IMMEX

Our IMMEX Expert

María Elena Sierra

With extensive experience spanning the public and private sectors, currently administering +70 IMMEX operations for clients in Mexico.

Former Head of Certification & Affairs at the Mexican Tax Authority

Former Director of Energy & Industry at the Secretary of Environment & Natural Resources

Former Head of Industry & Commercial SVP at ENGIE
Certified by the World Customs Organization as an Authorized Economic Operator (AEO) Expert

Active participation with USMCA negotiation team regarding facilitation and origin as well as the Pacific Alliance and European Union

Consulted and collaborated with governments of Peru, El Salvador and Paraguay in expanding the AEO Program

What is IMMEX? The Mexican IMMEX Program (Manufacturing, Maquila and Export Service Industry) is an instrument which allows companies to operate under a preferential tax and fiscal program.

What can IMMEX Companies do? Foreign companies can transform and export goods or services temporarily brought to Mexico under this incentive program.

IS IT JUST FOR MANUFACTURING? The IMMEX Program is not only for physical goods. It also encompasses services in the knowledge transformation process. Think customer service, purchasing, design engineering or other corporate functions that can take place in Mexico.

WHAT ARE THE BENEFITS? Benefits include tax exemptions, expedited customs procedures, and access to government incentives.

+5K IMMEX Manufacturers

+3M IMMEX Employees in Mexico

15% of total formal employment

25 States with IMMEX operations

+20% ARE AUTOMOTIVE COMPANIES

60% LOCATED IN NORTHERN STATES

80% OF ALL MEXICOs´ EXPORTS

+90% IVA/IEPS Certification in SAT

58% of total manufacturing GDP

+7.5M Additional jobs directly created

$50B trade surplus (USD, Q1&2 2024)

PRODENSA INSIGHTS

THE IMMEX PROGRAM

The IMMEX Program aims to enable foreign companies to produce goods or provide services from Mexico, in a way that is cost-effective while still focusing on quality. You may have heard of “maquiladoras”, and these are factories that import raw material into Mexico, use it in a production or transformation process (think machining, assembly, repair, etc) and then export it to their home country.

With VAT Certification, these organizations can avoid paying value-added tax on these temporary imports that are destined for subsequent export. They can also temporarily import the raw materials and equipment used in the transformation process without the payment of VAT tax.

There are some requirements, of course. Companies in the IMMEX Program in Mexico have to:

export at least US$500,000 annually, or at least 10% of their total sales
adopt certain inventory control systems
comply with time frames for the import and
export of their goods or services,
operate in registered locations in Mexico, among others

The IMMEX Program is not only for physical goods. It also encompasses services in the knowledge transformation process. Think customer service, purchasing, design engineering or other corporate functions that can take place in Mexico.

Types of IMMEX Operations

WHAT IS A MAQUILADORA?

A maquiladora is a type of manufacturing facility located in Mexico that specializes in assembling or manufacturing goods for export. Maquiladoras typically import raw materials or components from other countries, assemble or manufacture products, and then export the finished goods back to the original country or to other markets. This model has been particularly successful in attracting foreign investment to Mexico, especially in industries like automotive, electronics, and medical devices.

IMMEX PROGRAM BENEFITS

IVA/IEPS CERTIFICATION

IMMEX companies can defer VAT on temporary imports by obtaining VAT/IEPS certification. This allows them to claim a tax credit equivalent to the VAT or IEPS they would otherwise owe.

Virtual Exports

IMMEX companies can transfer goods between themselves without paying import duties.

AEO PROGRAM

IMMEX companies can apply for AEO status to extend the temporary stay of raw materials up to 48 months.

IMPORT DUTIES

IMMEX companies can choose from various import duty rates, including the general tariff, preferential tariffs under free trade agreements, or preferential rates under the PROSEC program, provided they meet the necessary requirements.

The IMMEX Program offers various advantages, such as participation in government trade initiatives and streamlined trade processes.

PROSEC

For those that quality, the PROSEC program offers reduced import tariffs based on their products or services.

TAXES

No permanent establishment in Mexico if certain requirements are met.

Sub-Manufacturing

IMMEX companies can partner with non-IMMEX third parties for sub-manufacturing, transferring imported materials duty-free, yet remain responsible for the compliance of both.

STREAMLINED CUSTOMS

The IMMEX Program streamlines customs procedures, reducing paperwork and speeding up the flow of goods across borders. This ensures a more efficient supply chain.

SAFE HARBOR REGIME

TAXES FOR IMMEX COMPANIES

Effective January 1st 2022, the Advanced Pricing Agreement (APA) ceased to be an option for IMMEX compliance, limiting companies’ options to the safe harbor rules.

IMMEX-Tax-Case-Study

In order to determine the income tax base in the Safe Harbor calculation, the higher amount between 6.9% of the total value of the assets and inventories, or 6.5% of the total amount of costs and expenses of the operation must be considered.

First Methodology:

6.9% of the total value of the assets and inventories used in the maquila (IMMEX) operation during the fiscal year, including those owned by the person residing in the country, or residents abroad or any of its related parties, even when they have been granted in use or temporary enjoyment to said IMMEX.

Second Methodology:

6.5% of the total amount of operating costs and expenses of the operation in question, incurred by the person residing in the country, determined in accordance with the regulations of financial information, including those incurred by residents abroad, except for the following:

the value corresponding to the acquisition of merchandise, as well as of raw materials, semi-finished or finished products, used in the operation of IMMEX, carried out on their own account by residents abroad
The deduction of investments from fixed assets, expenses and deferred charges owned by the IMMEX company, destined to the IMMEX operation, will be calculated by applying the provisions of this law
The effects of inflation determined in the rules of financial information
Financial expenses should not be considered
Extraordinary or non-recurring expenses of the operation should not be considered in accordance with financial reporting standards

WHAT IS VAT/IEPS CERTIFICATION?

Temporary imports under the IMMEX Program and other similar programs are subject to the general 16% VAT rate. Such imports may qualify for VAT relief when obtaining special certification from the tax authorities related to the adequate control of such imports. The relief is applied in the form of an immediate VAT credit when clearing customs, which means that the temporary import is done on a cashless basis for VAT.

IEPS, or Special Tax on Products and Services, is an excise tax on certain products and services, including those applicable for the IMMEX Program. With Certification, the IEPS taxes are also refundable.

VAT, or value-added tax, is similar to a sales tax in Mexico, payable at a 16% rate. It is applied on the sales of goods and services as well as lease payments and imports of goods and services.

The VAT law also taxes sales in Mexico of temporarily imported goods by non-residents to

(a) other non-residents,
(b) maquiladoras, or
(c) companies in the automotive industry.

VAT paid by companies on their purchases and expenses related to VAT-added activities may usually be credited against their liability for VAT they collect from customers on their own sales, services rendered, etc. VAT is calculated for each calendar month as a final tax. Additionally, VAT overpayments may be used to offset the tax liabilities arising from other federal taxes.

VAT / IEPS COMPLIANCE REQUIREMENTS

Monthly Reporting

Monthly Reports: detailing the value of goods accounted for in inventory control systems and pending export.

Proof of Payment: ensuring that taxes on these items can be paid, if necessary, through a bond or letter of credit.

Ongoing Compliance: of monthly reports and proof of payment.

Labor Compliance

Outsourcing Reporting: of any outsourcing arrangements in the facility, demonstrating compliance with Mexican labor laws.

Evidence Submission: of necessary documentation to prove compliance with labor regulations.

Tax and Customs Compliance

Adhere to Tax Obligations: to ensure compliance with all applicable tax laws and regulations.

Customs Compliance: maintaining accurate records and documentation for customs purposes.

Import Value Reporting: of the correct import values to avoid penalties and discrepancies.

Recordkeeping & Internal Controls

Maintain Detailed Records: of all transactions, including import and export documentation, tax payments, and inventory data.

Implement Strong Controls: Establish robust internal controls to prevent fraud, errors, and non-compliance, including suppliers.

IMMEX Program

Risks of Non-Compliance

Revocation or suspension of the IMMEX authorization
Imposition of economic sanctions and fines
Delays in goods clearance at customs
Potential legal litigation

Loss of fiscal and customs privileges
Restrictions on future foreign trade operations
Negative impacts on clients and suppliers
More frequent audits from regulators

PRODENSA INSIGHTS

CHALLENGES OF THE IMMEX PROGRAM

Extensive Documentation - requires a wide range of documents including tax situation, audited financial statements, and more.

Labor & Environmental Regulations - demonstrating compliance, including working conditions and waste management.

Inventory Control - detailed tracking of temporarily imported goods; must enable cross-referencing and verification of information between temporary imports and exports.

Tax Audits - preparation for frequent audits by the SAT (tax authority) which will verify the correct use of the facilities granted by programs.

Country of Origin - The IMMEX Program is not an automatic entry to complying with local content requirements for different trade agreements. An analysis must be made and a strategy defined for achieving certain trade compliacne.

Legal Complexity - as with any governmental program, it is subject to change by the administration in power. As such, there have been notable changes to the legal and operational framework in recent years.

Strict Compliance - there is a high level of control of the inventory levels at the IMMEX facility in Mexico, with a high risk to cash flow for skirting the regulations.

Not a Cheap Endeavor - Previously maquiladoras were touted as the solution to cheap labor. That's not always the case. The cost of labor encompasses a lot more than just minimum salaries.

Collective Bargaining - With an overhaul in 2019, Mexico's labor law concretes the freedom of association. This encompasses both local compliance within Mexico, but also holds the organization accountable to the USMCA labor requirements that could greatly impact trade.

Our Solutions

Trade compliance in Mexico, and the USMCA.

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VAT Advisory

VAT Advisory From strategic advisory to solution-oriented projects, our experts have extensive experience across all industries.

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SHELTER PROGRAM

SHELTER PROGRAM A local partner for the incorporation, setup and ongoing administration of an IMMEX facility in Mexico.

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FTA Origin Analysis & Determination

FTA Origin Analysis & Determination Validation of analysis of origin - Generation of Certificate of Origin

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Import & Export Processes

Assisting in import and export operations, coordinating with Custom Brokers.

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Foreign Trade Licensing Processes

Foreign Trade Licensing Processes Importers Registry - PROSEC - 8th Rule - IMMEX - VAT Certification - VAT & IEPS Guarantees - AEO & CTPAT

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Compliance Audits

Compliance Audits Importers Registry - PROSEC - 8th Rule - IMMEX - VAT Certification - VAT & IEPS Guarantees - AEO & CTPAT

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Annex 24 & 30

Daily operation, integrity assessment, reconciliations, reconstruction and retransmission

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Authorized Economic Operator

Authorized Economic Operator Certification advisory services for the diagnosis, implementation and application for AEO

Mexico's IMMEX Program

TABLE OF CONTENTS

Our IMMEX Expert

María Elena Sierra

The IMMEX Program in Mexico

THE IMMEX PROGRAM

Types of IMMEX Operations

Industrial

Holding

Service

Shelter

3rd Party

WHAT IS A MAQUILADORA?

IMMEX PROGRAM BENEFITS

IVA/IEPS CERTIFICATION

TAXES FOR IMMEX COMPANIES

WHAT IS VAT/IEPS CERTIFICATION?

Primary Exemptions of VAT

VAT / IEPS COMPLIANCE REQUIREMENTS

Risks of Non-Compliance

CHALLENGES OF THE IMMEX PROGRAM

IMMEX Reporting Requirements

Statistics

Report

Filings

Inventory

Regulation

Our Value Proposition

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