In November of 2006, the Mexican government abolished the Maquiladora and PITEX Programs and created the IMMEX Program. IMMEX stands for Industrial Manufacturera Maquiladora y de Servicios de Exportacion (literarily translated into English as Manufacturing Maquiladora and Export Services Industry).
Generally, an IMMEX is a business entity authorized by the federal government to temporarily import into Mexico raw materials, components, parts, other goods, etc., to be processed and subsequently exported or returned as a finished or transformed product abroad. Provided legal requirements and Customs certifications are met, the temporary importation of the materials and goods may be Customs duty and Value Added Tax free. Additionally, IMMEX may save money via the low salaries and wages in Mexico. An IMMEX can represent big savings for large companies who are attracted by these and other incentives to invest in Mexico.
To obtain an IMMEX Program, a company needs to:
- Be duly incorporated in Mexico,
- Identify the site where the IMMEX will be located and where the services and production process will be performed,
- Have a business and financial plan with detailed information about the service and production process,
- Identify the Harmonized Tariff Code (HTS) of the materials, goods, machinery, equipment, etc. required to perform the services and production process,
- Inform about the number of employees and their roles within the company,
- Identify the industry sector,
- Present the company’s commitment to export over 500,000 USD abroad or 10% of its total sales (invoiced),
- Complete and file the required letters and formats,
- Depending on the industry sector and HTS code of the goods and materials, other requirements or restrictions may apply.
IMMEX categories (page 2)
There are 5 different IMMEX categories (modalities) from which the applicant may choose only one:
This category can be obtained for a certified company belonging to a group of companies located in Mexico or abroad (to obtain the certification, the company must comply with a strict list of requirements as set forth under the Mexican Customs regulations). The certified company, as the controller, controls and oversees the operations of the other companies within the group. Each of these companies is an independent entity with their own tax ID number, but the import and export process are managed by the controller. The goods and materials may remain in the facilities of any of the companies within the group and may be transferred among them with a very simple administrative process.
This is the most common IMMEX category where the company imports materials for transformation and subsequently exports or returns them abroad.
This category only applies to specific services such as warehousing, sorting of goods, etc.
Under this category, Mexican companies, with an authorized IMMEX program, may offer the IMMEX services to foreign companies who would receive all the IMMEX benefits without the need to be incorporated in Mexico, or having to comply with the correspondent legal or administrative requirements.
- Third Party
This is for certified companies having an authorized IMMEX program but lack the facility, plant, equipment, etc. to perform the services or productions process. Under this category, the IMMEX company authorizes third parties having those assets, for them to carry on the services or production process under the umbrella of the IMMEX program.
An IMMEX imports its goods into Mexico under an entry type (Mexican customs regime) called “temporary importation for manufacturing, transformation and repair by a maquila or exports program.” This means that the materials it imports for process or services must leave the country within a specific period, otherwise, the benefits will not apply, and consequently sanctions and penalties can be imposed. There are different periods of time frame. For example, some materials can stay in Mexico for up to 18 months and containers, 2 years. If the IMMEX is certified, the time frame for materials can be extended up to 48 months. The equipment and machinery required to carry on the production process or services, can remain in Mexico up to the effectiveness of the IMMEX program.
An IMMEX may transfer their materials and goods to any other IMMEX. Under these circumstances, the benefits, as well as the obligations, will be transferred. For example, the materials and goods remain subject to the specific entry type responsibilities and the materials must leave the country within the specific statutory time frame. In certain cases, when the IMMEX that first imported the materials makes an error or commits a violation of the regulations without correcting or disclosing such errors, and subsequently transfers the materials to another IMMEX, who then accepts and receives the records and materials in good faith, now shares a joint responsibility and liability before the Mexican authorities.
For an IMMEX to stay in compliance and enjoy the customs, administrative and legal benefits, it must follow a broad set of regulations. Unfortunately, these regulations are constantly amended and therefore it is recommended for any person dealing with an IMMEX to stay current with any updates and training. Here is some of the legislation governing IMMEX:
- IMMEX Decree, published on the Daario Oficial de la Federacion (Mexican Official Gazette) on November 1, 2006 and its thereafter amendments. The most recent one was published on the DOF on October 5, 2017,
- Mexican Customs Law, amended on June 25, 2018,
- Mexican Customs Regulations, amended on April 20, 2015,
- General Customs Rules, amended on April 20, 2018,
- General Criteria and Foreign Trade Rules, amended on July 12, 2018,
- Depending on various factors such as the industry sector and HTS of the materials and goods handled by the IMMEX, other regulations can apply.
Some of their main responsibilities as set forth under the above legislation are:
- Annual exports over 500,000 USD abroad or alternatively 10% of its total sales,
- Perform the specific production process or services as described and listed on the IMMEX authorization,
- Return or export abroad the temporarily imported materials, goods, etc.,
- Maintain such materials, goods, etc. within the IMMEX authorized facility,
- Maintain its records in compliance,
- Submit the correspondent reports (statistics, tax, customs),
- Keep the inventory control in accordance to the guidelines described under Annex 24 and 31 of the General Customs Rules
* Please refer to the above legislations for other specific requirements.
Value Added Tax Certification
Generally, goods imported into Mexico must pay 16% VAT over the value of the imported goods, including customs duties. However, if they are A, AA, or AAA certified, they may receive Customs benefits and a credit for the IVA paid for their importations. The certification will be granted based on the IMMEX’s level of compliance, number of employees, export/import volume, Investments, shares/stocks, capital assets, among others.
An IMMEX showing a higher level of compliance, and a higher volume on their operations, assets, investment, etc. can obtain the “AAA”. This certification provides more advantages and benefits to the applicants. For example: “AAA” certification is valid for three years and the IMMEX may receive a VAT refund within 10 days after the request has been submitted, the “AA” certification is valid for two years and the refund is within 15 days, and the “A” certification is annual, and the refund is within 20 days.
Some of the administrative advantages and benefits for these A, AA and AAA certified IMMEX companies are: the right to file a prior disclosure and correct some irregularities, MX Customs may send warning letters “inviting” a company to correct irregularities, instead of filing one pedimento for each importation, they may file a monthly consolidated pedimento, among other things.
Penalties and sanctions
An IMMEX is highly scrutinized and monitored by the Mexican authorities. Should they detect a violation or inconsistency on their customs records, materials, goods or assets (i.e. incorrect HTS Code, incorrect origin, clerical errors, inventories, overstay of goods exceeding the temporary importation time frame, among others), they may impose penalties and sanctions. Some examples are:
- Fine of 130% to 150% of import tax omitted.
- Fine of 55% of Value Added Tax omitted.
- Fine of 55% of Customs Duty.
Although criminal sanctions are not regularly imposed, they are included on the law as follows:
- From 3 months to 5 years of prison if the amount of the omitted taxes is MXN $1,104,530.00 (close to 61,000 USD)
- From three to five years of prison if the amount of the omitted taxes is more than MXN $1,104,530.00 ((close to 61,000 USD)
Although the savings and benefits of an IMMEX can be attractive for foreign investors, it is important to point out that the requirements to incorporate an IMMEX and then to operate one, can be an overwhelming and complicated task for anyone. Additionally, IMMEX are regularly monitored by the Mexican government. The slightest error or violation (even inadvertent or derived from human error, e.g., clerical errors), the IMMEX program could be at potential risk for a temporary or permanent cancellation, and criminal sanctions could be imposed against the company’s personnel. Therefore, it is recommended that one implement internal controls to stay in compliance.