From Mexico: Mexico’s Government Offers Tax Benefits to Businesses With Operations in Special Economic Zones (SEZ)

Manuel Toledo and Marco Ruiz - Andersen Tax & Legal in Mexico, a member firm of Andersen Global

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Businesses setting up operations in designed SEZ could be subject to trade facilities, infrastructure development privileges, duty-free customs and other significant tax benefits, such as:

• Full relief of Income Tax due for the first 10 years of operation on income obtained within the SEZ, as well as a 50% reduction in the five years after.
• VAT levied at a 0% rate for operating SEZ entities on any acquired goods, leasing of tangible goods or services provided from taxpayer located in outside the zone.
• No VAT on activities performed in the SEZ.
• Special customs regime that allows temporary imports of goods used on productive activities on the SEZ.

These benefits are part of an effort from the Mexican government to promote economic development in regions with social disadvantage. To date, five cities across the country have been designated as SEZ, but more are expected to come.