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On December 31, 2018, Mexican President Andres Manuel Lopez Obrador published a special decree some border adjustment tax) for businesses operating in the Northern Border Zone in Mexico, sometimes referred to as the “Free Zone.”
The new decree aims to attract new investments and create jobs. The new decree went into effect on January 1, 2019 and goes through the year 2020.
“It is a very important project for winning investment, creating jobs and taking advantage of the economic strength of the United States,” said President Lopez Obrador while visiting Monterrey, in the Northern Mexican state of Nuevo León.
Overview of New Incentives:
Under the new decree, these are the affected municipalities.
Baja California: Municipality of Ensenada, Playas de Rosarito, Tecate, Tijuana, and Mexicali |
Chihuahua: Municipality of Janos, Ascensión, Juárez, Praxedis G. Guerrero, Guadalupe, Coyame del Sotol, Ojinaga and Manuel Benavides |
Coahuila: Municipality of Ocampo, Acuña, Zaragoza, Jiménez, Piedras Negras, Nava, Guerrero and Hidalgo |
Nuevo León: Municipality of Anáhuac |
Sonora: Municipality of San Luis Río Colorado, Puerto Peñasco, General Plutarco Elías Calles, Caborca, Altar, Sáric, Nogales, Santa Cruz, Cananea, Naco and Agua Prieta |
Tamaulipas: Municipality of Nuevo Laredo, Guerrero, Mier, Miguel Alemán, Camargo, Gustavo Díaz Ordaz, Reynosa, Río Bravo, Valle Hermoso and Matamoros |
Jose Luis Avendano, Director of Finance for Co-Production International, offered a preliminary analysis of how this will affect the VAT for manufacturers operating in the newly declared “free zone” in the Northern Border region. Some of the following may impact your cash flow tax.
Many manufacturers opt to expand manufacturing operations under a shelter services provider in Mexico to minimize risk and liability. Shelter company providers like Co-Production International make it their job to keep up with vendors, tax compliance and compliance with new regulations in Mexico on behalf of the manufacturer as a part of their contract.
USA Corporate Office
Ph: 619.429.4344 / 855.480.0837
8716 Sherwood Terrace
San Diego, CA 92154 USA
Mexico Corporate Office
Ph: 855.480.0837
Blvd. Tomas Alva Edison 14022
Int. 7A, Tomas Alva Edison
Tijuana, BC 22163, Mexico
info@co-production.net
Mexico Monterrey Office
Av. Benito Juarez 1102 Col. Centro
Piso 4 Torre Sur, Oficina 432
Monterrey, Nuevo Leon 64000, Mexico
info@co-production.net
USA Corporate Office
Ph: 619.429.4344 / 855.480.0837
8716 Sherwood Terrace
San Diego, CA 92154 USA
Mexico Corporate Office
Ph: 855.480.0837
Blvd. Tomas Alva Edison 14022
Int. 7A, Tomas Alva Edison
Tijuana, BC 22163, Mexico
info@co-production.net
Mexico Monterrey Office
Av. Benito Juarez 1102 Col. Centro
Piso 4 Torre Sur, Oficina 432
Monterrey, Nuevo Leon 64000, Mexico
info@co-production.net