Until this year all maquiladora industry inputs were imported VAT tax exempt without certification.

Since the beginnings of the industrialization of the US-Mexico border region during the middle 1960s, until the onset of this year, temporary imports used by companies that were incorporated into products subsequently exported from Mexico enjoyed certain preferential tax treatment. In January of 2015, however, a new Mexican maquiladora certification regime was put into place that, although designed to provide an incentive for manufacturers to play by a certain set of established fiscal rules, has raised voices of concern from its detractors.

New Requirements Introduced

Prior to this year’s implementation of the new Mexican maquiladora certification regime, IMMEX companies, or manufacturers that were involved in producing mainly for export, were exempt from paying Mexico’s value-added-tax, or VAT, on items that were temporarily imported for the purpose of being incorporating into a finished product that would, then, be shipped out of the country. Under the recently effective Mexican maquiladora certification regime, IMMEX companies, or manufacturers in Mexico that wish to receive the VAT tax exemption must, among other IMMEX program requirements:

  • provide proof that eighty percent of the goods produced in the certified production plant are exported;
  • keep up-to-date inventory counts of the value, quantity and composition of
  • products that are temporarily imported via an automated system;
  • be listed in a national registry of the industry to which it belongs.

Some critics of the IMMEX program Mexican maquiladora certification regime contend that an “elite” group of more than thirty-one hundred medium and large-sized maquiladoras has been created, while the newly established and enacted certification requirements have left thirty-four hundred businesses that are, also, according to critics of the new regime, involved in export activities, out in the cold.

Mexican government officials defend this year’s implementation of the new IMMEX certification requirements by pointing to the fact that the companies that have been certified to date have been responsible for 95% of the value of temporarily imported items incorporated into exported goods as recently as 2013. They also contend that the approximately thirty-four hundred companies that have not been certified have failed to do so because of their inability to meet the criteria and requirements that have been established for the granting of VAT tax exemption.

Cash flow and working capital affected

Critics of the Mexican maquiladora certification of IMMEX exporting companies contend that achieving certification is a costly and bureaucratic process, and that the inability of some companies to navigate the requirements has resulted in problems with liquidity and cash flow that has reduced their ability to expand and hire more people by investing in additional plant and equipment. They also point out that, even for those companies that have successfully navigated the process required to comply with the Mexican maquiladora certification regime, there is the inconvenience of enduring a waiting period of up to one hundred and eight days for the devolution of VAT tax paid on imported items. Companies can, however, avoid waiting for a refund of Mexican value-added tax by taking one of two possible courses of action:

  • by obtaining a financial credit that is available to IMMEX certified companies;
  • by securing a bond in an amount that will cover the projected value of goods imported temporarily.

Individuals, such as Eliseo Diaz Gonzalez, a researcher at the Department of Economics at Mexico’s College of the Northern Border in Tijuana, Baja California view the issue of the speed with which VAT refunds are processed under the current Mexican maquiladora certification regime as being a challenging issue for some companies due to their need for a constant and stable supply of and access to working capital.

Experts can help

Because the Tecma Group of Companies has successfully navigated the intricacies of the Mexican maquiladora certification regime for IMMEX, or exporting, companies in Mexico, parties with questions are invited to speak with other Tecma Group of Companies’ experts.