Tax incentives for exports
On 11 October 2023, the decree granting tax incentives to key sectors of the export industry was published in the Official Gazette of the Federation, consisting of the immediate deduction of investment in new fixed assets and the additional deduction of training expenses, which entered into force on 12 October of this year.
The purpose of these stimuli is for companies to consider relocating part of their production to locations near the markets where they operate (nearshoring), tacitly identifying the key sectors of the export industry, such as the semiconductor, automotive (especially in electromobility), electrical and electronic industries, medical and pharmaceutical devices, agribusiness, and human and animal food sectors, among others; thus boosting the economy and creating jobs.
The taxpayers who may be eligible to receive the benefits of the Decree (immediate deduction and training) are the legal entities that pay taxes under the general regime or under the trust regime, and natural persons who pay their taxes under the business and professional activity regime, regulated by the Income Tax Law (LISR), when they work in the production, processing or industrial manufacture of the goods. This incentive is also granted to the production of cinematographic or audiovisual works, the content of which is protected by copyright, provided that the works are exported.
The relevant aspects of the incentive include:
1. Immediate deduction of new fixed assets
The incentive consists of immediately deducting expenses in new fixed assets acquired between October 12, 2023 and December 31, 2024 to be used in key activities. They are deducted in the year in which the expense is disbursed, applying the maximum percentages by type of asset, which range between 86% and 89%. In the case of machinery and equipment, the deduction percentages are also based on the activity in which they are used. The percentages range between 56% and 88%.
The incentive does not apply to the following fixed assets: furniture, office equipment, internal combustion engine cars, car armour equipment or any fixed asset not individually identifiable or aircraft dedicated to agricultural air fumigation.
Taxpayers may choose to apply the fiscal incentive during fiscal years 2023 and 2024, if it meets the following criteria:
a) The amount of income from the export of the goods represents at least 50% of the total turnover in each year
b) Submission of the notice to apply the incentive within 30 calendar days following the month in which the stimulus is applied for the first time
c) Implementing a specific log identifying the expenses for which the immediate deduction was applied
d) That the tax authority has a positive opinion of compliance with tax obligations
In addition to the application of the immediate deduction incentive, there are tax effects to be considered in the determination of the provisional income tax payments in the year in which the deduction is made, as well as, in the determination of the profit coefficient for the fiscal years of 2024 and 2025, aimed at the optimization of cash flows for the benefit of taxpayers.
2. Additional deduction of training expenses
The incentive of the additional deduction of training expenses may be considered in the calculation of the annual returns for the fiscal years between 2023 and 2025. It applies to training that consists of technical or scientific knowledge that is linked to the taxpayer's activity, provided to workers registered with the Mexican Institute of Social Security.
The incentive consists of an additional deduction equivalent to 25% of the increase in the expenditure disbursed for training received by each of the workers in the year. Said increase will be determined by the positive difference of the expenditure disbursed for training in the year in question and the average expenditure that has been disbursed in the fiscal years between 2020 and 2022, including any years in which no training expenses were disbursed.
3. Taxpayers that are not eligible to apply the incentive
The benefits of the aforementioned incentives will not be applicable to taxpayers who: appear in the list of article 69 of the CFF, who have outstanding tax debts, or debts that, being enforceable, are not guaranteed, or, if the guarantee is insufficient, taxpayers in liquidation, in temporary restriction of the use of digital stamps for the issuance of tax receipts, among others.
Taxpayers who have applied the aforementioned incentives and fail to meet the requirements established in said Decree must pay the tax and the relevant surcharges and cancel the fiscal incentives.
At Mazars, we are at your service to clarify any questions related to this incentive. We can support you in analysing the fiscal and financial impact this stimulus may have on your companies.
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