research and development (R&D)

Mexican Tax Credits and Incentives

By Prof Sergio Guerrero Rosas, Guerrero y Santana, S.C.

With the entry of the new government in Mexico led by President Andrés Manuel López Obrador, new foreign- investment opportunities seem to open up, mainly in the Mexican southeast and in the northern border area, so here is a brief summary of some tax credits and current incentives in Mexico.

Corporate bonds

In accordance with the Presidential Decree that entered into force on 09 January 2019, a tax credit equivalent to 100% of ISR is granted that would have to be withheld on interest paid to investors residing abroad.

This benefit will be applied whenever the interest is derived from publicly traded bonds issued by entities residing in Mexico and the recipients residing in a country with which Mexico has an income tax treaty or a broad information-exchange agreement, such as the United States of America.

Capital gain

The Decree establishes a preferential tax rate of 10%, applicable to the profits made by resident natural persons or tax residents abroad during the fiscal years 2019 to 2021 from the sale of shares in the Mexican stock exchange, complying with a series of requirements and assumptions.

Incentive for research and development (R&D)

The Income Tax Law establishes a 30% tax credit for R&D expenses, including investments. The tax credit will be equal to the R&D expenses of the current year that exceed the average of said expenses incurred in the previous three years.

The expenses for investment in specialised equipment, laboratory equipment, tools, and fees paid to researchers are, among others, eligible for this incentive, in the same way it is necessary to attend to the rules of operations to know in detail the requirements and limitations.

Incentive on investments in film production

There is a direct fiscal stimulus equivalent to the amount contributed to projects of production of national cinematographic films (EFICINE) applicable against income tax for the year. However, said incentive may in no case exceed the ISR paid in the previous fiscal year.

Incentives for real estate investment (FIBRAS and REITS)

There are some tax benefits for real-estate investment trusts. Mexican legislation establishes a special tax regime for real-estate investment trusts dedicated to the acquisition and development of real estate for lease or acquisition of the right to receive income from the lease of the property or to grant financing for such purposes. This tax regime grants benefits such as the deferral of ISR, among others. Certain requirements must be met to be subject to this special tax regime.

Prof Sergio Guerrero Rosas

Prof Sergio Guerrero Rosas

Guerrero y Santana, S.C., Tijuana, Baja California, Mexico
T: : +52 333 120 05 38
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Guerrero y Santana S.C. provides its clients with a wide range of tax, legal and consulting services. The firm makes comprehensive evaluations of its clients’ businesses and draws on the expertise of its professionals to offer the best solution available.
Prof Sergio Guerrero Rosas, Managing Director at Guerrero y Santana, has over 25 years’ experience advising companies from SMEs to multinationals, as well as individuals, on tax and estate planning. He is also the Latin American Chairman of International Taxation Practice Group and Global Vice Chairperson of the Trust & Estate Planning Practice Group.

Published: International Taxation, No. 10, Spring 2019 l Photo: -


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