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  • Service: Tax
  • Type: Regulatory update
  • Date: 10/8/2013

Mexico 

Taxes and Incentintives
Mexico Taxes and incentives for renewable energy KPMG Global Energy & Natural Resources.

Support schemes

Mexico’s Income Tax Law (ITL) provides a 100 percent deduction incentive for taxpayers who carry out investments in renewable energy equipment. Qualifying sources like sun, wind, water and geothermal energies, as well as biomass fuel equipment, are eligible for this incentive.

Additional information

FIDE (Trust for energy saving) energy efficiency


Projects are funded for the installation of new high efficiency technologies by micro, small and medium enterprises, municipalities, industries and service sector companies. These technologies are also tax deductible as investments. The following equipment is included in this program: air conditioners, water pumps, air compressors, high-pressure sodium vapour (HPSV) lamps, light-emitting diode (LED) lighting, fluorescent compact lamps, electric motors, renewable energy systems for refrigeration, ventilation, speed control, and other energy efficiency equipment. Applicants must file a request for the fund and be approved.


FIDE business eco-credit


Projects up to USD30,000 are funded for replacing obsolete equipment with high efficiency equipment. The program applies to companies of any size in the private sector. Besides the funding, the companies are awarded a 10 percent scrapping bond. Technologies financed under this program include air conditioning, commercial refrigeration systems, electric motors, LED lighting, high efficiency lighting and electrical substations. Applicants must file a request for the fund and be approved.


Fund for hydrocarbon projects


In 2012, the Ministry of Energy (SE) and the National Council of Science and Technology (CONACYT) released a fund oriented to R&D and the adoption of new technology related to hydrocarbon sources of energy. The fund aims to increase efficiency in the use of hydrocarbon sources of energy, prevent pollution, and repair environmental damages derived from the oil industry activities. The official bid for 2012 called for universities, research centers and private entities to propose projects related to exploration, production, refinery and oil chemistry studies. No bid has yet been published for 2013.


Fund for hydrocarbon projects


The Renewable Energies Exploit and Energy Transition Financing Law (LAERFTE in Spanish) allows industrial, commercial and residential installation of renewable technologies for the generation of electricity for private consumption only. According to Mexican legislation, only the Electricity Federal Commission (CFE) is allowed to sell electricity. If the energy production exceeds the amount used by an entity during a given month, the excess can be fed into the CFE’s grid and becomes a credit that can be applied against the entity’s electricity bills in the future. The CFE will not reimburse the money equivalent to the energy fed into the grid.


Fund for energy transition and sustainable exploit of energy


In 2008, LAERFTE was released. It establishes Mexico’s strategy to support policies, programs, actions and projects oriented to increase the usage of renewable energy sources and clean technologies, promote energy efficiency and sustainability, and decrease oil dependency as the main source of energy.


To finance sustainability projects, the Fund for Energy Transition and Sustainable Exploit of Energy was created in 2009. The Federal Expenditure Budget for this fiscal year assigned Mexican peso (MXN)3 billion (USD250 million) to the fund. For fiscal year 2011, this amount has been increased to USD260, based on the Consumer Price Index (INPC).


Companies or individuals compete for cash incentives from the fund by submitting proposals for projects that involve renewable energies and energy transition. The announcement for 2010, “Bioeconomy,” called for projects that promote the production and use of alternative fuels in primary sectors. No bid was published for years 2011 and 2012, nor has a bid for 2013 been published yet.


Fund for energy sustainability


Every fiscal year, the Ministry of Energy (SE) and the CONACYT establish a special fund for energy sustainability projects in which universities and research centers are the potential participants and beneficiaries. The resources for the fund are provided by the Mexican Oil Company (PEMEX) and are calculated every three months as a percentage of their total income. The projected balance for fiscal year 2011 is approximately MXN1 billion (USD84 million). After the official announcement, participants will compete for cash incentives by submitting their proposals to the Committee, which will then evaluate the proposals and decide on the cash distributions. No official bid was published during 2012, nor has a public bid been published during 2013.


The fund for energy sustainability supports four kinds of projects:


  • Applied research: research regarding energetic sustainability technology.
  • Technology development: universities and/or research centers working together with enterprises in technology development projects such as pilot tests or prototyping. In such cases, the enterprises must provide at least 30 percent of the resources for the project development.
  • Technology packages: documentation, business planning, feasibility studies and other activities designed to link universities and/or research center projects with an enterprise partner.
  • Technology assimilation: universities and/or research centers working together with enterprises in order to introduce a current developed technology into Mexico. In such cases, the enterprises must provide at least 30 percent of the resources for the project development.

Fund for R&D in energy


The CFE and the CONACYT created a fund to provide resources for R&D projects in the electric sector. The distribution of resources was carried out by a competition among participants, and the CONACYT released one program in 2010, which ended in February 2011. This program involved seven types of projects related to specific categories such as ocean waves, ocean currents, hydraulic equipment, nuclear energy and the measurement of gas emissions. No official bids were published during 2012, nor has a public bid been released for 2013.


Government projects funded for 2011 include the following:


  • Municipal Street Lighting National Program: For 2011, the Fund has authorized MXN120 million (USD10 million) for the execution of projects for energy-efficient street lighting.
  • Sustainable Light Program: This program aims to decrease the energy consumption in homes by substituting 45.8 million lights during 2011 and 2012. The first stage of the program is to be concluded within the first months of 2012. The second stage aims to double the number of lights by the end of this year.
  • Integral Energy Services Program: This program is designed to provide a greater percentage of rural populations in Mexico with electricity through renewable energy and small-scale energy generation. The program will be supported by the Global Fund for the Environment (GFE), the Bank of Reconstruction and Promotion (BIRF) and the National Committee for Indigenous Towns Development (CDI).
  • National Sustainable Energy Exploit Program: A review carried out by the National Sustainable Energy Exploit Program (PRONASE) identified several areas in which energy efficiency might be increased over a medium to long-term period. These areas include transportation, lighting, industrial motors and home equipment. PRONASE will continue to define new strategies to encourage the use of renewable energy in these areas for Mexico.
 

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