Mexico Manufacturing: What You Need to Know About the IMMEX Program

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. It is designed for "personas morales" (legal entities), including various types of businesses such as industrial manufacturers, national factories, service providers, and third-party entities, among others.

The program specifically targets companies engaged in manufacturing or export-related activities and is open to businesses that manufacture, process, or repair imported goods for subsequent export. Additionally, IMMEX is not limited to large multinational corporations—small and medium-sized enterprises (SMEs) can also leverage its benefits to access global markets.

What are the requirements to apply?

Non-resident companies must provide a variety of documentation to prove they are legally operating in the country and are up to date on all tax obligations, along with a detailed description of its processes or services, as well as documents proving legal possession of the facilities where operations will be carried along with and supporting documentation for this. Once this information has been collected, it must then be submitted electronically through the Ministry of Economy’s website. Next, a notary will prepare an affidavit regarding the veracity of the documentation and location of the operations.

IMMEX Program Requirements for Companies

To apply for the IMMEX program, companies must submit an electronic application through the Ministry of Economy’s website, along with an affidavit from a notary verifying the location of operations and supporting documentation.

The application must include a detailed description of the company’s processes or services, including the capacity ratio and percentage of utilization, HTS codes of finished goods and raw materials, a commercial description of the equipment to be used, the productive sector, and proof of legal possession of the operational facilities, including photographs. If the facilities are leased, a contract with at least one year remaining must be provided.

Additional documentation required includes:

• Proof that the company is a persona moral (legal entity) and is taxed under Title II of the Income Tax Law.
• Registration with Mexico’s Federal Taxpayer Registry (RFC) and proof of a legal representative.
• Evidence that the company exports at least $500,000 USD in goods or services annually or that exports account for at least 10% of its total sales.
• A maquila contract or purchase orders supporting the company’s operations.
• Compliance with inventory control regulations as established in Article 59, Section I of the Customs Law.

Once submitted, the Ministry of Economy will review the application and notify the company within ten days if it has been approved for the program.

After acceptance, IMMEX companies must continue to meet compliance obligations, including filing annual operational reports, paying all taxes on time, maintaining inventory control, and ensuring that imported materials are used for their authorized purpose. Additionally, any changes in operations or company ownership must be reported to both the Ministry of Economy and the tax administration.

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.