MEXICO CITY (Reuters) – Mexico on Monday pitched a series of tax incentives aimed at luring companies into investing in a business corridor that President Andres Manuel Lopez Obrador is developing in a southern isthmus in hopes of competing with the Panama Canal.

The finance ministry said companies that invest in the so-called Inter-Oceanic Corridor connecting the Pacific port of Salina Cruz in Oaxaca state with the Gulf coast hub of Coatzacoalcos in Veracruz state will not need to pay income tax during their first three years of operations.

For the following three years, companies will only have to pay half of the normal income tax, the ministry said in a statement, adding they could get a discount of up to 90% if they met certain employment goals.

The measures also include accelerated depreciation of investments during the first six years of operation.

Business conducted in the corridor will be exempt from value-added tax (VAT), and firms can claim back VAT from purchases made outside the zone for four years, the ministry said.

As part of Lopez Obrador’s drive to create jobs and lift the economy of Mexico’s poorer south, the government plans to build 10 industrial parks along the corridor, the backbone of which is to be an upgraded rail link between the coasts.

A tender for the industrial parks to be located across the Isthmus of Tehuantepec is due to be in launched in mid-June, Lopez Obrador said last week.

(Reporting by Carolina Pulice; Editing by Jamie Freed)

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