What importers need to know about Mexico's IMMEX program

Mexico's IMMEX program offers significant tax incentives for the import of raw materials to manufacturing facilities in the country. How can firms take advantage of this?

Mexico has positioned itself as one of the world's leading hubs for trade and manufacturing, with many companies offshoring to the country to take advantage of benefits such as lower taxes and labor costs and less stringent regulations.

But in order to take full advantage of this, companies will need to import many raw materials and export finished goods. As such, the country's government offers a number of incentives to reduce the customs duties associated with this and encourage investment in Mexico.

Chief among these is the IMMEX program. This offers relief from key import duties for certain goods, so understanding what's eligible and how to claim these benefits easily is a vital part of doing business in the country.

The IMMEX program offers companies relief from import duties and other taxes on imported raw goods and components, provided that 100 percent of any finished items manufactured using these materials are then exported from Mexico within a designated time frame.

Standing for Maquiladora, Manufacturing and Export Services Industry in Spanish, the system was brought in from 2006 to replace the previous maquiladora manufacturing incentive program dating from the 1960s. The rules simplified and modernized trade compliance requirements and created new ways for companies to operate in Mexico.

The IMMEX environment aims to make it more attractive for foreign companies to set up manufacturing facilities in Mexico, boosting both the local economy and international trade. By providing a low-tax, low-tariff environment that allows companies to defer the payment of import duties or the General Import Tax, this greatly reduces costs for businesses.

Over the first ten years of the program, IMMEX greatly increased Mexico's manufacturing sector by incentivizing companies to export goods. This led to a 99 percent increase in export trade, from $210 billion in 2005 to $419 billion in 2017.

IMMEX is sometimes used interchangeably with maquiladoras, which refers to factories in Mexico that are wholly-owned and run by foreign companies, and have a variety of preferential tax incentives.

However, while IMMEX did supersede the previous incentive program, one change from the older maquiladoras regime with IMMEX is the introduction of new categories such as shelter companies, which allow businesses to set up operations in the country without the need to establish a legal entity in Mexico.

This means the shelter company becomes responsible for ensuring compliance with local laws, allowing firms to pass off administrative duties while retaining full control of their manufacturing operations.

In order to take advantage of the tax and customs duties benefits of IMMEX, companies will need to be certified, which can take up to six months to receive. To do this, they must provide several key pieces of documentation.

The three main requirements to be submitted with an application are:

• A certificate of Advanced Electronic Signature from the Mexican tax authority.
• An Active Federal Taxpayers Registration.
• A registered address and premises where manufacturing operations are carried out.

Other required documentation includes copies of the company's articles of incorporation, maquiladora contracts, purchase orders or other evidence that work is being carried out, and letters outlining the scope of the project, the number of people employed and the type and value of materials to be imported and exported.

This can be a complex process, so it pays to have a streamlined software solution in place to automate declarations, standardize workflows and connect directly with digital tax authority services.

Our Mexico specific functionality enables the automation of bonded, duty deferral, reconciliation programs and the IMMEX program while automating the creation of import and export declarations (pedimentos) leveraging one country’s export clearance into another country’s import clearance. These automations allow the customs process to be simplified and costs per clearance mitigated across the entire supply chain.

MIC’s Mexico customs solution set is web-based that can handle multiple facilities from a single hosted or licensed system. This allows for a standardized, organized and defined workflow process for your company helping you take full advantage of existing regulations and to get ahead of future changes.