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The new fiscal stimulus

If there’s one thing that distinguishes Mexico, it’s its geographical location, culture, values, history, and, above all, its eagerness to foster significant initiatives like the “DECREE granting tax incentives to key sectors of the export industry, consisting of immediate deduction of new fixed asset investments and additional deductions for training expenses,” which the federal government announced a few days ago.

What does this mean? Companies will be able to deduct their investments ranging from 56% to 89% in 2023 and 2024. Furthermore, there is a guaranteed additional deduction of 25% for three years for employee training expenses (Suárez, 2023).

The new fiscal stimulus, as published in the Official Gazette of the Federation, allows for the immediate deduction of investments in new fixed assets acquired from the effective date until December 31, 2024.

The Ministry of Finance has unveiled a set of fiscal incentives in ten key productive sectors to attract private investment. These benefits, which include accelerated depreciation of investments for companies, range from 56% to 89% in 2023 and 2024.

Companies that can benefit from this initiative are those engaged in the production, processing, or industrial manufacturing of the following products, and export them: products for human and animal consumption; fertilizers and agrochemicals; raw materials for the pharmaceutical industry and pharmaceutical preparations; electronic components such as simple or loaded cards, circuits, capacitors, resistors, connectors, and semiconductors, coils, transformers, harnesses, and computer and phone modems; machinery for watches, measuring instruments, control and navigation, and electronic medical equipment for medical use; 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 stamped metal parts for cars, vans, trucks, trains, ships, and aircraft; internal combustion engines, turbines, and transmissions for aircraft; non-electronic equipment and apparatus for medical, dental, and laboratory use, disposable medical supplies, and optical articles for ophthalmic use. The fiscal incentive established in this article is also granted to taxpayers referred to in the previous paragraph engaged in the production of cinematographic or audiovisual works whose content is protected by copyright in accordance with applicable regulations, provided that these works are exported. For these purposes, a cinematographic or audiovisual work is considered to be exported when the producer, as the holder of the economic rights, licenses or transfers the exploitation rights of the work for dissemination abroad.

The primary driver is economic development through key sectors such as automotive, electrical and electronic, medical devices and pharmaceuticals, agro-industry, human and animal food, agrochemicals, measurement equipment, the film and audiovisual industry, among others. Industrial development implies designing fiscal strategies that enable exporting companies to migrate to more competitive sectors by relocating part of their production to destinations near the markets they serve, a concept known as “nearshoring.” The objective is for companies to establish their operations in other countries to take advantage of geographical proximity, cost reduction, and quality of labor.