February 2014
taxalerts.plantemoran.com
Mexican Tax Reform for Maquiladoras
In our last Tax Alert, we discussed the general provisions of Mexican Tax Reform for 2014 and future years.
The general provisions increased the tax base for businesses and individuals, canceled proposed tax rate
decreases, but provided for certain administrative relief. Certain provisions of the Tax Reform reduced benefits
for IMMEX (Industria Manufacturera, Maquiladora y de Servicios de Exportación) companies (including
maquiladoras). To minimize the impact of these reforms on IMMEX companies, a presidential decree and
miscellaneous resolutions issued in late 2013 provided guidance for IMMEX companies to retain some benefits
taken away in the general Mexican Tax Reform provisions. This Tax Alert will discuss the benefits taken away
from IMMEX companies and how they can retain some or all of those benefits. IMMEX companies that have
non-maquiladora operations or that cannot substantiate compliance with maquiladora rules will lose some
benefits associated with the IMMEX status. Certification requirements are expected soon.
Mexico has long provided certain advantages to companies that produce products in Mexico that are exported.
The companies that meet these requirements are referred to as maquiladoras or, more properly, as IMMEX
companies. An important benefit of this program is the ability to avoid paying VAT on imported products that
are subsequently exported.
VAT on Temporary Imports
An important benefit for IMMEX companies is the exemption from VAT on imported property that is expected to
be part of an exported product. While VAT amounts paid will eventually be refunded, the exemption is
important to companies that often run on thin margins. The government provided a list of requirements that
IMMEX companies seeking certification to retain this benefit must follow. IMMEX companies must show they
are in compliance with IMMEX rules to obtain a certification. The certification must be submitted and obtained
by Jan. 2, 2015.
Deduction of Exempt Fringe Benefits
As discussed in our prior Tax Alert, Mexican companies will have limitations placed on the deductibility of
exempt fringe benefits, i.e., a maximum of 53 percent can be deducted. Certified maquiladoras will be able to
deduct 100percent of their exempt fringe benefits.
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Requirements for certification include:
 Provide the taxing authorities a tax compliance certificate (as per Article 34-A of the Mexican
Fiscal Code) for the company, its legal representative, shareholders, and members of the
Board of Directors.
 Provide documentation that proves that all of its employees are registered in the Mexican
social security system and provide documentation that contributions to the system have
been paid for at least 10 of the employees.
 Provide documentation of the company’s required investment in Mexico.
 Provide names, addresses, and contact information for customers and suppliers with which
the maquiladora had foreign trade activities during the prior year.
In addition, maquiladoras should also be able to:
 Demonstrate that the maquiladora has the necessary infrastructure for the operation of its
IMMEX program in accordance with the authorized modality. (Customs authorities have the
authority to conduct inspections at any time to ensure compliance.)
 Show that in the preceding 12 months (a) the value of goods transformed and exported
exceeds (b) 60 percent or more of the value of property imported during the same period.
 Demonstrate that the production processes or services comply with the modality of the
program. The demonstration should include records supporting the arrival of goods, the
storage of the goods, the production process, and subsequent export of the transformed
goods. Photographs and records should be provided.
 Show that the maquiladora has contracts for production, purchase orders, or a backlog of
firm orders to demonstrate the continuity of the export program.
Maquiladoras involved in the manufacturing of footwear, connected with sensitive raw materials such as steel,
and certain other products, have higher thresholds to support and may be required to meet minimum
investments in equipment and must utilize bonded warehouses.
Companies meeting the requirements above will receive an “A” certification. Companies meeting the
requirements and having 1,000 workers or MXP50 million in fixed assets will receive an “AA” certification.
Companies meeting the requirements and having 2,500 workers or MXP100 million in fixed assets will receive
a “AAA” certification.
 Companies with an “A” certification will receive (a) a credit for VAT on temporary importation
of goods, machinery and equipment, (b) VAT refunds in 20 days, and (3) certification for one
year.
 Companies with an “AA” certification will receive the benefits above plus VAT refunds paid
in 15 days, access to streamlined administrative processes, and certification for two years.
 Companies with an “AAA” certification will receive the benefits above plus VAT refunds paid
in 10 days and certification for three years.
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To allow an even flow of applications for certification, the tax authorities have provided the following schedule
for filing dates:
Company characteristic
Filing Dates
Certified companies in accordance
with rule 3.8.1, paragraph L
Companies operating under the Fiscal
Deposit regime to undergo the
process
of
assembling
and
manufacturing of vehicles
North Pacific
Northeast
North Center
Center
April 1 to 30
April 1 to 30
April 15 to May 15
June 3 to July 3
July 7 to August 7
August 7
to September 8
September 22 to
October 22
West and South
The certification process is expected to be available online the second week in February 2014.
If you have any questions, please contact your tax advisor or
Jerry Jonckheere
877.622.2257 ext.34044
[email protected]
Scott Sneckenberger
877.622.2257 ext. 33807
[email protected]
The information provided in this International Tax Alert is only a general summary and is being distributed with the understanding that Plante & Moran
PLLC is not rendering legal, tax, accounting, or other professional advice, position, or opinions on specific facts or matters and, accordingly, assumes no
liability whatsoever in connection with its use.
This Alert was authored by Raul Montemayor and Jerry Jonckheere from the Praxity affiliates Mazars and Plante & Moran PLLC, respectively. Raul is a
partner in the Monterrey office of Mazars and Jerry is a partner in the Grand Rapids office of Plante & Moran PLLC. This Alert has been provided to the
North American member firms of Praxity as part of the group’s collaborative efforts and initiatives and illustrates how Praxity members share a common
desire to deliver professional excellence and high service standards. Praxity AISBL is the largest global alliance of independent accounting firms and is
the world’s largest association of accounting firms. Praxity’s website can be found at www.praxity.com.
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