Mexico’s Island Municipalities Push for Tax Relief to Boost Investment and Jobs

Cozumel, Quintana Roo — A proposal by Mexico’s ruling Morena party to create a special tax category for island municipalities in states that share an international border could improve living standards and competitiveness for island communities, the head of Cozumel’s business coordinating council said.

The initiative would add Article 39 Bis to the Fiscal Code of the Federation, establishing a differentiated tax treatment for island municipalities and granting them specific tax incentives. María del Carmen Joaquín Hernández, president of the Consejo Coordinador Empresarial (CCE) of Cozumel, said the measure responds to a long-standing demand from island residents who face conditions that differ sharply from those of communities on the mainland.

“It is a demand that has been made for many years, related to social welfare, because islanders, lacking quick and affordable access to the mainland, today have difficulty accessing all the services they require, such as healthcare and government paperwork,” she said.

What the Proposal Would Do

The legislation seeks to recognize the particular conditions of island zones through a differentiated tax regime. Among the measures under consideration is a reduction in value-added tax from 16 percent to 8 percent for operations specified by the reform, along with a cut in income tax for certain taxpayers.

The proposal would apply to islands in states including Quintana Roo, Campeche, Nayarit and Baja California, according to criteria that the legislation would eventually set out.

Higher Operating Costs on the Islands

For Cozumel’s business sector, tax incentives could also help attract new investment and create jobs, particularly in communities where operating and supply costs are higher because of their island status.

“Even to bring investment to the island and new sources of jobs, there have to be incentives. This is not about privileges, but about reasonable adjustments for residents; in our state’s case, for Cozumel, Isla Mujeres and Holbox, as well as other inhabited islands in the country that need a quality of life similar to those who live on the mainland,” Joaquín Hernández said.

The CCE Cozumel president said the initiative offers a chance to revive a debate that has sat on the public agenda for years, and voiced hope that it will advance in the Congress of the Union this time.

“We hope that on this occasion they receive follow-up from all the benches and move forward,” she said.

The initiative’s preamble acknowledges that island status generates additional costs tied to transport, logistics and supplies, factors that weigh on both productive activity and the cost of living for families.

In Quintana Roo, the debate is especially relevant for communities such as Cozumel, Isla Mujeres and Holbox, where business owners and residents have called for differentiated conditions to offset the economic and connectivity disadvantages created by their geographic location. For the business sector, the aim is not only to reduce tax burdens but to create conditions that favor investment, employment and access to goods and services under a framework that recognizes the economic and social particularities of island communities.