September 7, 2016

Federal Law on Special Economic Zones

Mexico’s Congress recently approved a bill proposed by President Peña Nieto to designate special economic zones in the 10 states with the highest poverty levels.  Such zones are instrumental in facilitating trade and investment, as well as overcoming existing barriers to such.  The new law defines special economic zones as geographic zones with economic and legal regimes that are different than the rest of the country given their special characteristics.  Accordingly, they will receive numerous tax and customs incentives.  Determining the zones that will receive these benefits is provided for in the law based on various specific criteria, including strategic areas for the development of productive activities for zones with one or more municipalities with a combined population of between 50,000 and 500,000.  To determine the viability of a productive zone, the Mexican Department of Finance and Public Credit must prepare a report, including several required technical elements. Such elements include specifications as to the zone, areas of influence, feasibility studies and other required information. The formal designation of a special economic zone must be made by the President through a Decree published in the Official Journal of the Federation.  The approval must include coordination agreements to be entered into by the municipalities and states where the economic zones are located.  Similarly, a development program will be created with the involvement of the Department of Finance and Public Credit and other agencies, along with the participation of the state and municipal governments that will benefit from the economic zone.   It is expected that this idea, now enacted into law, along with the public policies it will spawn, will lead to increased business development and positive results.