Main Incentive Programs for Importing & Exporting Products to Mexico
By Alejandro Lara Cruz | Board Member at American Industries Group®
There are programs and certifications international companies doing business in Mexico can apply for to save on their import and export taxes, tariffs, and duties. Though these incentives are available to all companies operating in Mexico, you will want to have experts on your team who know all their ins and outs to ensure your company can make the most of them in the shortest possible time.
As evidenced by its trade agreements with over 40 countries, Mexico has always been very open to trade and has created four main incentive programs to stimulate economic growth and the establishment of foreign companies in the country. These include:
The Manufacturing, Maquiladora and Export Service Program, commonly known as IMMEX
This program went into effect on November 1, 2006, and provides benefits to qualifying investors, such as saving on import duties on products that are subsequently exported, providing significant savings for companies manufacturing in Mexico.
Some of the program’s specific benefits include:
- Deferred payment of import duties for up to 18 months (can be extended to 36 months under the OEA program)
- Ability to apply for VAT credit on temporary imports
- Discounts on Customs Processing Fees (DTA)
- 0% VAT for maquila services
- 0% VAT on virtual transactions between IMMEX companies and Mexican suppliers
It is important to remember that the time frame for considering imports as temporary ranges from 6 to 36 months. Enrolling in the program takes about 1-3 months, so it is helpful to work with experts who can ensure it is done as quickly as possible.
Sectorial Promotion Programs or PROSEC
As its name implies, this program only applies to goods used in a specific productive sector, such as automotive, textile, and electronic, among others. It specifically benefits legal entities that produce these goods by allowing them to carry out imports with a preferential duty rate (General Import Tax). The preferential rate applies only for goods to be used in producing specific products, regardless of whether the goods to be made are intended for export or the domestic market.
An additional permit that can be used in conjunction with PROSEC is known as a Rule 8 Permit. It allows companies in the PROSEC program to import machinery and equipment, inputs, materials, parts, and components that will be used for a specific project for products to be manufactured or assembled in the country, exempt from import duties.
Similar to the IMMEX program, it takes around 1-3 months to enroll in PROSEC as well.
Authorized Economic Operator, commonly known as OEA
Though the primary purpose of the OEA Program (Mexico equivalent of the C-TPAT) promoted by the World Customs Organization is to strengthen the security of international trade, it also offers additional economic incentives and other benefits, such as:
- Allowing companies to extend the period for temporary imports under IMMEX from 18 to 36 months
- Allowing companies to carry out virtual transfers to Mexican companies (without being enrolled in the IMMEX Program)
- Access to express and fast lanes at border crossings
- Lower likelihood of undergoing verifications with Mexican customs
Combined with the IMMEX program, the VAT certification program allows companies to receive full credit for VAT import taxes. Though it can take up to one year to obtain both certifications, it allows companies to import materials and machinery completely exempt from VAT.
These programs will allow your company to take full advantage of the cost savings available to companies manufacturing in Mexico. When looking into setting up operations in Mexico, you will want to work with experts that fully understand these programs and all of Mexico’s FTAs to ensure you are getting the full benefits available to you. Reach out today if you want more information on how Mexico can help your company reduce costs and gain a competitive advantage.
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