On February 27 th a Decree providing administrative processes to National Water concession holders was published in the Official Journal ofthe Federation suspending the federal land, reserves and regulated zones for concession holders of national water rights that expiredbetween January 1, 2004 and December 31, 2008, or which are currently in force but have not yet applied for a renewal of the concessionaccording to the terms of article 24 of the National Waters Law (Ley de Aguas Nacionales) (at least six months before expiration of theconcession). The purpose of this decree is to allow concession holders the right to renew their concessions. It is important to note that theNational Water Commission (Comisión Nacional del Agua or CNA) may establish restrictions or limitations on any new concession andmay not renew concessions of those concession holders who are currently in the process of having their concessions revoked, suspended orterminated. The CNA will issue general rules for the implementation of the Decree.

On March 5 th the “Decree Establishing a Job Creation Program for Marginal Economic Areas” entered into force, the purpose of which is toencourage job growth and promote the installation and operation of production centers located in parts of Mexico with high or very highpoverty rates, according to the most recent official statistics, where the local population does not exceed 50,000 persons and where suchproject will create permanent jobs. A production center is defined as an establishment that (i) has at least 50 employees who are registeredwith the Mexican Social Security Institute who work at the production center of the facility, and (ii) files with the Mexican FederalTaxpayer Registry a notice of initiation of activities. Various benefits of the program include: (a) Support for up to 100% of the employerportion of IMSS and National Worker Housing Fund (INFONAVIT) contributions for each employee of the production center whose basesalary does not exceed ten times the daily minimum wage in the corresponding geographical area during the 18 months immediatelyfollowing joining the program; (b) The possibility of accessing preferred financing for construction of industrial facilities and obtainingcertain financing benefits for the acquisition of equipment, construction of facilities and modernization of infrastructure; financial leasing orguaranties for acquiring or renovating personnel transportation equipment and financing, and subsidies to the employees of the productioncenter for their own construction or improvement of housing, as well as acquiring lots served with public utilities, all of which may beavailable from certain financial institutions and development banks; (c) Funds for scholarships for professional development training inamounts equal to two times minimum monthly salaries in the corresponding geographic area for each employee for up to 15 months; and (d)In specific cases and under the conditions established by the Decree, tax incentives consisting of deductions for investments made in newfixed assets of the business. The Department of Commerce (Secretaría de Economía) will administer the program and will review anddecide upon applications to the program, which is set to expire on August 31, 2011.

On March 4, 2008, tax benefits relating to the Income Tax (Impuesto Sobre la Renta or ISR) and Single Rate Business Tax (ImpuestoEmpresarial a Tasa Única or IETU) were published in the Official Journal of the Federation and apply to individuals and entities carryingour business and professional activities in Mexico, as well as those parties who receive income from real property leasing activities. Thepurpose of such benefit is to stimulate economic activity and protect jobs in Mexico. With respect to the ISR, taxpayers may defer 3% oftheir provisional ISR tax payments during the period February through June, 2008. To determine provisional payments from Marchthrough December, 2008, taxpayers may apply the deferral cited above against payment of the provisional tax due for the month forprovisional payments of the same fiscal year as previously determined, that would have corresponded if the deferral had not occurred. Thestimulus also applies to the IETU so that the discount granted for ISR will not increase the amount of IETU due and owing. In addition, inorder to promote electronic tax filings, the Decree grants a tax credit to individuals who present their 2007 annual tax returns on time (notincluding taxpayers who work as independent contractors), which credit consists of a one-time $1,000.00 pesos amount against ISR and theAsset Tax (Impuesto al Activo or IMPAC) due for calendar fiscal year 2007. To take advantage of the electronic filing tax credit, taxreturns must be filed by Internet, utilizing the taxpayer’s advance electronic signature, on the Taxpayer Administration Service’s webpage,and provided the tax due is at least equal or greater to $1,000.00 pesos. If the tax to be paid is less than such amount, the tax credit will beequivalent to the amount due. Finally, it is worth noting that application of the benefits established in the Decree will not provide groundsfor any tax refund or reimbursement and will not be considered as taxable income under Mexico’s Income Tax Law.

It is advisable for businesses to, at the time of entering into individual labor agreements, clearly specify that their employees agree not todivulge to any individual or company trade secrets, administrative processes, professional advice, production, sales, manufacturing,distribution or any other confidential information that such employees obtain in the course of their employment, the dissemination of whichcould cause harm to the company. In addition, such labor agreements should specify that a breach of the confidentiality provision by anemployee is a cause of termination under article 47 of the Federal Labor Law and subject to the penalties imposed by articles 210 and 211of the Mexican Federal Penal Code, or its correlative provisions of Mexico’s states. Such labor agreement provision should also state that abreach will cause the employee to be responsible for payment of civil damages according to articles 1910 and 1915 of the Federal CivilCode or its corresponding versions in the Mexican states, as well as the sanctions established in Mexico’s Federal Copyright Law (LeyFederal de Derechos de Autor).

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.

On March 3, 2008, Mexico’s federal government issued the “Decree Providing a Partial Exemption for Payment of Employer SocialSecurity Law Payments” in order to stem possible negative effects of a downturn in Mexican economic growth. Such Decree relievesemployers of the obligation to pay amounts equivalent to 5% of the employer portion of Social Security Law payments corresponding toworkplace risk, illness and maternity, disability and life, and employee benefits insurance beginning March 1, 2008. The partial exemptionapplies only to employers who are registered with the Mexican Social Security Institute (IMSS), whose employees do not perform work forgovernmental entities and all of whom are registered with the IMSS, which do not currently have pending tax credits in their favor. It isimportant to mention that if an employer takes advantage of the Decree, and the IMSS subsequently determines that the employer has notmet all applicable requirements, the IMSS may assess late fees and penalties.