Mexican Government Unveils Nearshoring Incentives to Boost Manufacturing

On January 21, 2025, the Mexican government published a Decree in the Official Federal Gazette introducing tax incentives under the 'Nearshoring Decree,' as part of its Plan Mexico strategy. This initiative aims to encourage foreign and domestic companies to relocate and streamline their supply chains closer to the U.S. market, enhancing Mexico's manufacturing sector. Key incentives include accelerated depreciation on new fixed asset investments and additional deductions for training and R&D expenses. The Decree, enforced from January 22, 2025, is expected to invigorate sectors such as manufacturing, technology, automotive, electronics, and renewable energy, with a total allocation of MX$30 billion. The Decree also outlines an Evaluation Committee responsible for approving tax incentives, ensuring the scheme's transparency and efficacy. These measures are designed to reconfigure global supply chains, increasing Mexico's competitiveness and reducing dependence on Asian manufacturers, thus positioning Mexico as a strategic partner in global value chains. The success of this plan hinges on the government's ability to provide adequate infrastructure, labor conditions, and equitable access to incentives for SMEs.