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What is a Maquiladora and Immex Mexico Program?
Mexico is a country with many possibilities for foreign investors. This is especially true in the manufacturing sector. Low labour costs and proximity to US markets make it an attractive option for American companies looking to save on production costs. The Mexican government creates the Immex Mexico Program or IMMEX at Tacna as part of its strategy to attract new investments into the country's economy while creating jobs at the same time.
What is a Maquiladora?
A maquiladora (Spanish for "maquila") is a company that assembles and produces goods in Mexico. Typically, the raw materials are imported to be transformed into finished products internationally exported without being subject to tariffs or other restrictions. The term has become synonymous with manufacturing companies who produce primarily in the Mexico border region to take advantage of the low-cost labour close to the United States markets.
Among other terms in Mexico manufacturing, IMMEX, production sharing, co-production sharing are part of the equation.
What is the IMMEX Program?
The IMMEX Program by TACNA is a Federal Government program established in 1985 to spur foreign investment and production for export. The term immex can be translated as "in Mexico" or "within Mexico". While the program has its roots in manufacturing, it includes all industries of any size, including services like construction. It also applies to companies who produce only one good but want to import materials duty-free from other countries like China.
IMMEX Program Benefits
The IMMEX Program benefits include:
- The right to import all the equipment, spare parts and raw materials needed for production duty-free from any country in the world.
- One year tax holiday on profits derived from exports of goods produced under this program.
- Reduced tolls at Mexico border crossings with NAFTA countries (Canada, U.S., China)
IMMEX Program Requirements To Participate In The Immex Mexico Program:
The requirements to participate in the immex Mexico are as follows:
- Establish a plant or subsidiary company in Mexico with adequate working capital for its operations and development plan; a minimum of USD 500 thousand available cash flow is required per month.
- Provide a Mexico bank account for the IMMEX's transactions.
- Supply information on the company and financing sources to establish eligibility of investment following Mexican law, including corporate history, financial records and ownership documentation
IMMEX Tax Considerations And Regulations:
The Immex Program has tax benefits that include a one year tax holiday on profits derived from exports of goods produced under this program as well as reduced tolls at Mexico border crossings with NAFTA countries (Canada, U.S., China). There are also requirements to participate, including paperwork such as an application form and your initial capital contribution or commitment letter. The regulations must be followed by all companies interested in participating in the Immex Program when applying for any credit, including loans and letters of credit.
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Any facts, figures or references stated here are made by the author & don't reflect the endorsement of iU at all times unless otherwise drafted by official staff at iU. This article was first published here on 23rd May 2021.