Mexico has enacted a new policy to boost nearshoring investments. This policy offers tax breaks to companies planning to move their operations to Mexico, targeting 10 major export sectors.
The tax benefits include a fast-tracked investment write-off, varying from 56% to 89% for the remainder of 2023 and all of 2024. On top of that, companies can claim an extra 25% deduction for employee training costs for three years, as stated in the Official Gazette of the Federation (DOF).
The government has identified specific sectors for these incentives based on four key factors: robust GDP growth, strong export ties, economic multiplier effects, and increasing U.S. export demand. The sectors include electronics, semiconductors, agribusiness, and more.
This move is Mexico’s answer to global disruptions like the COVID-19 pandemic and geopolitical tensions that have unsettled supply chains. Given its strategic location, Mexico is well-positioned to draw foreign investment, especially from companies eyeing the U.S. market.
However, there are conditions. Companies must hold their investments in fixed assets for at least two years, and certain assets like office equipment are not eligible.
This year has already seen major investments in Mexico from global companies like Amazon, Bosch, and Samsung, aimed at expanding operations and cutting costs. For instance, Amazon has committed nearly MX$20 billion (US$988 million) to bolster its distribution network in Mexico. Similarly, Bosch plans to invest MX $5,097 million (US$283.2 million) to enlarge its Aguascalientes facility, creating 400 new jobs and focusing on advanced brake technology for leading car manufacturers.
