All about the Mexican IMMEX (Maquila) Program

What is the IMMEX program and how does it work?

The IMMEX program is a government program that offers tax and customs benefits to authorized companies that carry out manufacturing or maquila operations in Mexico, including the import and export of goods. A maquiladora is typically a company that has the IMMEX program or IMMEX certification.

The IMMEX program allows companies to temporarily import goods necessary for their industrial or service process without paying the general import tax, VAT or certain countervailing duties. This tax exemption can significantly reduce the cost of operating companies.

The IMMEX program also offers incentives for job creation, foreign direct investment, technological development and the competitiveness of Mexican companies.

What type of tax incentives does the IMMEX program offer for companies that establish a maquiladora in Mexico?

The main tax incentive offered by the IMMEX program is the possibility of deferring (avoiding) the payment of the general import tax, which can vary between 0% and 35% depending on the type of product. This benefit allows companies to preserve their cash flow by not paying the tax at the time of importing the goods, but until the finished products are exported.

Additionally, the IMMEX program allows companies to credit for Mexican income tax purposes the income tax paid abroad in relation to non-Mexican source income. The tax credit is limited to the effective income tax rate in Mexico on the tax result shown by the annual tax filing by country and by type of income.

Another tax incentive offered by the IMMEX program is the accelerated refund of VAT paid on temporary imports, as long as certain requirements are met. The deadline to request a VAT refund is 20 business days after the month in which the temporary import was made.

What are the modalities of the IMMEX program and what requirements does each one have?

The IMMEX program has

5 different modalities, each with its own specific requirements and benefits. Some of the most common modalities are:

- Industrial maquila: It is the modality most used by companies that carry out manufacturing or maquila operations in Mexico. It requires companies to set up a Mexican entity to manufacture and then export the manufactured good to the main company. It also requires companies to export at least 60% of the national added value of finished products or to generate at least 10 direct jobs for every million dollars of fixed investment.

- Services: It is the modality that allows companies to provide services related to foreign trade, such as storage, distribution, transportation, labeling, packaging, assembly, repair or maintenance of merchandise. It requires companies to have adequate facilities to perform such services and to export at least 10% of the total value of the services provided.

- Shelter: It is the modality that allows foreign companies to establish a manufacturing or maquila operation in Mexico without establishing a Mexican legal entity, but rather through a contract with a Mexican company that provides them with the necessary administrative and operational services. It requires foreign companies to have a hosting contract with a Mexican company authorized by the IMMEX program and to export at least 90% of the total value of finished products.

- Outsourcing: It is the modality that allows companies to subcontract part or all of their production process to other Mexican companies authorized by the IMMEX program. Requires that companies have an outsourcing contract with a Mexican company authorized by the IMMEX program and that they export at least 60% of the national added value of finished products or that they generate at least 10 direct jobs for every million dollars of investment. fixed.

- Holding Company: It is the modality that allows companies to control and coordinate the manufacturing or maquila operations of other Mexican companies authorized by the IMMEX program. Requires that companies have a controlling contract with a Mexican company authorized by the IMMEX program and that they export at least 60% of the national added value of finished products or that they generate at least 10 direct jobs for every million dollars of investment. fixed.

How many companies have been granted the IMMEX approval up to date and which are the main countries with the highest number of applications to the program?

According to data from the Tax Administration Service (SAT), as of June 2021 there were 6,237 active companies with the IMMEX program in Mexico. The number of companies has decreased since 2019, when there were 6,469 companies, due to the COVID-19 pandemic and the entry into force of the Agreement between Mexico, the United States and Canada (T-MEC).

The main countries with the highest number of applications to the IMMEX program are the United States, with 3,570 companies; Japan, with 385 companies; Germany, with 262 companies; South Korea, with 212 companies; and Spain, with 161 companies.

In which parts of Mexico are the greatest number of establishments within the IMMEX program located ?

The states with the highest number of establishments with the IMMEX program are Baja California, with 1,082 establishments; Chihuahua, with 1,034 establishments; Nuevo León, with 1,003 establishments; Coahuila, with 775 establishments; and Tamaulipas, with 601 establishments. These states are characterized by their proximity to the northern border of Mexico and their industrial development.

Conclusion

The IMMEX program is a government program that offers tax and customs benefits to companies that carry out manufacturing or maquila operations in Mexico. The IMMEX program has different modalities that adapt to the needs of each company and that promote foreign investment, employment, technology and competitiveness. The IMMEX program is one of the main drivers of the Mexican manufacturing sector and the country's foreign trade.

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