Two Ways Working under a Provider of Shelter Services in Mexico Can Help You Save on Taxes

In addition to the main incentive programs available to companies in Mexico that help businesses save money on export taxes, tariffs, and duties we discussed in a recent article, there are also various tax incentives you will also want to take advantage of. Due to the complexity of tax laws and because every situation is unique, it is a good idea to work with a provider of shelter services in Mexico to ensure you get the maximum savings possible.

In Mexico, there are two main federal taxes all companies operating under their own legal entity will have to pay: VAT (IVA) or value-added tax and FIT (ISR) or federal income tax. The first, VAT, is a standard 16% tax payable on all sales of goods and services, lease payments, and imports of goods and services in Mexico.

Companies enrolled in the IMMEX program, and VAT certification can defer or eliminate VAT for temporary imports, maquila services, and even acquisitions from local suppliers in some instances. Additional incentives and deductions are also available on VAT, and companies can apply for refunds for various concepts and deductions. However, the process is complicated and takes 90-120 days to receive the refund. On the other hand, by working with the American Industries’ shelter, companies can operate exempt from import VAT tax on machines or raw materials imported as well as local expenses, including leases, electricity, packaging, and cafeteria services, among others.

Companies working under a shelter will also save on FIT (income tax). Companies that operate under a shelter non-incorporated model are not required to set up their own legal entity in the country. This means they do not technically have income in Mexico, and the 30% tax does not apply. Instead, companies will pay tax under the safe harbor methodology.

All companies want to make the most of tax savings available to them, and these are just some available to companies operating in Mexico. Due to the complicated nature of tax law and working in a different country, you will want someone with in-depth knowledge of the law and tax codes on your side who can ensure you get all the additional incentives and cost savings possible.

Working with a shelter services provider through this process allows companies to focus 100% on what they do best—their manufacturing operations, engineering, quality control, maintenance, design and scheduling, and maintain full control over production and quality, raw materials, and their machinery and equipment.

On the other hand, clients get to pass off the high-learning curve side of doing business in a foreign country with a different language, culture, laws, regulations, accounting processes, and environmental regulations, just to name a few. This includes everything from human resources and staffing needs, to networking and being able to take advantage of a providers’ well-established network of suppliers and economies of scale.

Companies can even rest easy knowing that their employees’ relocation processes will go smoothly, as providers assist with everything from visa applications to finding schools, and helping people get their bearings in a new place. This ensures that companies have a solid foundation from the start as they establish and expand in Mexico.

Having a trusted shelter services partner gives clients the peace of mind of knowing that they have an entire team behind them that has the expertise and knowledge gained by having gone through this process with companies across all types of industries, ranging from the automotive industry Mexico, medical devices manufacturing Mexico and even the aerospace industry in Mexico.

Operational Support

The operational expertise of a shelter partnership includes the following benefits:

1. Workforce recruitment and management: They help you tap into the local talent pool, ensuring your manufacturing unit is staffed with skilled personnel.
2. Handling of all administrative processes: A shelter provider streamlines your operations from the get-go, offering start-up manufacturing services in Mexico that translate into efficiency.
3. Sourcing materials and managing logistics: A key component in shelter manufacturing in Mexico, ensuring that your supply chain is agile and responsive.
4. Reduced costs and risks: Shelter support also extends to financial aspects. The shelter program provides substantial savings on everything from duties and taxes to purchasing of non-production goods and services, among others.
5. Savings on administrative overhead: Cutting down on the expenses associated with setting up independent operations.
6. Reduces or eliminates the learning curve: Shelter companies are focused on efficiency, ensuring your company can avoid wasting the time and resources that often accompany expansions into unfamiliar regulatory environments.

By establishing a Mexico shelter manufacturing partnership, your company can gain a strategic edge, ensuring a smooth and cost-effective entry into one of the most vibrant manufacturing hubs in the world.