Nearshoring — shifting production from Asia to Mexico next to the US market — is the biggest global investment trend today. Mexico rolls out the red carpet with tax incentives: accelerated depreciation, duty-free temporary imports, preferential component duties. But the carpet has conditions.
Nearshoring: why Mexico
Nearshoring = locating production near the consumer market (the US) instead of far (Asia). Mexico wins on:
- USMCA: the US–Mexico–Canada deal — Mexico-made goods enter the US at 0% duty (meeting USMCA origin rules — regional content, labour).
- Geography: a 3,000 km US border — days by road versus weeks by sea from Asia.
- Cost: labour multiples cheaper than the US, roughly Vietnam-level in some sectors.
- Clusters: established auto, electronics and aerospace hubs (Monterrey, Bajio, Juarez).
The 2023 nearshoring decree: accelerated depreciation
Mexico’s government issued a nearshoring incentive decree (2023): firms investing in export sectors get accelerated depreciation on fixed assets — 56–89% by asset type in the first year. Meaning: USD 10m of machinery yields immediate most-of-value deductions against taxable income — slashing ISR in year one. Conditions: new assets, for export production, held 2+ years.
IMMEX and PROSEC: the two main tools
- IMMEX: the temporary-import programme — importing materials and machinery for export production free of import duty + VAT (see EXP-3902 on maquiladoras).
- PROSEC: sector-based duty relief (autos, electronics, textiles…) — importing components at preferential rates (0–5%) for manufacturing, including domestic sales.
- Combined: IMMEX (duty-free export inputs) + PROSEC (cut component duties) = the optimal tax structure for Mexican plants.
Mexican taxes: the numbers
- ISR (CIT): 30% — above Vietnam’s 20%.
- IVA (VAT): 16% (8% in the border zone).
- No DTA with Vietnam: Vietnam has no double-tax treaty with Mexico — dividends, interest, royalties face full taxation at both ends (structure accordingly).
- Transfer pricing: Mexico applies full OECD rules — parent dealings at arm’s length; a maquila safe harbour exists (see EXP-3902).
Investment structure: direct or via the US
Vietnamese firms entering Mexico have two structures:
- Direct: Vietnamese company → Mexican subsidiary — simple, but no VN–Mexico DTA means double tax on dividends/interest.
- Intermediated: Vietnam → intermediate company (US/Netherlands/Singapore — DTA partners of Mexico) → Mexico — using DTAs to cut withholding; but needs economic substance, not a shell (anti-treaty-shopping).
Note USMCA: Mexico → US goods at 0% duty — but origin rules must be met (North American content, labour-value rules for autos).
Risks and notes
Security risk: some Mexican states have security issues — choose location carefully (Bajio and Monterrey safer than the border). Labour risk: the 2021 outsourcing reform bans core-staff outsourcing — hire directly. USMCA risk: US administrations may shift trade policy — watch (the 2026 sunset review). Tax risk: no VN–Mexico DTA — substantive intermediation, never let tax stack on tax.
Frequently asked questions
What tax incentives does Mexican nearshoring offer?
The 2023 decree: 56–89% accelerated depreciation on new assets for export production; IMMEX (duty/VAT-free temporary imports); PROSEC (0–5% preferential component duties by sector).
What is Mexican CIT?
ISR 30% (above Vietnam’s 20%); VAT 16% (8% border zone); no Vietnam–Mexico DTA — dividends/interest/royalties fully taxed at both ends.
Do Mexico-made goods enter the US duty-free?
Under USMCA: 0% if origin rules are met (North American content, labour-value requirements for autos).
Should Vietnamese firms invest directly or via intermediaries?
Direct is simple but double-taxed without a DTA; intermediating via a Mexican DTA partner (US/Netherlands/Singapore) cuts withholding — but needs real economic substance against treaty shopping.
Contact FLAT Law Firm
FLAT Law Firm advises on Mexican nearshoring investment: tax incentives, IMMEX/PROSEC, intermediated structures and USMCA origin rules. Contact us from the survey stage.
This article has been quality-reviewed by the FLAW AI Legal Council