Tax Incentives Northern Border Region

Since fiscal year 2018, Mexico has offered two tax incentives applicable to taxpayers domiciled in the northern border region, related to Income Tax (ISR) and Value Added Tax (VAT).

Taxpayers with a tax address, branch, agency, or establishment within the northern border region may have access to these incentives, which consist of a 50% reduction in the VAT rate (from 16% to 8%) and a tax credit equivalent to one-third of the ISR, in order to boost the local economy and competitiveness.

Through a Presidential Decree, this incentive has been extended to fiscal year 2026. However, several cases have been detected in which taxpayers have been unable to access the aforementioned benefits, among other reasons, for allegedly "having stopped applying for the benefit, making it impossible to apply for it again" thus resulting in a REJECTION by the Tax Administration Service (SAT).

This has generated uncertainty due to SAT's blunt response, as well as the lack of legal basis and justification to support the authority's refusal.

At TP Legal, we can advise you on pursuing legal defenses to help you challenge these types of decisions, in order to safeguard your rights and seek certainty regarding the aforementioned refusal.