The Decree was published to promote investment within the Development Areas for the Isthmus of Tehuantepec’s Bienestar (Well-being) project

On June 5, 2023, the Decree to encourage investment from taxpayers carrying out economic activities within the Development Areas for the Isthmus of Tehuantepec’s Bienestar project was published in the Official Federal Gazette (DOF).

Said Decree derives from the 2019 – 2024 National Development Plan, now focused on the Isthmus of Tehuantepec to attract new investments in industrial activities and encourage the installation of new production plants within the Development Areas for the Bienestar project (which includes part of Mexico’s south-southeast region, within the states of Oaxaca and Veracruz) to detonate the region’s economic development and permanent employment sources.

The Decree grants the following tax incentives with specific administrative facilities for each of them:

• Income Tax (ISR)

A creditable tax credit is granted against the caused income tax equivalent to 100% of the original amount for three years and 50% in the three subsequent years. If the minimum employment levels established in the guidelines are exceeded, this last percentage could increase to 90%.

• Immediate deducibility of investments on new fixed assets.

The immediate deduction of 100% of the original investment amount on new fixed assets used in the Bienestar Development Areas to carry out economic activities for six years.

• Value Added Tax (VAT)

A tax credit is granted for four years to taxpayers who carry out economic activities within the Bienestar Development Areas equivalent to 100% of the VAT to be paid for the sale of goods, provision of independent services, or the granting of the temporary use or enjoyment of goods to people who carry out productive activities. It will be creditable against the tax that must be paid for said activities.

The economic activities to which the benefits mentioned above will be applied are the following:

1) Electrical and electronic.
2) Semiconductors.
3) Automotive (electromobility).
4) Auto parts and transportation equipment.
5) Medical devices.
6) Pharmaceutical.
7) Agribusiness.
8) Electric power generation and distribution equipment (clean energy).
9) Machinery and equipment.
10) Information and communication technologies.
11) Metals and petrochemicals.
12) Any other determined by the Governing Board of the Interoceanic Corridor of the Isthmus of Tehuantepec per the terms of the applicable legal provisions.

It should be noted that these tax incentives are not considered cumulative for Income Tax, and those who use them have administrative facilities; however, those interested in obtaining the above benefits must comply with the following requirements, among others:

I. Be up to date on their fiscal obligations.

II. Have a valid concession title or land/property ownership in a Bienestar Development Area.

III. Submit, where applicable, the investment project for which the concession title referred to in the previous section was granted, and

IV. Have the tax address in which they carry out their economic activities within the Bienestar Development Area

We recommend that companies analyzing these Development Areas for the Isthmus of Tehuantepec   Bienestar project as a destination for their new investments consider the following before investing:

1. Timing. Because these areas are still under development, if you want production facilities in the short term, this destination may not be ready to meet your projected timing.

2. The land uses defined to be projects subject to the tax benefits and administrative facilities mentioned in the Official Federal Gazette. Your project may be a supplier to one of them, but this does not mean it is considered within that same land use and will need to be submitted to the Governing Board of the Interoceanic Corridor of the Tehuantepec Isthmus.

3. Workforce. It is important to consider the necessary job profiles and the availability of the economically active population in the location area for your new project. It would be best to keep in mind the great demand these areas will have to satisfy the needs of the new companies to establish there.

4. Accessibility. You may need to consider transportation for your staff (round trip) until public transport routes are established.

5. Logistics. If you plan to transport the goods by ship, you should consider the specifications and characteristics of the nearby ports. If the goods are transported by land, we suggest you know the road’s risk heat map.

At JA DEL RÍO, we have a specialized consulting area in direct investment that can assist you with these and other matters to ensure that your new project in the Development Areas for the Bienestar Project for the Isthmus of Tehuantepec is productive and competitive.

If you have any questions, J.A. DEL RÍO´s experts are available to advise you on compliance with legal and tax provisions. Please do not hesitate to contact us at contacto@jadelrio.com