Mexico courts investors with tax breaks

The Mexican government has announced a decree aimed at promoting “nearshoring” by offering tax incentives to companies looking to relocate their operations to Mexico, according to Deputy Finance Minister Gabriel Yorio. The incentives will benefit 10 key sectors of the Mexican economy and were detailed in an official decree published in Mexico’s official gazette.

Among the sectors covered by these incentives are Mexico’s significant automotive industry, agriculture, and technology sectors. The incentives include accelerated investment deductions ranging from 89% to 56% in 2023 and 2024, as well as additional deductions of 25% over three years for worker training.

Notably, the highest deduction of 89% will be applicable to machinery and equipment intended directly for research into new products or technology development within Mexico. The automotive, agricultural, and technology sectors are poised to benefit from deductions exceeding 80%.

This move by the Mexican government is aimed at attracting more investment and business activity to the country, particularly in sectors that can contribute to economic growth and innovation. It aligns with the concept of nearshoring, where companies locate their operations closer to their primary markets to enhance efficiency and reduce costs.