Published On: Wed, Oct 25th, 2017

Mexico’s Special Economic Zones represent a strategy to counter Trump

With a different customs regime and fiscal incentives, officials seek to increase the country’s attractiveness to receive investments….

MEXICO CITY – The Special Economic Zones are the best strategy to face the protectionist policies of President Donald Trump, said Enrique Huesca, executive secretary of the Federal Authority for the Development of Special Economic Zones.

During an interview with Excélsior, he emphasized that these geographical areas even constitute an alternative to free trade.

(Photo: Dinero en Imagen)



“Economic zones allow us to attract investments that are not necessarily aligned with free trade, but rather with a customs regime similar to that of Vietnam, Korea, Indonesia, Malaysia and other countries with which we have commercial interaction,” said the executive secretary.

He emphasized that the interest of the companies to settle in these geographical areas is conclusive if it is considered that 152 companies have expressed their interest to settle in one of them; 126 have advanced negotiations and 50 have already issued their letter of intent.

In orange are the already designated Special Economic Zones, in blue are the ones that still awaits its designation in December (Photo: Dinero en Imagen)



“These figures respond to the fiscal and economic incentives that will be granted by all levels of government,” among which is a discount of up to 100% in the payment of Income Tax (Impuesto Sobre la Renta, ISR, in Spanish) during the first ten years and of 50% in the next five.

Investors will also be able to access tax credits for employer fees to the Mexican Social Security Institute, which will be 50% in the first ten years and 25% in the next five years. In addition, when companies buy items from the rest of the national territory, a zero Value Added Tax (Impuesto al Valor Agregado, IVA, in Spanish) rate will apply. “This is to encourage companies to buy their inputs in Mexico, which will undoubtedly help detonate domestic consumption.”

Projected SEZ with specialized trade areas (Photo: Dinero en Imagen)



Additionally, those who invest in the special economic zones will have a special Development Bank financing program with competitive interest rates, extended terms and flexible payment schemes.

To date, three zones have been decreed: Puerto Chiapas, Coatzacoalcos and Lázaro Cárdenas, but before the end of the year there will be two more: Salina Cruz and Progreso.

Source: www.dineroenimagen.com

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