Special Economic Zones in Mexico (“SEZ”) are designated geographical areas in which business and trade regulations differ from those that prevail in the rest of the country. This special type of regime is intended to boost economic growth and enhance public services in Mexico´s neglected areas - through the promotion of local and/or foreign direct investment- by providing tax benefits, customs and business facilitation measures and possibly financial support to investors.

According to the current statutes regulating SEZ, as well as recent announcements made by the Mexican Ministry of Finance on Feb. 10, 2017, the preferential benefits granted to SEZ may generally be as follows:

  1. Income Tax: Companies that invest in SEZ may benefit from a 100 percent discount of income tax generated on activities performed within the SEZ for the first 10 years and 50 percent for the following five years.
  2. Value Added Tax: Goods introduced and traded within the SEZ, as well as services performed therein, will not be subject to value-added tax.
  3. Social Security Tax: The Mexican federal government may grant companies investing in an SEZ a 50 percent discount on social security contributions by the employer for the first 10 years of operation and 25 percent for the following five years.
  4. Local Incentives: Local governments (state and/or municipalities) may grant incentives regarding various taxes including property, payroll, property transfer, property acquisition and lodging, as well as government procurement benefits.
  5. Financial Incentives: Special financing programs, with competitive interest rates, extended installments, and flexible payment schemes may also be implemented by the Mexican federal government.
  6. Customs: A special customs regime will be created and may include reduced customs fees, import duties exemptions and other benefits. We believe this regime will be similar to the temporary importation regime used by manufacturing companies operating under an IMMEX program, or similar to the strategic fiscal precinct which has been underutilized.

The creation of the first three SEZ was announced by Mexican President Peña Nieto on Sep. 29, 2015, in the following regions:

  1. Istmo de Tehuantepec Corridor, located in the states of Veracruz (Coatzacoalcos) and Oaxaca (Salina Cruz);
  2. Chiapas Port, located in the state of Chiapas; and
  3. Lázaro Cárdenas Port, located in the states of Michoacán and Guerrero;

However, the Mexican government recently announced that they will create other SEZ areas by the end of 2017 (a “petroleum corridor”) in states near the Gulf of Mexico (i.e., Yucatan, Tabasco and Campeche). In addition, the states of Puebla and Hidalgo have also expressed interest in having an SEZ within their borders.

It should be noted that both domestic and foreign investment will be allowed in the SEZ, provided that the corresponding authorization is obtained.