Maquiladoras are facilities located in Mexico - with a large concentration near the US border - which were started in the middle 60s as an economic answer to the increase cost of labor that was taking place in the highly industrialized countries. At Maquiladoras, or Maquilas, industrial or service processes are conducted for modifications, alterations or repair of goods previously imported under a temporary importation order only to be exported once the process has been concluded.

In 2006, the Mexican Government published the IMMEX Decree to Promote the Manufacturing, Maquila and Service Export Industries. This decree took two individual programs - Maquiladora and PITEX - and brought them together under a single export support program to be known as IMMEX. This program now includes companies that represent 85% of the manufacturing exports in Mexico.

The IMMEX program was created with the following objectives:

• Fortify the competitiveness of the Mexican export sector
• Simplify the fulfillment factors
• Diminish logistic and administrative costs
• Modernize and reduce lead times
• Create new job opportunities in Mexico

While the main benefit of the IMMEX program is to defer taxes on goods temporarily imported into Mexico for manufacturing purposes, there are other benefits that should be noted as well:

• Reduce or eliminate import duties for goods and materials temporarily imported by accessing the PROSEC program
• Avoid payment of taxes such as the General Import Tax in Mexico, VAT which is typically 15% of the import value, and compensatory quotas such as anti-dumping
• Create virtual pedimentos between companies registered in the IMMEX program as well as create consolidated Import pedimentos
• Lower transit times and costs due to proximity to borders
• Reduce operational costs due to lower labor and utility rates
• Qualify for free trade agreements - such as NAFTA or MX-EU - for Mexican manufactured products
• Access other customs programs and enhanced compliance
• Perform post-import reconciliation with penalty reduction for goods not declared upon entry

Requirements to Participate

For companies wishing to participate in the IMMEX program through the establishment of a Maquiladora, it must be similar to the following profile and meet government reporting requirements.

• Export at least $500,000 (USD) in a one year period or export 10% of the company sales into Mexico
• Import only the approved goods based on HTS classifications
• Use the goods solely for what they have been approved
• Respect the terms set forth under Mexico Customs Law (Article 108) and the IMMEX Decree (Article 4)
• Be a legal entity in Mexico with the obligation to pay ISR (income tax)
• Maintain the goods in the registered and approved addresses
• Inform the Economy Secretary is there is a change in the legal name of the company, Tax ID or address, if there are changes in the addresses of companies which provide sub-Maquila services

Cross Border Operations

Most companies looking to implement a Maquiladora fail to evaluate their entire cross border operations. This could potentially leave cost savings on the table as well as open the door for non-compliance to US and Mexico regulations. For a US firm considering becoming part of the IMMEX program and implementing a Maquiladora, there are several areas which should be considered:

1. Inventory Control — how are you going to track the imported goods and materials to ensure export takes place in the appropriate time-frame
2. Classification of Goods — how will you verify the classification of goods and materials to ensure the correct tariff is applied for both the US and Mexico
3. Origin Determination — how will you ensure that goods are accurately qualified and certificates of origin are solicited to ensure FTA benefits
4. Landed Cost Analysis — how will landed costs, both inbound and outbound, be utilized to ensure this will be a cost-saving program
5. Audit Processes — will an audit plan for all transactions be set in place and will it include a periodic reconciliation of operations and inventory balances against government information
6. Customs Broker — will a customs broker be selected to process all imports and/or exports, and if so, has the broker been approved by the Mexican Government

Maquiladora / IMMEX Resources

Secretary of Economy — http://www.economia.gob.mx/swb/en/economia

Chamber of the Industry and Transformation (Spanish) — http://canacintrasolidaridad.com/index1.php

General Customs Administration —- http://www.aduanas.gob.mx/aduana_mexico/2008/pasajeros/139_10134.html