.

For these reasons, the Federal Executive published in the Official Gazette of the Federation, a decree granting tax incentives to key sectors of the export industry consisting in the immediate deduction of investment in new fixed assets and the additional deduction of training expenses, which we will discuss below.

To whom does it apply?
According to the first article, this decree is aimed at taxpayers who are in the normative assumption referred to in titles II or VII, chapter XII, of the income Tax Law (for corporations), and title IV, chapter II, section I of the above-mentioned law (for individuals), as long as they are engaged only in the production, processing or industrial manufacture of the goods listed below, and also export them:

I. Products intended for human and animal feed.
II. Fertilizers and agrochemicals.
III. Raw materials for the pharmaceutical industry and pharmaceutical preparations.
IV. Electronic components.
V. Machinery for watches, measuring, control and navigation instruments, and electronic medical equipment, for medical use.
VI. Batteries, accumulators, electrical conduction cables, plugs, fuses and accessories for electrical installations.
VII. Gasoline, hybrid and alternative fuel engines for automobiles, vans and trucks.
VIII. Internal combustion engines, turbines and transmissions for aircraft.
IX. Non-electronic equipment and devices for medical, dental and laboratory use.
X. Production of cinematographic or audiovisual works, provided that these works are exported.

What percentages can be deducted?
According to its text, the percentages that taxpayers may apply to deduct the investments referred to in article one are as follows:

Maximum authorized percentages by type of specific asset:

a) 86% for automobiles, buses, cargo trucks, forklifts and trailers.
b) 86% for airplanes dedicated to agricultural aerial fumigation.
c) 88% for personal desktop and laptop computers, servers among, others.
d) 89% for dies, molds, matrixes and tooling.
e) 89% for machinery and equipment directly destined to the research of new products or development of technology in the country.

Maximum percentages for machinery and equipment according to the key activity in which they are used and that are different from those indicated in the previous fractions:

From manufacturing for pharmaceutical products to machinery and manufacturing of products destined to the development of technologies in the country; from construction and assembly of sets in photos for recordings and photography to the production of food for animals and humans; among others assumptions, the percentages range from 56% to 88%.

25% of the increase in training expenses for employees in activities related to the company’s line of business.

What is the time frame?
The incentive consists of choosing to make the immediate deduction of the investment in new goods acquired as of the effective date of this decree (October 14, 2023) and until December 31, 2024.

Any additional requirements?
In addition to the logical and common ones (having a positive compliance report; not being in the 69-B list; not having tax credits, among others), the decree determines some specific guidelines such as, that goods that are used for the first time in Mexico are considered as new goods; and the use of these goods for a minimum period of two years.

If as a businessman you find yourself in any of the cases established here, we suggest you contact us and schedule an appointment so that our specialists in tax matters can answer your questions.

Sincerely, Guadalajara, Jalisco, in October 2023.