Mexico announces tax breaks to aid oil-producing southeast

Mexico's government will introduce tax breaks on new investments in the oil-producing southeastern states of Campeche and Tabasco, which have been impacted by the drop in crude prices.

Investments in new assets will be 100% tax deductible until December 31, while companies and entrepreneurs will be exempt from paying income tax during April, May and June, among other measures, in a bid to reactivate economic activity in the region, according to the finance ministry (SHCP).

Details of the strategy, originally announced by President Enrique Peña Nieto (pictured) in early May as part of an economic plan for the two states, were revealed by the SHCP on Wednesday to coincide with the publication of a presidential decree.

Taxpayers in the two states will have until September to file their returns for the first six months of the year.

The fall in oil prices has severely impacted Mexico's revenues, with state oil firm Pemex having undergone a US$5.5bn budget cut for this year, the second consecutive year in which its finances have been clipped.