With the entry of the new government in Mexico led by President Andrés Manuel López Obrador, new foreign investment opportunities seem to open up, mainly in the Mexican southeast and in the northern border area, so here is a brief summary of some tax credits and current incentives in Mexico.
Corporate bonds
In accordance with the Presidential Decree that entered into force on 09 January 2019, a tax credit equivalent to 100% of ISR is granted that would have to be withheld on interest paid to investors residing abroad. This benefit will be applied whenever the interest is derived from publicly traded bonds issued by entities residing in Mexico and the recipients residing in a country with which Mexico has an income tax treaty or a broad information-exchange agreement, such as the United States of America.
Capital gain
The Decree establishes a preferential tax rate of 10%, applicable to the profits made by resident natural persons or tax residents abroad during the fiscal years 2019 to 2021 from the sale of shares in the Mexican stock exchange, complying with a series of requirements and assumptions.
Incentive for research and development (R&D)
The Income Tax Law establishes
a 30% tax credit for R&D expenses, including investments. The tax credit will be equal to the R&D expenses
of the current year that exceed the average of said expenses incurred
in the previous three years.
The expenses for investment in specialised equipment, laboratory equipment, tools, and fees paid
to researchers are, among others, eligible for this incentive, in the same
way it is necessary to attend to the rules of operations to know in detail the requirements and limitations.
Incentive on investments in film production
There is a direct fiscal stimulus equivalent to the amount contributed to projects of production of national cinematographic films (EFICINE) applicable against income tax for
the year. However, said incentive may in no case exceed the ISR
paid in the previous fiscal year.
Incentives forreal estate investment (FIBRAS and REITS)
There are some tax benefits for real-estate investment trusts. Mexican legislation establishes a special tax regime for real-estate investment
trusts dedicated to the acquisition and development of real estate for lease
or acquisition of the right to receive income from the lease of the property or to grant financing for such purposes. This tax regime grants benefits such
as the deferral of ISR, among others. Certain requirements must be met to be subject to this special tax regime.