The "Decree granting tax benefits in the Circular Economy Development Poles for Well-Being" in Mexico was published on July 4, 2025. This decree will grant tax benefits to companies and developers that invest in the Circular Economy Development Poles for Well-Being (Polos de Desarrollo de Economía Circular para el Bienestar or PODECIBI). The PODECIBI will be publicly owned real estate (federal or state) designated specifically to house circular economy projects. Their purpose is to act as catalytic centers for sustainable development, generating environmental benefits, jobs and regional economic growth.
The decree seeks to generate a strategic response from Mexico to channel global sustainability demands and initiatives due to the growing pressure on natural resources, fluctuating raw material prices and increasingly stringent regulatory frameworks globally, which are forcing companies to reevaluate their operations and the location where they are carried out. Mexico is responding to this dynamic by building a more favorable environment for investments that choose or aim for more efficient and responsible business practices.
The decree also sends a strong message about the predominant place that the circular economy will have as one of the main tools of President Claudia Sheinbaum's administration to reduce waste generation, reuse materials and regenerate natural systems. This is expected to help transform the economic model of production in Mexico, harmonizing economic growth with environmental protection and social welfare, as established in the 2025-2030 National Development Plan.
The decree establishes three main axes:
- immediate deduction of 100 percent of the investment in new fixed assets until 2030
- significant tax credits for developers of circular infrastructure
- additional deduction of 25 percent in training and innovation expenses related to circularity
Key Considerations
These 10 points should be considered in light of the decree’s creation:
- Social Responsibility and Sustainability: This decree highlights the role of the Mexican state in guaranteeing the right to a healthy environment, with a vision of national economic development, defining the circular economy as a production and consumption model.
- Investment Promotion and Intersectoral Collaboration: The decree promotes joint participation of the public, private and social sectors. This collaboration scheme is considered essential to achieve equitable and sustainable economic development, promoting companies that actively contribute to environmental conservation.
- SEMARNAT as a Strategic Axis: For the execution of the decree, the Ministry of Environment and Natural Resources (Secretaría de Medio Ambiente y Recursos Naturales or SEMARNAT) assumes faculties that include the promotion and creation of PODECIBI, the issuance of its declarations, the validation of circular economy projects and the setting of annual goals to ensure the progress of the objectives.
- Key Requirements to Access the Incentives: To qualify for the incentives, developers and businesses must meet specific tax requirements, be up to date with their obligations, have their tax domicile in the entity where PODECIBI or the project operates, and have formal accreditation of their status as a circular economy developer or company by SEMARNAT.
- Tax Benefits for Developers: A 100 percent tax credit is granted to developers against the royalties for the use of Mexican public property. This benefit applies from the beginning of the concession and during the construction phase of the infrastructure and may be extended for up to 24 additional months if no rent is collected from the circular economy companies during that period.
- Incentives for Training and Innovation: Companies and developers can access an additional deduction of 25 percent on the increase in training expenses of their employees (specifically in technical or scientific knowledge related to the circular economy) and in investment projects for the development of inventions and initial certifications. This incentive is applicable until the 2030 tax year.
- Immediate Deduction of Investments in Fixed Assets: An immediate deduction of 100 percent of the original amount of the investment in new fixed assets used within the PODECIBI is allowed. This tax advantage would be available for the fiscal years of 2025 to 2030, on condition that the goods are kept in use for a minimum of two years and certain exceptions apply.
- Conditions for the Application of Incentives: Beneficiaries must understand that the application of the decree's incentives excludes the possibility of using other special regimes of the Income Tax Law (Ley del Impuesto Sobre la Renta or ISR), such as those of groups of companies or certain real estate trusts. They are also not cumulative with the incentives provided by the decree that grants tax incentives to support the national strategy known as "Plan Mexico."
- Accounting and Calculation of Differentiated Income Tax: The activities carried out within the PODECIBI must have separate accounting for calculating income tax; income and deductions will be attributed exclusively to these operations and any tax losses generated may be offset only by future profits from the same activities. If there is income from other activities, the income tax will be calculated without the benefits of this decree.
- Guidelines and Rules: SEMARNAT will issue the necessary guidelines within 30 calendar days from the entry into force of the decree. For its part, the Tax Administration Service (Servicio de Administración Tributaria or SAT) will be responsible for publishing the general rules for the correct application of the incentives and, supplementarily, the ISR, the Federal Law of Rights, the General Law of National Assets and the Federal Tax Code will be applied.
Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.
