Tax Benefits in Mexico: Incentives for Forklift Battery Rooms and Warehouse Equipment

In recent years, Mexican policy has tended to shy away from tax breaks and corporate incentives. Where these benefits do exist, they are usually highly targeted, selective, and competitive.

That said, there are a few tax breaks that can help companies in Mexico invest in battery handling equipment and other warehouse infrastructure. Be sure to research the following programs before making capital investments on equipment for facilities located in Mexico:

• Maquiladoras, or IMMEX

  The Mexican government created the maquiladora industry to boost manufacturing within its borders. Under the program, foreign companies — especially those in the nearby United States — can import materials to Mexican manufacturers, then export finished products, without paying import or export duties.

  The program also speeds up the transfer of goods in both directions by streamlining security, allowing access to faster lanes at borders, and easing inspection requirements. Companies enrolled in the IMMEX program also have access to export-policy assistance and even financial benefits for direct exporting.

  While this valuable program doesn't provide funds for battery handling equipment in particular, it does allow companies to save considerable sums on typical business costs. Managers can then funnel those savings into warehouse investments.

• Industry-specific Tax Incentives

  Companies involved solely in target industries can claim additional tax exemptions, freeing more capital for investments in material handling facilities.

  Currently, the Mexican government offers exemptions to business entities involved in timber, fishing, livestock, and agriculture. The value of the exemption varies depending on how many shareholders own a given company.

• Nacional Financiera, S.N.C. Assistance

  The Mexican government's development bank, Nacional Financiera (Nafinsa), focuses on providing funds at affordable rates for small and medium-sized businesses in the country. It particularly encourages growth and innovation in new industries.

  In addition to business loans, Nafinsa also provides support services such as feasibility studies and long-term financing. Industrial operations that need funds to build a better battery room should absolutely consult with Nafinsa before making a final financing decision.

• Programs to Incentivize Innovation

  Like many other nations, Mexico offers tax incentives and grants to spur innovation in the technology sector. This program is controlled by the National Council of Science and Technology (CONACyT), which offers assistance with technology-related research and development (R&D) projects.

  Awards can range up to $36 million pesos (about US$1.7 million). If an R&D project requires warehouse equipment, a CONACyT award might help build a highly efficient facility with equipment from BHS Global.

Despite the relative dearth of tax incentives, Mexican policy tends to welcome foreign investment, as long as those investments spur the local economy and create jobs. Thanks to the maquiladora system, it's easy and inexpensive for companies around the world to establish local facilities within the country.

These benefits can make it much more cost-effective to invest in a state-of-the-art battery room, which will in turn create a safer, more efficient operation. Managers planning to establish new facilities in Mexico should investigate the benefits outlined above before planning a purchasing budget.

References:

Cobos, Rene. “The Maquila Handbook: Quick Tips for Understanding Mexico’s IMMEX Program.” IndustryWeek. Penton, 13 May 2009. Web. 15 Nov. 2016.

“Doing Business in Mexico.” PWC. PWC, Jan. 2015. Web. 15 Nov. 2016.

Russell, Alan. “Investment Incentives in Mexico.” Tecma. Tecma Group, L.L.C., 3 Feb. 2015. Web. 15 Nov. 2016.