On 18 April 2018, were published in the Federal Official Gazette, the Decrees that create the Special Economic Zones of Paraíso, in the State of Tabasco and Champotón, in the State of Campeche ( SEZs). These decrees came into force on 19 April 2018, and are added to those issued in 2017 for the municipalities of Puerto Chiapas, in the State of Chiapas; Salina Cruz, Oaxaca; Coatzacoalcos, Veracruz; and Lazaro Cárdenas - La Union, in the State of Michoacán.
In these Decrees are appointed tax and labor incentives applicable for Entities and Investors who obtain a permit to participate in these SEZs, and such incentives are applicable up to 15 fiscal years according to certain rules on each case.
Both SEZs will begin operations no later than 30 June 2019, as follows:.
A) Polygons, areas of influence, specific development sectors and restricted activities.
- Special Economic Zone ( SEZ) of the State of Tabasco. The polygon is located in the municipality of Paraíso, with an area of influence in Comalcalco and Paraíso. The Port of Dos Bocas is excluded from the SEZ. Development sectors identified for this SEZ are agribusiness (production of sugars, chocolates, sweets, and processing animals), beverage, manufacture of rubber products machinery and equipment for the manufacturing of air conditioning equipment, heating, industrial and commercial refrigeration, machinery and equipment for the metalworking industry and industry in general.
- Special Economic Zone of the State of Campeche. It will be located in the municipality of Champotón, and its area of influence in the municipalities of Carmen and Campeche. The Port of Seibaplaya is excluded from the SEZ. Development sectors identified for this SEZ are: agribusiness (grain milling and seed, production of oils and fats, processing of sugar, chocolates, sweets, and preservation of fruits, vegetables and prepared foods), beverages , chemical (pharmaceutical) and plastic and rubber.
- In both SEZs, is restricted to perform refining activities, and natural gas processing and storage, transport, distribution and selling of hydrocarbons and petroleum.
- Both tax and labor incentives and special customs regime of the SEZs shall not apply to taxpayers who are in the optional regime for corporate groups.
- Taxpayers who carry out assembly operations in the SEZs are not entitle to apply the provisions of Articles 181 and 182 of the Income Tax Law.
B) Tax benefits on income tax (ISR).
- 100% reduction of the ISR during the first 10 years and 50% within the next 5 years. If the income tax reduction is not exercised when is feasible to do it, the right for the reduction is lost.
- Additional income tax deduction of 25% in specific technical training of employees located inside the SEZ. Reduction should also be exercised when it is feasible to do it, otherwise the right for the reduction is lost.
- Both benefits are conditioned to keep the same number of employees registered in the Mexican Social Security Institute (IMSS) inside the SEZ during all the years when reductions are applied.
- Crediting of income tax paid abroad. The tax credit should be decreased in the same percentage as the reduction in the ISR is given, during the fifteen fiscal years mentioned.
- Reduction does not apply in the case of withholding on dividends. As a benefit, it is possible to constitute Tax Net Income Account (CUFIN).
C) Tax benefits relating to Value Added Tax (VAT).
- The introduction of goods to the SEZs, foreign, transferred or provided by non-residents of the country to residents of SEZ, intended to construction, development, management, operation and maintenance activities or for the development of Productive and Economic Activities, shall not be considered import.
- 0% rate applies to:
- Transfer of assets to "residents" of an SEZ. In such cases it shall not be considered as export, provided it has the appropriate CFDI and the introduction of goods to the SEZ is demonstrated.
- Provision of services intended to construction, maintenance and management of the SEZ, or for the development of Productive and Economic Activities to residents of SEZ.
- Leasing services for Entities and Investors of the SEZ; to apply this rate it will be required to demonstrate the introduction of services to the SEZ.
- Refund or VAT Crediting:
- Transfer of goods, made by residents of the country located outside SEZs, to residents of the SEZs, shall be entitled to VAT refund, when this residents introduce the goods to the SEZ.
- If goods are transferred by persons who only have activities in the SEZ will get the tax refund within 20 days.
- If the transfer of goods is made by persons who carry on activities in the SEZ and in the rest of the country, will be entitled to credit the VAT.
- Crediting of tangible goods to SEZ residents; It will be required to have supporting documentation of the introduction of goods to the SEZs.
- Rate of 16%:
- This rate applies to goods removed from the SEZ and introduced in the rest of the country, except goods currently subject to the rate of 0% or exempt from VAT. VAT is caused only by the introduction of the goods. There are exceptions.
- The VAT base applicable to such goods by the introduction, will be the prices agreed for the transfer. In case of no transfer, the base will be the value that had been used in transactions with independent third parties. Transfer pricing rules will be applicable.
- The VAT paid will be credited on a similar fashion than the tax paid on import, and removal of goods for their export or their return abroad will have no consequence on VAT.
D) Employee Benefits.
- Tax credit against ISR during the first 10 fiscal years in which activities are conducted within the SEZ, for the equivalent of 50% of the employer contribution to sickness and maternity insurance payments, and in the next five years, for the equivalent of a 25%.
E) Customs Special Regime for ZEE.
- The introduction of foreign, domestic or nationalized goods to the SEZs is allowed, to carry out Productive and Economic Activities in accordance with the permit obtained, which may remain up to 60 months; in the case of machinery and equipment, may remain as long as the permit is in force. Goods may be removed to be imported or exported permanently to the rest of the country.
- In specific cases the goods will not pay taxes on foreign trade. They will not be subject to Mexican Official Standards or nontarif barriers.
- Special rules for scrap and waste.
- In some cases, it will not deem as import, foreign goods introduction to the SEZ, transferred by non-residents in the country and purchased by residents of the SEZ.
- Tax incentive for the payment of customs processing fees in certain cases.
- Temporary removal of machinery and equipment of the SEZs to the rest of the country for repair and maintenance, for up to 6 months, extendable to additional 6 months.
- Agricultural products and domestic raw materials to be obtained in the SEZ, that due to their nature are confused with goods or products of foreign origin may be removed from the SEZ to introduce them to the rest of the country. They will not be subject to payment of the General Import Tax, as long as it is demonstrated they were obtained in the SEZ.
- In case of cancellation of the permit, the goods must be removed from the SEZ or transferred to another investor or entity with permit into the same or to a different SEZs within 60 days. For more information on these Declarations of Special Economic Zones and their incentives, please contact our specialists at Baker McKenzie.