The IMMEX maquiladora program combined with the available VAT certification offers one of the top cost-savings benefits for companies that implement nearshore manufacturing in Mexico. It offers a 16 percent VAT tax exemption for all temporary imported materials, equipment, and tools. Manufacturers that have previously expanded operations internationally may compare this benefit to what’s normally referred to as a “free trade zone.” Although tax-wise the IMMEX program is similar, the extra advantage is that it’s not centric to any one geographical location.
When added to access to a competitive, cost-effective workforce, close proximity to the U.S., and favorable trade relations through the USMCA, an operational transition from China to Mexico is a viable option for a growing number of manufacturers. Numerous global brands across multiple sectors have already experienced success over the years through Mexico manufacturing, and the benefits continue to entice new companies to explore their options closer to home.
Working with Mexico Shelter Companies to Ensure VAT Tax Exemption
To receive tax benefits through the IMMEX maquiladora program, manufacturers can either apply and become IMMEX program approved and then get their VAT certification on their own or operate under a shelter umbrella that already has both permits in place.
The timeline of being accepted into the IMMEX maquiladora program often takes several months due to the complexity of what’s necessary to meet the criteria. Plus, if there are any discrepancies in the application and a company is denied, they must start the process again. This impacts Mexico manufacturing costs since companies can’t import any components, materials, or equipment without having their IMMEX program.
Once they have it or work with a shelter to use the shelter’s program, manufacturers are able to initiate their equipment and materials imports and start the setup process on their current Mexico facility. As you can imagine, not doing this right and as fast as possible will present delays on your project. Mexico shelter companies allow manufacturers to receive VAT tax benefits automatically when working under the shelter’s IMMEX licenses since a VAT certification is already in place.
This is in addition to other advantages, such as lower customs broker fees and the use of special compliance software that tracks the timeframe of all temporary imported materials that exempt VAT payment at customs. Companies that wish to apply for the program on their own must hire a U.S. and a Mexico customs broker, since these are the representatives that process and transmit to customs all the documentation required to move materials and finish goods
through the US / Mexico border. Also if you select this operating option, you must absorb all compliance software fees.
Additionally, once approved, a manufacturer can lose VAT certification at any time if criteria is not met at the time of renewal or during an inspection from the Ministry of the Economy. Manufacturers who partner with a shelter company often benefit from decades of expertise, experience minimizing red lights at customs, and a history of optimizing operations.
Explore Cost-Saving Solutions When Manufacturing in Mexico
The fiscal benefit of Mexico’s IMMEX maquiladora program is significant but comes with strict guidelines and great responsibility. Although starting from scratch is an option when nearshore manufacturing in Mexico, it increases costs and extends operational set up times that can lead to bigger challenges down the road.
In addition to working under a shelter’s IMMEX license, a shelter provider can create a customized cost analysis that explores additional ways to save money and get operations up and running efficiently and on schedule.
Overall, the IMMEX maquiladora program provides a good avenue for manufacturers looking to get operations up and running quickly and smoothly.
Sergio Tagliapietra has spent his entire career pioneering administrative service solutions in Mexico. He works with government in all parts of Mexico and he is one of the country’s most respected business leaders in the field. He is president and founder of IVEMSA, a full shelter services provider and partner to manufacturing companies expanding to Mexico.