Decree Establishes Job Creation Program for Marginal Economic Areas

March 14, 2008
Decree Establishes Job Creation Program for Marginal Economic Areas

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.

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