Mexico’s New Maquiladora Tax Rules In Effect
The world economic climate is constantly changing, and Mexico must conduct frequent reviews and updates of its taxation laws in order to remain competitive. Recent updates and new maquiladora tax rules have gone into effect as of Dec. 31 to ensure continued growth and clarity for the legal framework surrounding contract and shelter manufacturing in Mexico.
New Maquiladora Tax Rules Published
Published in the Federal Official Gazette on December 23, 2015, the Miscellaneous Tax Rules for Fiscal Year 2016 are now in full effect, and included among the new maquiladora tax rules are a few revisions and updates to those impacting the companies that operate under an authorization issued pursuant to the IMMEX Decree, also known as maquiladoras. The relevant rule changes fall into two basic categories:
- Extension of the deadline to file tax the DIEMSE (Informative Return of Maquila Operations and Exportation of Services) of Fiscal Year 2014
- Greater legal certainty to companies that operate through Shelters
Deadline Extension
In order to take advantage of benefits available for maquiladora companies, the DIEMSE must be filed each fiscal year by all maquiladoras. The deadline for fiscal year 2014 had been Dec. 31, 2015, but these provisions now mandate filing by March 15, 2016. The filing deadline for fiscal year 2015 is still June 30, 2016.
Greater Certainty for Shelter Operations
Per the 2014 Mexican tax reform, a foreign resident shall not be deemed to have a permanent establishment in Mexico derived from the undertaking of manufacturing activities through an IMMEX company authorized under a shelter modality up to four consecutive years from the initiation of the contractual relationship with the shelter company. So foreign residents must formally register a permanent establishment after four years for tax compliance. However, the new rules allow for an extension of four additional years before permanent registration must occur providing the following qualifications are met.
- The foreign resident is a tax resident of a country with a country that shares tax information with Mexico.
- File before the Tax Authorities a notice of the election to be subject to the option set forth under rule 3.20.6, and request a tax identification number without inclusion or indication of specific tax obligations for the foreign resident.
- The shelter contractor assumes full responsibility for assessing taxable profits for all foreign residents.
- Foreign client tax obligations are to be determined as he higher of the following:
- 6.5% of all operations cost and expenses
- 6.9% of all manufacturing assets
- The shelter contracts with an international accounting firm to decide assets and costs.
- The new maquiladora tax laws require that the shelter allows inspections by tax authorities to verify asset and cost amounts.
- The shelter maintains full compliance with their own maquiladora tax obligation and status requirements.
- The shelter participates in the program for real time verification of the tax authority.
- The shelter derives income from the rendering of services to its foreign clients and never from the sale or distribution of finished products in Mexico.
A foreign resident who wishes to change shelters, the option established in rule 3.20.6 may continue (exempting the formal registration) only for the remaining of the four years related with the original option.
Senior management at the Tecma Group of Companies is under the expectation that after the four year extension period granted for shelter maquiladora operations expire, the Mexican government will grant further extensions. Public economic policy officials are quite well aware of the positive contributions that Mexican shelter companies make as regards attractive foreign investment and creating jobs in Mexico.