The IMMEX (formerly Maquiladora) program in Mexico offers favorable tax benefits to companies manufacturing in Mexico—especially for companies who primarily manufacture products that will be exported out of Mexico.
First, a definition: a maquiladora is a factory in Mexico that’s owned and run by a foreign company. That company manufactures products in Mexico and exports them to other countries. One of the main cost-saving benefits is that the company is able to exempt the 16% Value Added Tax (VAT) when importing raw goods, materials, and equipment for manufacturing processes. They also will not pay duties when exporting finished goods to the US and Canada markets if the finished goods are classified as “Made in Mexico.”
IMMEX stands for the Maquiladora, Manufacturing, and Export Services Industry. It’s a program which first started in the mid-1960s (then known as the maquiladora program) to attract foreign direct investment into Mexico. The IMMEX program allows for temporary importation of goods, machinery, and materials part of the manufacturing process without accruing the value-added tax (VAT) of 16%, so long as they’re exported within the set timeframe.
The terms “IMMEX” and “maquiladora” are often used interchangeably. However, a maquiladora is defined as a factory in Mexico run by a foreign operator exporting its products back to its home country. Whereas, IMMEX refers to the program which maquiladoras operate under.
Compliance under the IMMEX program requires an established length of stay, certain sales commitments, and annual reports. Temporarily imported raw materials may remain up to sixteen (16) months before needing to be exported. Manufacturers must also commit to annual sales abroad totaling at least $500,000 USD, or the peso equivalent, or 10% of total invoices. Those holding IMMEX certification are also responsible for submitting an annual electronic report of total sales and exports from the immediately preceding tax year.
For foreign operators setting up a new IMMEX program, there’s a lengthy application process. Certified copies of the appropriate documents must also be registered with the proper organizations. This includes an active federal taxpayers registration, maquiladora contract and purchase orders, a letter detailing the production process and services referenced in the program application, and more.
Registering with the IMMEX program is advantageous due to the tax benefits. All temporarily imported goods, materials, and equipment are exempt from the 16% VAT. However, manufacturers awaiting IMMEX approval are subject to these taxes until officially certified. The application process can take weeks, if not months, before approval is granted, which adds significant costs to the manufacturing process.
Operating under the IMMEX program can be especially challenging for those manufacturing in Mexico for the first time. It’s time-consuming, plus there’s a learning curve to understanding the full scope of documentation and compliance required. The paperwork is extensive, and the smallest mistake can cause the process to start over.
Rather than enrolling as a standalone entity unfamiliar with Mexico’s IMMEX requirements, it’s easiest to work with a shelter company. A shelter is already part of the IMMEX program (and has all other permits and certifications necessary to operate), so there’s no delay, miscommunication, or potential for incomplete applications to be concerned about.
Working with a shelter partner like IVEMSA is beneficial for several reasons. With a team of experts well-experienced in handling the startup process and administrative functions, as well as what’s needed for compliance, it speeds up the production timeline. IVEMSA has IMMEX certification, and all other permits needed to operate in place, which means tax savings are implemented from day one.
Additionally, IVEMSA has the software in place to track imports and put together the reporting as required by the IMMEX program. When manufacturing in Mexico, it’s smart to have a local shelter to guide the process and take on all the administrative tasks needed to get production up and running quickly and efficiently.
While there are numerous benefits to participating, the IMMEX / Maquiladora program comes with many strict regulations and requirements that change occasionally. It’s important for companies operating under the program to maintain detailed records and meticulously track inventory. For example, under the IMMEX program, a company can import goods and raw materials temporarily and must either export the goods (as a finished product) within a certain time frame, transfer them to another IMMEX company, or change their status from “temporary” to “definitive.” It’s challenging for many businesses to keep up with these requirements on their own.
By working with IVEMSA and using our shelter services, you can use maquiladora licenses that we already have in place, or we can create and manage a new license for you. Our team will handle all the logistics so you can manufacture in Mexico with all of the advantages and none of the hassle. We’ll take care of:
When manufacturing in Mexico, you can choose to operate under IVEMSA's shelter to reduce risk, or we can create a new legal entity for you and obtain your IMMEX / Maquiladora license. If you select the latter option, you will be operating as a standalone entity.
You’ll be running your manufacturing operations under a “shelter,” an entity technically owned by IVEMSA where we are responsible for compliance and the administrative functions. Although you’ll have full control over your manufacturing processes, you’ll operate under our business license, and IVEMSA will handle all the set-up and administrative processes.
If you prefer to set up your own Mexican corporation, IVEMSA can create this new entity for your business and help you obtain the IMMEX / Maquiladora permits and other required permits and registration you will need to operate. We can also provide ongoing management services (HR, accounting, etc.) to help your operations run smoothly.
Download our free guide for U.S. and foreign manufacturers interested in nearshoring to Mexico. Learn:
Contact us today and see how we can help you take advantage of all the benefits of manufacturing in Mexico - without the hassle.
