Mexico Manufacturing: What You Need to Know About the IMMEX Program
By Jorge Baca | Queretaro Regional Director at American Industries Group®
The Mexican Manufacturing, Maquila and Export Services Industry Program (IMMEX) is a government initiative that was launched on November 1, 2006. The program is designed to attract foreign investment and spur economic growth in Mexico through the industrial manufacturing and export of goods and services.
IMMEX has become one of the most beneficial programs for foreign and US companies manufacturing in Mexico, attracting a large number of investors and making it one of the country’s most successful economic development programs. It has had a significant impact on companies deciding to move their manufacturing to Mexico and has contributed to developing its industrial and export infrastructure and consolidating supply chain ecosystems in various sectors.
This article will provide an overview of IMMEX and its benefits and answer some of the most frequently asked questions about the program.
What is the Mexican Manufacturing, Maquila and Export Services Industry Program (IMMEX)?
This incentive program is aimed at companies manufacturing in Mexico. It helps reduce taxes by granting duty deferral on foreign goods temporarily imported to the country to be used in manufacturing, transforming, or repairing goods or services destined to be exported or for the provision of export services. In short, the program provides incentives to qualifying investors, including tax credits for import dues paid on products that are subsequently exported, providing significant benefits for Mexico manufacturing companies.
What are the benefits of the IMMEX program for companies manufacturing in Mexico?
The IMMEX program offers a range of benefits for companies manufacturing in Mexico.
Firstly, it allows non-resident companies to keep certain imported goods and property in the country from 18 months to indefinitely (or as long as the program is in effect) without triggering tax consequences derived from a permanent establishment. This means that you can be eligible for the deferral of import duty payments, and in some cases, even be exempted for raw materials through the Promotional Sectorial Program (PROSEC).
Furthermore, IMMEX companies can apply to obtain VAT credits on temporary imports if the company is granted certified export company status by the Mexican tax authority (SAT). This means that VAT payment is only due upon final importation, when applicable.
In addition, businesses are not considered as having a permanent establishment if all income obtained from productive activities is derived from exports. This means that maquila services are taxed at a 0% VAT rate, transactions between IMMEX companies are taxed at 0% VAT rate under specific conditions, and acquisitions of non-resident companies from local suppliers are also subject to 0% VAT in some cases.
Another benefit of IMMEX is that it allows you to apply for other government incentive programs, including VAT (Value Added Tax) and IEPS (Special Tax on Products and Services) Certification. This certification is advantageous because it grants flexibility in import and export processes with authorities and provides even more tax savings and flexibility in import-export processes than IMMEX alone.
Who can participate in the IMMEX program?
The IMMEX program is open to all companies and entities interested in nearshore or offshore manufacturing in Mexico and exporting goods and services.
How can you apply for the IMMEX program?
You must submit an electronic application through the Ministry of Economy’s website and an affidavit from a notary verifying the location of the operations and documents filed.
The application includes a detailed description of your company’s processes or services, including the capacity ratio and percentage of this capacity actually being used, HTS codes of finished goods and raw materials, commercial description of the equipment to be used, your productive sector, and documents proving legal possession of the facilities where operations will be carried out, along with photographs of these (if the facilities are leased, a contract with at least one year remaining on it must also be provided).
Additional supporting documentation required includes proof that the company is in good legal standing and is up to date on all tax obligations, including its advanced electronic signature, the company’s articles of incorporation, tax ID registration, a copy of the identification of the company’s registered agent, and maquila contract or purchase orders, among others.
Once the documents have been submitted, the Ministry of Economy will then notify the company within ten days if it has been granted access to the program.
Subsequent to acceptance into the program, you must also meet additional requirements and comply with certain obligations to maintain your status, including filing an annual report of operations and filing and paying all taxes on time, and notifying both the Ministry of Economy and the tax administration of all changes in operations and ownership of the company, among others.
What additional benefits does the program offer?
In addition to the tax and financial benefits, and depending on the business model you choose to set up manufacturing operations in Mexico, there is a wide range of additional benefits. One of the most advantageous ways for foreign companies with no experience in Mexico to start up operations quickly and with minimal risk is by operating under a shelter program.
Compared to other modalities available for enrolling in the IMMEX program, shelter manufacturing in Mexico eliminates liability by ensuring full compliance with all laws and regulations, allowing you to find and retain the right talent for your operations, and having all administrative issues handled by the shelter company, among many others. This means you can focus on what you do best.
How can I find out more about the IMMEX program?
If you are interested in finding out more about the IMMEX program, you can visit the Mexican Ministry of Economy’s website or reach out to a trusted provider of shelter services in Mexico who have experts that fully understand the IMMEX program and all of Mexico’s FTAs and incentive programs. They can ensure you take full advantage of all the benefits manufacturing in Mexico offers to maximize your cost savings and gain a competitive advantage.
In summary, the IMMEX program is a government initiative that continues to help attract foreign investment and spur economic growth in Mexico. It offers a range of benefits for companies manufacturing in Mexico, including reduced taxes and preferential terms for overseas exports. Also, be sure to check out our infographic and article to learn more about the IMMEX program or contact us and we’d be happy to answer any questions you have.
If you would like to find out more about this topic or are interested in receiving a complimentary business case analysis for your operation in Mexico, please fill out this form or contact us at:
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