In the past article we detailed the Maquiladora and the IMMEX program. In this post, I’ll focus on how to open a Maquiladora in Mexico. If you want to know what President Trump is up in arms about, here’s what you need to know about Maquiladoras in Mexico.
These Maquiladoras have a huge economic importance for Mexico and the United States. Maquiladoras provide for hundreds of thousands of jobs for residents of border cities (on both sides of the border) and throughout Mexico. At one point in time, they helped to stabilize Mexico-USA relations.
Because of the massive deportations that occured at the end of the Bracero Program in 1964 and Operation Wetback, a large number of factories were established along the US-Mexico border called maquiladoras to provide jobs for these newly relocated Mexicans.
The maquiladoras functioned as American assembly plants set up in Mexico’s border towns to provide jobs and a steady income for the deported. At the same time, they increased Mexico’s global exports and cemented the United States as its most important trading ally.
Maquiladoras made American companies competitive in global trade because Mexico’s wages were substantially lower than in the United States. The Maquiladora program strengthened the relationship between the United States and Mexico which at this point in time was quite strained.
Even though Maquiladoras have become ingrained in the lives of many Mexican and American citizens, many Americans fail to understand the economic advantage that opening an “offshore” assembly or repair plant in Mexico.
- Some refer to these plants as being offshore, as outside of the United States. The more modern definition is “near short” to leverage their proximity and ease of operation compared to more distant competitors like China and India.
The IMMEX program allows US Companies to temporary import raw materials into Mexico for the preparation, repair, transformation of goods to be later exported to the United States as a final product. With this program you make imports without paying the general import tax, value added tax, and other compensatory payments. Then you export those finished products to the United States with no import duties or red tape.
To obtain the IMMEX program it is necessary to perform certain procedures fulfilling certain requirements, the applicant must have:
- Advanced electronic signature certificate (SAT)
- Federal taxpayer registration
- Your tax domicile must be active and registered in the federal taxpayer registry.
In addition, the following documentation must be attached to the application for the procedure:
- Certified copy of the articles of incorporation of the company and, where appropriate, the modifications to it.
- Copy of the document that legally certifies the possession of the property where the operation of the IMMEX Program intends to take place, indicating the location of the property, attaching photographs of it. In the case of a lease or loan agreement, it must be proved that the contract establishes a minimum term of one year.
- Contract of maquila, orders of purchase that prove the existence of the project.
- Power of attorney (original or certified copy and simple copy); or exhibit a copy of the Unique Registry of Accredited Persons (RUPA).
- Written document by means of which the production process or the services which will fall under the guidelines of the program are detailed.
- Written document in which the detailed description of the production process or service is provided that includes the installed capacity of the plant to process the goods to be imported or to perform the objectives of the program.
- Letter of conformity from the company or companies that will carry out the sub-manufacturing process where they express, under protest to tell the truth, the joint and several liability on temporarily imported goods (original).
- Additionally for the IMMEX Business Controller Program modality, you must show:
- Acts of Assembly stating the shareholding of the controlling company and the controlled companies (original and copy).
- Certified entries in the shareholders’ registry book (copy)
- The documentation referred to in points 1, 2 and 5 of this section, in addition to presenting the copy of the tax identification card. This documentation must be submitted to the controller and to each of the controlled companies.
- The maquila contracts that each controlled company has with the controlling company or a maquila contract in which the obligations contracted must be established, both by the controlling company and by the controlled companies in relation to the objectives of the requested program, duly recorded before a Notary (original and copy)
- Authorization as a certified company (copy), granted by the Ministry of Finance and Public Credit.
- Additionally for the modality of IMMEX Program for the use of a Third Party:
- Letter of conformity from the company or companies that will carry out the process of tertiarization, where they manifest under protest to tell the truth, the joint and several liability on temporarily imported goods (original).
- The company or companies requesting the program under the Tertiarization modality must have the authorization as a certified company granted by the Ministry of Finance and Public Credit.
- If your maquiladora will operate in the textile sector other requests have to be met.
With this article we just covered the basics of the requirements that must be met. For more information on doing business in Mexico, or for assistance in investing in Mexico, please contact us below by filling out the form. Thank you.