IEPS and ISR: tax incentives for investments in Mexico
In terms of IEPS and ISR, Mexico grants the following tax and non-tax incentives to investments, according to information from the WTO.
First and foremost, incentives with respect to the IEPS:
Tax incentive to importers or alienators of turbosine consisting of an amount equivalent to 100% of the IEPS to be paid in the importation or alienation of turbosine, and will only be applicable as long as no amount is transferred to the acquirer for the mentioned tax in the alienation of such good and will be creditable against the tax to be paid for the mentioned activities. (Article 3.2 of the “Decree that compiles various tax benefits and establishes administrative simplification measures”, DOF 26/12/2013).
Tax credit consisting of an amount equivalent to 100% of the IEPS to be paid for the importation of goods to the customs regimes of temporary importation for manufacturing, transformation or repair in maquila or export programs; of fiscal deposit to undergo the process of assembly and manufacture of vehicles; of manufacturing, transformation or repair in bonded warehouse, and of strategic bonded warehouse, which will be creditable against the tax to be paid for the aforementioned activities (Article 15-A of the IEPS Law).
With respect to Income Tax (ISR):
Tax regime for specialized retirement fund investment companies (SIEFORES) as non-taxpayers of ISR.
Fiscal transparency of investment funds with respect to their income from interest, dividends and capital gains derived from the sale of shares (Art. 87 Income Tax Law) o Preferential rate of 10% for individuals residing in Mexico and individuals and entities residing abroad with respect to gains derived from the sale of shares, as well as securities representing them, in the stock exchange (Arts. 129 and 161 Income Tax Law).
Exemption for foreign pension and retirement funds with respect to income from interest, capital gains and from the granting of the temporary use or enjoyment of land or constructions attached to the ground located in Mexican territory (Art. 153 Income Tax Law). o Tax regime for trusts engaged in the acquisition or construction of real estate (FIBRA) (Art. 187 and 188 Income Tax Law).
Tax regime for infrastructure and energy investment trusts (FIBRA E) (Art. 187 and 188 Income Tax Law and rules 18.104.22.168.2. and 22.214.171.124. Miscellaneous Tax Resolution for 2022) o Tax regime for venture capital investment trusts (FICAP) (Art. 192 and 193 Income Tax Law) o Tax credit equivalent to the contribution to infrastructure projects and highly specialized sports facilities, as well as to programs for the development, training and competition of high performance Mexican athletes (Art. 203 Income Tax Law).
Fiscal transparency for foreign investment funds that manage private equity investments with respect to their income from interest, dividends, capital gains and real estate leasing (Art. 205 Income Tax Law) o No withholding of income tax on interest earned by foreign residents derived from corporate bonds (Article 1 of the “Decree by which tax incentives are granted to the taxpayers indicated”, DOF 08/01/2019).
Temporary tax incentive (until 2025) to apply the 10% rate on the gain obtained in the first disposal of shares in a stock exchange, as well as in the disposal of the control or more than 10% of the shares of a company in which a FICAP that is listed in a stock exchange participates, or a similar vehicle. (Second and third articles of the “Decree by which tax incentives are granted to the taxpayers indicated”, DOF 08/01/2019).