How Foreign Companies Benefit from Mexico’s IMMEX Program
05.23.22
Mexico’s maquiladora program was established in the 1960s to promote foreign manufacturing activity throughout the country. Since its inception, it has evolved into what’s now referred to as the IMMEX program and benefits U.S. and other foreign companies through tax-deferment savings.
It allows foreign manufacturers to temporarily import goods and equipment used for the production process and exempt them from the 16% value-added tax. This is only applicable once approved for IMMEX certification and as long as these temporary imports are exported as final products within the specified timeframe.
This unique tax-savings benefit can significantly reduce manufacturing costs for companies, especially those partner with a Mexico shelter company. A Mexico shelter company already has IMMEX maquiladora certifications in place, which means manufacturers can reap the benefits from the first day of operations. Otherwise, it can take several weeks, if not months, to go through and be accepted through the approval process.
What Goods Are Eligible for VAT Exemption?
Temporarily imported materials eligible for the IMMEX maquiladora program must be used for goods intended for export. These include any parts, components, and machinery used as part of the manufacturing process, which may include pallets, packaging material, containers, and other tools and instruments. Additionally, products necessary for industrial safety, telecommunications, and quality control may also qualify as tax-exempt goods under IMMEX maquiladora qualifications.
There are also distinguishing categories of sensitive product categories that maintain their own specific requirements under the program. These include goods made from imported steel, tires, and textiles. Part of a shelter company’s role is to determine which goods, materials, and equipment qualify to maximize tax savings and maintain compliance.
Who Can Participate in the IMMEX Maquiladora Program?
Any foreign manufacturer established as a legal entity in Mexico is eligible to apply for the IMMEX maquiladora program, as long as its export value equals a minimum of $500,000 USD or comprises 10% of the total turnover. To create such an entity, foreign companies can either set up a standalone entity or work under the umbrella of a Mexico shelter company. The latter minimizes the risk and liability of operating in Mexico and automatically qualifies the foreign manufacturer for IMMEX maquiladora program benefits.
Partnering with a Mexico Shelter Company
By working with an experienced shelter company like IVEMSA, U.S. and other foreign manufacturers can use the maquiladora licenses already in place and benefit from all other logistics handling as well. This includes securing permits and licenses, ensuring tax and customs compliance, handling HR, accounting, and the facilitation of site selection.
Operating in Mexico is already cost-effective when it comes to labor and transportation, and the tax exemption benefits of the IMMEX maquiladora program only add to the total savings. As many continue to explore the advantages of manufacturing in Mexico, a shelter company partner helps to optimize operations and maximize the investment.