In the wake of the phenomenon known as nearshoring, the Mexican Federal Executive has recently published a decree in the Official Gazette of the Federation, providing various tax incentives for taxpayers within key sectors of the export industry. The decree takes effect for the fiscal years 2023 and 2024.
The concept of nearshoring refers to the practice where companies shift their business or services to neighbouring or nearby countries, typically to leverage lower costs of operations, or due to similar cultural context and time-zone advantages. This trend has been particularly significant within the North American context, following the re-negotiation of key trade agreements, and the disruption of global supply chains due to ongoing global geopolitical factors.
The new tax incentives announced in Mexico are part of a broader strategy aimed at attracting these businesses that are looking for nearshoring opportunities. By offering attractive financial incentives, the aim is to place Mexico as a preferred destination for businesses looking to optimize their operation and production costs, particularly within the export industries.
While specifics of the incentives are yet to be fully understood, this move by the government signals a clear effort to appeal to businesses within the export industry and stimulate economic growth. As the global economy continues to grapple with effects of the pandemic, strategic pivots such as this will be key in stabilizing economies and encouraging sustainable growth.
This development is expected to pave the way for expanded opportunities within the legal sector, as businesses, regulatory bodies and other stakeholders navigate these newly presented avenues of economic collaboration and growth. For legal professionals, it is crucial to stay informed on these updates, to better understand the implications across varying industries, and be equipped to advise businesses effectively navigating these changes.
More information about these fiscal incentives is available on the corresponding decree published in Mexico’s Official Gazette, accessible here.