Mexico's President has enacted a Tax Incentive Decree in favor of PEMEX

On February 13, 2024, Mexico’s President Andrés Manuel López Obrador issued a Decree granting a Tax Incentive to Petróleos Mexicanos (“PEMEX”) as part of the National Development Plan 2019-2024 (Plan Nacional de Desarrollo), which states in section III. "Economy", the "Rescue of the energy sector", which has as a strategic purpose for the current administration, the rescue of PEMEX.

Therefore, in order to continue supporting the exploration and extraction of hydrocarbons in the country, it is considered necessary to grant tax incentives that PEMEX will apply for the payment of sharing profit rights (“derechos por utilidad compartida”) and hydrocarbon extraction rights (“derecho de extracción de hidrocarburos”) referred to in the Hydrocarbons Revenue Law.

Therefore, Mexican President decided to grant a tax incentive to PEMEX consisting of:

• A tax credit equivalent to 100% of the sharing profit rights “derechos por utilidad compartida” corresponding to the months of October, November and December, of 2023, as well as January of 2024, which can be credited against the same right that results to be paid in those monthly periods on account of the annual right corresponding to the fiscal year 2023 and the fiscal year 2024, respectively.
• A tax credit equivalent to 100% of the hydrocarbons extraction rights “derecho de extracción de hidrocarburos”, corresponding to the months of October, November and December, of 2023, as well as January of 2024, which can be credited against the same right that results to be paid in those monthly periods.

It should be noted that these tax incentives do not constitute accumulative income for tax purposes, nor will result in any refund, so the Tax Administration Service must issue the necessary general provisions for the application of this Decree.

Finally, it is important to bear in mind that the current Presidential Tax Incentive Decree will become effective on February 13, 2024.

In case of any questions or for more information about this Energy Alert, please contact us:

Rodrigo Ochoa

Mario Karim

Yuri Barrueco

Salvador Meljem

Pablo Cobo