The CIIT: impact on investments and GDP
Mexico‘s Ministry of Finance estimates that the first phase of the construction of the five poles of the Interoceanic Corridor of the Isthmus of Tehuantepec (CIIT) will attract investments of US$7 billion.
What does the CIIT consist of? It is an infrastructure project in Mexico that seeks to connect the Gulf of Mexico with the Pacific Ocean through the Isthmus of Tehuantepec, a narrow strip of land in the southeast of the country.
This investment will increase the region’s growth rate by an estimated 0.9 percentage points per year over three years from the establishment of the first investments, according to projections by the Ministry of Finance.
This corridor is intended to provide an alternative to the longer and more congested Panama Canal route.
In order to encourage investments in the development poles, on June 5, a decree was issued with tax benefits for companies that carry out activities in these industrial parks.
The tax incentives consist of a creditable tax credit against income tax for up to 100% during the first three fiscal years and 50% in the three subsequent fiscal years, or 90% in the event that the minimum employment levels stipulated in the bidding conditions are exceeded.
CIIT
In addition, an immediate deduction of 100% of the original investment amount of new fixed assets used by taxpayers for their activities will be provided during the first six years.
Finally, a VAT exemption will be provided for internal operations and between industrial parks during the first four years of operation.
The purpose of these incentives is to increase the rate of return of the companies that establish themselves along the Isthmus area and thus accelerate private investment and the generation of jobs in the region.
Medium term
The bidding process for the first five poles began on June 27 of this year, with the first package consisting of four parks located in the state of Veracruz and the industrial park in Salina Cruz, Oaxaca.
While in previous years, low levels of investment in logistics infrastructure in the states of Veracruz and Oaxaca caused a bottleneck in attracting investment, over the medium term this trend is expected to reverse as the impact of CIIT development on employment, trade, and industrial production is consolidated.
