What do firms need to know about Mexico's Regla Octava?

How can companies take advantage of Mexico's Regla Octava program to reduce their import duties on manufacturing equipment?

Manufacturers doing business in Mexico are able to take advantage of a variety of trade facilitation programs and preferential rules that can reduce the amount of duties they are required to pay on their imports and exports.

One particularly useful regulation that can greatly reduce the cost of doing business in the country is the Regla Octava provision. This is intended to encourage manufacturing within the country and can offer international firms significant savings by deferring import duties.

How does Regla Octava relate to PROSEC?

The Regla Octava, or Eighth Rule, is a part of the PROSEC program. This stands for Programa de Promoción Sectorial, or Sectorial Promotion Program in English, which allows authorized companies manufacturing goods for specific sectors to import materials for use in their production processes at preferential tariff rates.

Unlike similar programs such as IMMEX, which stipulates that finished goods must then be re-exported, PROSEC rules allow for the domestic consumption of finished goods. Import duties for goods covered under PROSEC rules typically range from zero percent to ten percent.

However, companies are still obliged to pay value added tax at the general rate of 16 percent or the border rate of eight percent, as well as Customs Processing fees.

Regla Octava, however, allows businesses operating with a PROSEC license to import certain goods related to their manufacturing processes without duties.

What goods are covered by Regla Octava?

Whereas goods imported under the terms of PROSEC may still be liable for import duties - albeit at a preferential rate, items that take advantage of Regla Octava are grouped under a single tariff code that is free from import duties.

This includes items that are essential to the manufacturing process, including machinery, equipment, materials, inputs, parts, and components.

Any items imported to Mexico under Regla Octava are required to be used only in a specific manufacturing project as set out under the terms of the permit, and may only be used for the manufacturing of goods that are covered by its PROSEC authorization.

What do firms need to secure a Regla Octava permit?

Manufacturers will be required to obtain a special license from the Ministry of Economy in order to take advantage of Regla Octava benefits. To be eligible for this, firms must already have a manufacturing company certificate that includes its PROSEC registration.

There are several conditions for the approval of these permits. For example, such licenses may only be awarded in cases where there is a lack of sufficient Mexican-originated  products that meet the specific conditions required by the manufacturing company. Other reasons include if the goods will be required during a pre-production stage.

MIC's software solution for taking advantage of Regla Octava benefits

Damit Sie die Vorteile von Regla Octava nutzen können, bietet MIC ein speziell auf den mexikanischen Markt zugeschnittenes MIC-CUST®-Modul an. Diese mexikanische Softwarelösung unterstützt Regla Octava zusammen mit vielen anderen mexikanischen Besonderheiten wie IMMEX.

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