According to Emilio Cadena, president of Index, Mexico’s national association of maquiladoras, the country’s export maquiladora industry has, for the most part, worked out the issues related to recent Mexican tax reform on which manufacturers were unclear. Cadena made this assessment during a press conference that took place on January 28 in Mexico City.

Last October, Mexico’s Congress, approved a battery of measures that was designed to increase tax revenue for the purpose of creating more extensive social safety net coverage for the country’s citizens, as well as for funding the infrastructure that will sustain the pace of economic growth that Mexico has been experiencing in recent years. Tax collection as a percentage of GDP in Mexico is among the lowest in OECD countries.

Although companies that do not meet the export maquiladora industry parameters for certification for value-added tax exemption will be subject to a 16% tax on imported goods that are used in the manufacture in their products, some exemptions contained in the legislation that cleared the Mexican Congress were reinstated at the beginning of January through executive action.

According to Index’s president, Emilio Cadena, one “outstanding point of contention remains between the maquiladora industry and the Mexican government.” This would be the raising of income tax rate applied to the export maquiladora industry from 17.5 to 30 percent. Cadena, however, does not see this change as being a deal breaker for foreign investors in Mexico.

In an interview with Plastics News, Cadena pointed out the importance of the maquladora industry as it relates to Mexico’s economic well-being. According to him, it is one of the biggest engines of job creation in the country, employing 2.3 million, and is Mexico’s second largest source of exports. Only crude oil and related exports generate more foreign exchange for Mexico than products shipped to global markets by the maquiladora industry.

Read the primary source for this post at Plastics News.