January 18, 2019
From Mexico: Mexican Government Issues Decree of Tax Benefits for the Northern Border Region
The Decree of Tax Benefits for the Northern Border Region (effective during 2019 and 2020) has been issued by the Mexican Government to boost the development of the regional economy.
Income Tax Benefit
The Decree grants a tax credit equivalent to a third of the income tax determined by taxpayers residing or having operations on the region (reducing the income tax rate to 20%). For purposes of obtaining the benefit, taxpayers must fulfill the requirements established and be authorized by the tax authorities.
While the referred tax credit is not applicable to taxpayers that are already subject to a preferential tax regime (such as maquiladoras, trusts, among others), it fully represents an important benefit.
Value Added Tax Benefit
Focused on acts and activities carried out in the region, the Decree grants a tax credit equivalent to 50% of the value added tax computed by taxpayers. In search of facilitating the benefit, the Decree allows taxpayers to reduce the tax credit from the 16% regular rate, fixing the value added tax rate to 8%.
This benefit is not applicable to certain activities (sell of real estate, intangibles, digital content, among others) and for purposes of being subject to it, taxpayers must fulfill the requirements established and be authorized by the tax authorities.