Tax advantages

Tax advantages for foreigner manufacturers thanks to the IMMEX program

The IMMEX program ensures that the imported raw materials and components are free of general import duties, value-added taxes, and compensatory fees.​​

The IMMEX program ensures that the imported raw materials and components are free of general import duties, value-added taxes, and compensatory fees.​​

1. IMMEX Compliances

Mexico has a corporate tax rate of around 30%. However, thanks to the program of “immex”, foreign companies have a tax advantage to manufacture their goods for a much lower tax than in many other countries!

The primary objective of the IMMEX program Mexico (“Manufacturing Industry, Maquiladora, and Export service) is to expand the Mexican economy by enabling foreign companies to import raw materials and components into Mexico, where they will be processed into manufactured products for export to other countries.

1. IMMEX Compliances

Mexico has a corporate tax rate of around 30%. However, thanks to the program of “immex”, foreign companies have a tax advantage to manufacture their goods for a much lower tax than in many other countries!

The primary objective of the IMMEX program Mexico (“Manufacturing Industry, Maquiladora, and Export service) is to expand the Mexican economy by enabling foreign companies to import raw materials and components into Mexico, where they will be processed into manufactured products for export to other countries.

2. Advantages of the IMMEX Program

The program also aims to modernize the globalization of Mexico’s manufacturing infrastructure by bringing new, specialized technologies and knowledge to the region and creating jobs as well as to attract foreign direct investment. This also provides companies to be cost-efficient while still focusing on the quality of the goods produced and manufactured.

From the following advantages will you benefit:

Exemption from import/export tax

Deferring (avoiding)  paying import duties on processed goods, provided that the goods do not exceed their legal stay in Mexico.

Reduced or no corporate tax

The Mexican Income Tax Law provides a general 30% corporate tax rate. However, a foreign-owned IMMEX company can benefit from a special tax regime provided that it meets the “maquiladora” definition for tax law purposes. 

Exemption from VAT

You also can apply for a VAT/IEPS Certification, which is granted by the SAT. The VAT/IEPS Certification allows an IMMEX company to have a “tax credit” equivalent to the applicable VAT and/or IEPS tax as a result of its temporary imports.

We will calculate together how much money you can save for your business with the IMMEX program.

Among the most important users of the IMMEX program in Mexico are companies that produce parts for the country’s automotive, medical device and aerospace industries as well as textiles, electronics, and general manufacturing.

3. Who is IMMEX in Mexico aimed at?​

The IMMEX program in Mexico is aimed exclusively at legal persons, which is an individual with rights and obligations that exists, not as a natural person, but as an institution that has been created by one or more natural persons.

The types of legal entities that can access the IMMEX program in Mexico are several.  Among them are the following:

The IMMEX program in Mexico is aimed exclusively at legal persons, which is an individual with rights and obligations that exists, not as a natural person, but as an institution that has been created by one or more natural persons.

The types of legal entities that can access the IMMEX program in Mexico are several.  Among them are the following:

Industrial type

Which includes foreign manufacturers

car-manufacturing

National factory

that participates in the production chain of a company that manufactures products in Mexico for export;

Providers of Services

These may include companies that are in the business of providing services to other companies such as cleaning and machinery and equipment maintenance.  If a foreign company is under IMMEX in Mexico, providers of services to such a company are able to enjoy the benefits of the program;

Tertiary entity

This mode of operation is for companies that do not have facilities to carry out production processes in Mexico that carry manufacturing operations out through third parties that are registered in the IMMEX program.

4. Requirements to enter the IMMEX program

Companies must export a minimum of at least $500k worth of finished products on an annual basis or must have exports that account for a minimum of 10% of yearly sales. 

To participate in the IMMEX program, manufacturers must meet certain requirements.  Most important among these is that all raw materials, components, and products that foreigners import into Mexico are only allowed to be in the country for a temporary period.

Here are three processes described they might undergo:

processing materials to export
processing materials to export

To participate in the IMMEX program, manufacturers must meet certain requirements.  Most important among these is that all raw materials, components, and products that foreigners import into Mexico are only allowed to be in the country for a temporary period.

Here are three processes described they might undergo:

Elaboration

An example of this is the instance of a company importing wood into Mexico from a foreign country. The company’s factory in Mexico will then employ its manufacturing processes to convert the wood into a table, chair or a desk. 

Once the manufacturing of the item has been completed, the product must be exported from Mexico to be sold in a foreign market like the United States.

Transformation

Transformation is the process under the IMMEX program in Mexico by which a product undergoes a change at the physical or chemical level.

A simple example of this is food products in which inputs into food products are shipped to Mexican factories and are then delivered to export markets as a ready-to-eat product.

Repair

Foreign companies may send products to Mexico for repair, or reverse logistics.

Once the repairs are completed under IMMEX in Mexico, products are then exported from the country to consumers.

The products must leave Mexico into an end product that has been exported from Mexican national territory.

Companies that are eligible to take the advantage and the benefits of the IMMEX program must export a minimum of at least $500k worth of finished products on an annual basis or must have exports that account for a minimum of 10% of yearly sales. 

In addition, companies must specify what it is that they will receive from abroad and how these items will be incorporated into an end product that will be shipped overseas.

Companies that operate under the IMMEX program in Mexico must also use an inventory control system under the ANNEX 24 of the foreign trade rules. 

Companies that are eligible to take the advantage and the benefits of the IMMEX program must export a minimum of at least $500k worth of finished products on an annual basis or must have exports that account for a minimum of 10% of yearly sales. 

In addition, companies must specify what it is that they will receive from abroad and how these items will be incorporated into an end product that will be shipped overseas.

Companies that operate under the IMMEX program in Mexico must also use an inventory control system under the ANNEX 24 of the foreign trade rules. 

5. General Tax Information

Tax law

There will be a lot to learn about Mexico’s tax laws, it is important that we have a reliable accountant in Mexico to help us to deal with the different taxes and make sure you take advantage of tax breaks and deductibles.

Depending on the business, it may be required to pay corporate tax, tax on dividends, asset tax, value added tax, and payroll taxes. In addition, Mexico has signed with 60 countries a DTA which ensure a tax reduction of withholding tax on dividends distributed to non-resident companies. More information about laws can be found here

Avoid Double Tax

Mexico has a strong tax treaty with the US and Canada, which provides relief from double tax on all income. If you are not a permanent resident in Mexico and you want to do business in Mexico, you are required to make a declaration to the Mexican Institute for Foreign Investment.

Always negotiate your sales contracts and the credit terms carefully, using a qualified lawyer, and purchase receivables insurance to protect yourself against possible non-payment loss.