Kia Agrees to More Modest Tax Breaks for Plant in Mexico

Kia Motors Corp. has agreed to accept more modest tax breaks for the assembly plant it is completing in the Mexican state of Nuevo Leon, according to Gov. Jaime Rodriguez.

Rodriguez, who was elected in October, quickly declared the deal struck with Kia in 2014 by his predecessor “excessive” and demanded the incentive package be renegotiated. The state had hoped to finalize a revised agreement in April.

The new package reduces the value of incentives to 10.5% from 28% of the project’s investment by Kia and its suppliers, according to Reuters, which cites Economic Minister Fernando Turner. The deal waives what Rodriguez has described as an "illegal" pledge to waive income taxes for 20 years. The accord also eliminates an initial agreement by the state to provide utilities and fund a party to dedicate the facility.

The $1 billion Kia factory in Pesqueria, which is scheduled to open later this year, will have annual capacity to make about 300,000 vehicles. The facility will supply North and South America, but Kia has not yet announced which products will be made there.