Fiscal stimulus package seeks to keep companies on the border

President Claudia Sheinbaum Pardo published the fiscal stimulus decree so that the industrial sector, national and foreign companies and even small and medium-sized companies (MSMEs) remain on the border of Mexico and the United States.

The decree that grants fiscal stimuli to support the national strategy Plan México to encourage new investments, encourage dual training programs and promote innovation was published yesterday in the Official Gazette of the Federation (DOF).

The decree is published a day after President Donald Trump announced that he will boost the United States automotive industry and that he hopes to impose 25 percent tariffs on products imported from his trading partners: Canada and Mexico as of February 1.

The fifth article of the decree establishes the creation of the Evaluation Committee for the application of fiscal stimuli, which will be made up of a representative of the Ministry of Economy, one of the Advisory Council for Regional Economic Development and Relocation, who will only have a voice without the right to vote, and one from the Ministry of Finance and Public Credit, who will chair the committee and have a casting vote.

The total amount of fiscal stimuli authorized to taxpayers will be up to 30 billion pesos distributed from the entry into force of the decree and until September 30, 2030.

In addition to allowing access to the largest possible number of companies, it is important to provide security to investors (…) generate greater investment and economic development, which is why this government considers it appropriate that fiscal stimuli be applicable until September 30, 2030is mentioned in the decree.

Of the total amount of the stimuli, at least one billion pesos will be applied to taxpayers with total income in the immediately preceding fiscal year of up to 100 million pesos.

In turn, the committee will determine for each fiscal year the maximum amount that taxpayers can apply for each of the stimuli.

When consulted, Eugenio Grageda, partner in Holland & Knight’s tax practice, commented that the stimuli become more relevant in the face of potential tariffs, because if goods made in other countries do not carry that tariff, those produced in Mexico will be more expensive for the population in the United States and, therefore, less attractive to consumers there.

On the other hand, the analyst pointed out, with the stimuli the competitiveness of Mexican inputs is ensured, because a lower income tax to be paid in Mexico gives room to maquiladoras and foreign companies that produce their goods in Mexico to lower the price to the consumer.

He added that the stimuli that are intended for people who make expenses for training and innovation, allow attracting more qualified personnel and, therefore, more production to Mexico.

Likewise, there will be more talent in Mexico due to the incentive given to develop patents and service supply chains in the country.he highlighted.

For the maquila to remain in Mexico, competitive production costs are needed, which is helped by stimuli. Trained personnel and legal certainty are needed, which is supported by this decree for the long term during which it will be in force..