In the narrowest south part of Mexico the Pacific and the Atlantic Oceans are separated by a neck of land of only 200 km wide (124 miles) located in the Tehuantepec Isthmus an area in which only ports and minor interoceanic rails had been developed. However, to connect both oceans and compete with the Panama Canal at the start of this administration the Interoceanic Corridor of the Tehuantepec Isthmus was created.
The Interoceanic Corridor is a decentralized public body with its own state which powers had been modified.
Upon its settlement the Interoceanic Corridor was given the sole task of connecting both oceans through the development of a railway between the two most important ports of the region. However, under Nearshoring phenomenon the Interoceanic Corridor was further entrusted with (i) the connection of other ports and strategic points through the development of a railway and road network, and (ii) the development of production clusters in areas labeled as Development Poles (situated alongside the ports or the railway and road network).
Development Poles
The Development Poles are areas designated by declarations issued by the Interoceanic Corridor in which participants that meet requirements may obtain a public concession to carry on relevant foreseen productive activities within each Development Pole. On the 11, 12 and 16 of October declarations for the ten envisioned Development Poles were issued.
Taxes in the Development Poles
Derived from a robust package of tax stimulus recently granted by the federal executive branch, concessionaires (or owners) of spaces within the Development Poles (already or later declared) that, inter alia, (i) participate in qualifying productive activities (pursuant each Development Pole vocation), (ii) met employment thresholds, (iii) obtain a tax certificate before the tax authorities for its application, and (iv) establish their tax domicile within the Development Poles may choose to be taxed under the following tax regime:
It shall be considered that:
- This tax regime may be fully or partially applied as it comprises different tax
incentives. - Income tax benefits can only be applied by (i) Mexican tax resident entities or entrepreneurial individuals (they should be), or (ii) permanent establishments of foreign tax residents; not taxed under one of the excluded tax stimulus or regimes as available due to their nature (e.g. entities subject to investment from a Mexican REIT are excluded).
- Relevant income tax decrease is also applicable to monthly provisional payments. However, the deducted monthly amount cannot be credited against annual income tax liability (thus, the isolated application of this benefit does not generate annual refund claims).
- A parallel income tax or tax loss shall be determined considering taxable income and deductible items attributable to non qualifying activities (if any).
- Only certain fix assets used in Mexico for the first time can be subject to the immediate deductions. If transferred (under any agreement) at least their market price shall be considered as taxable income (such price should be above zero and considered for the referred parallel income tax determination).
- The application of the immediate deductions does not decrease the tax year´s profit coefficient. However, in some cases it may diminish the monthly tax basis.
- Value added tax benefits are only applicable to activities carried on and profited within the Development Poles (in one or several). Consequently, these benefits do not foresee value added tax triggered under exportation rules.
The Mexican States in which the Interoceanic Corridor is situated may grant tax incentives for local taxes which would practically make the Development Poles tax free areas.
