Mexico Revises Tax Incentives Applicable to the Cargo and Passenger Transportation Services Industry

Through a decree published in the Official Journal of the Federation on March 4, 2008, Mexico revised previously enacted tax incentivesapplicable to the cargo and passenger transportation services industry, as well as the incentives granted to companies that provide urbanpassenger bus transportation services. Such tax incentives seek to promote the substitution of older vehicles with newer more efficient ones.The tax incentives also apply to manufacturers, assemblers or authorized distributors of tractor trucks, two axle trucks with a minimumvehicle weight of 11,794 Kgs., three axle trucks with a minimum vehicle weight of 14, 500 Kgs. and buses with a capacity of at least 30seats, for new vehicles sold this year or in the following model year. In general terms, the change allows taxpayers to credit the incentivesagainst federal taxes from the time such taxes are due, as well as against municipal or state taxes due as determined by Mexico’s federalauthorities.