Background
On January 13, President Claudia Sheinbaum presented an ambitious new economic plan, the Mexico Plan, her administration’s strategy for “equitable and sustainable economic development and shared prosperity.” The Plan’s main objectives are boosting the national content on strategic sectors, creating new jobs in specialized manufacturing, increasing the value added in global supply chains, creating development poles and industrial parks, expanding access to higher education, and strengthening scientific and technological innovation.
The Plan sets several goals, which include positioning Mexico among the world’s top 10 economies and increasing investment to 28 percent of GDP by 2030; creating 1.5 million additional jobs in specialized manufacturing; increasing national content by 15 percent in the global supply chains of strategic sectors (automotive, aerospace, semiconductors, pharmaceutical, and chemical); covering 50 percent of national consumption in other sectors (textiles, footwear, furniture, and toys) with domestic production; reducing the time required to finalize an investment from 2.6 years to 1 year (cutting in half requirements and using a single digital investment portal); allocating 50 percent of public procurement to local companies; and assuring that 30 percent of SMEs have access to financing.
In support of the Plan’s objectives, on January 21, President Sheinbaum issued a decree with two important tax incentives. The deduction can be applied in the year the investment is made, based on the percentages established in the decree and calculated on the original investment amount.
First, the incentives allow for the immediate deduction of investments in new fixed assets acquired from the decree’s effective date until September 30, 2030. The deduction can be applied in the year the investment is made, based on the percentages established in the decree and calculated on the original investment amount. During 2025 and 2026, the depreciation percentages range from 41 to 91 percent, and for the years 2027 to 2030, these will range from 35 to 89 percent depending on the type of asset and activity. Key sectors benefiting from immediate deductions on investments include construction, transport, communications, power generation, paper manufacturing, metal production, and technology development. Deductions will vary by sector.
Second, an additional deduction equivalent to 25 percent of the increased expenditure on training to employees or innovation. The deductible expenses for innovation would be those linked to investment projects related to innovation, for example related to patents, and those investment projects that are developed to obtain initial certifications required by taxpayers for their integration into local/regional supply chains.
The decree caps the total amount of the tax incentives at MX$30 billion through September 30, 2030, of which MX$28.5 billion will be allocated for investment in new fixed assets and MX$1.5 billion to additional deductions on training and innovation expenses. To support SMEs, at least MX$1 billion of the total incentive package will be allocated to taxpayers with annual revenues of up to MX$100 million in the preceding fiscal year.
Analysis and Perspective
This new effort is being launched in a particularly complex context for Sheinbaum’s administration and for Mexico.
As the economy shows signs of slowing, the Plan seems intended to counterbalance the uncertainty in the investment climate prompted by recent economic and political reforms in Mexico—including controversial changes to the judicial system and the elimination of independent regulatory agencies, as noted in our previous alert.
Also, importantly, the launching of the Mexico Plan coincides with the beginning of a new Trump administration pursuing deep changes in U.S. trade policy that seeks to prioritize workers in the United States, to rebalance trade relationships, and re-shore investments to the United States (as described in detail here: alert).
The Mexico Plan attempts to signal: (i) the readiness of the Sheinbaum administration for a complex review – and most likely renegotiation – of the United States, Mexico and Canada Agreement (USMCA) set to start this year and extend into 2026; and (ii) some level of convergence with President Trump’s objective to counter China through import substitution.
Additional polices and decrees will be announced by April 2025 including: new public investment and public-private association arrangements in infrastructure and energy, areas which have been clearly identified as a bottlenecks for Mexico’s nearshoring potential, as well as simplified tax and regulatory framework for the Maquiladora, Manufacturing and Export Service program (IMMEX).
If you have any questions concerning the material discussed in this client alert, please contact the members of our Latin America practice.
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