Mexico’s IMMEX Program - A Simple Overview

Mexico has always encouraged investors and foreign companies to manufacture in Mexico. This has been largely through tax incentives, grants, economic policies, duty exemptions, and simplified customs procedures. The maquiladora program, established in 1964, was created to create special tariff agreements between the US and Mexico and introduce simplified tax, cost, logistical, customs, and legal arrangements for foreign companies to manufacture in Mexico.

The maquiladora program is one of the major tenets of Mexico’s ‘open manufacturing’ approach. In 2006, this became known as the IMMEX program. Here’s a simple run-down of what it’s all about.

What is IMMEX?

IMMEX, which stands for "Industria Manufacturera, Maquiladora y de Servicios de Exportación," is a key program established by the Mexican government to stimulate export-oriented manufacturing and service activities. Launched in 2006, IMMEX aims to enhance Mexico's competitiveness in global markets by offering a range of benefits to companies involved in exporting goods and services.

Program Overview

IMMEX integrates several earlier programs, including the maquiladora program, into a simplified framework to streamline operations for export-focused businesses. The program provides companies with a range of incentives, including exemptions from import duties on raw materials and components used in the production process, as long as the finished products are exported. This tax benefit helps companies reduce costs and increase efficiency, making Mexico an attractive location for international manufacturing and assembly operations.

Key Features and Benefits

1. Duty Exemptions: Companies participating in IMMEX can import raw materials and components duty-free, provided that the final products are exported.
2. Simplified Customs Procedures: IMMEX streamlines customs processes, reducing bureaucratic hurdles and speeding up the movement of goods across borders.
3. Tax Incentives: In addition to duty exemptions, IMMEX participants may benefit from various tax incentives, such as reductions in VAT (Value-Added Tax) and other fiscal benefits designed to support export activities.
4. Access to Skilled Labor: IMMEX provides access to a skilled and cost-effective labor force in Mexico, which can be crucial for companies looking to maintain high production standards while managing costs.

It should be noted that cost advantages are typically due to the lower standard of living in Mexico as compared to the US, and to US Dollar - Mexican peso conversion rates.

Who Can Benefit?

The IMMEX program is open to a wide range of industries, including electronics, automotive, aerospace, textiles, and medical devices. Companies from around the world, especially those based in the United States, take advantage of IMMEX to leverage Mexico's manufacturing capabilities and cost efficiencies. Using the IMMEX program enables these companies can optimize their production processes, reduce costs, and strengthen their global competitiveness.

Program Flexibility

IMMEX offers flexibility in terms of the types of operations covered. It includes not only traditional manufacturing but also service-related activities that support export operations. This flexibility allows a diverse array of businesses to benefit from the program, whether they are involved in assembly, processing, or other export-oriented services.

How to join the IMMEX program

To participate in the IMMEX program, a company must first ensure it meets the program’s eligibility criteria, which typically include being a Mexican entity that engages in manufacturing or services with the intention of exporting goods. Next, the company needs to submit an application to the Mexican Tax Administration Service (SAT), providing documentation such as proof of business activities, a detailed operational plan, and compliance with legal and environmental regulations. Once approved, the company must adhere to the program’s requirements, including maintaining proper records of exports and imports, and reporting on its activities to ensure compliance with the program’s rules and regulations.

Companies who specialize in setting up offshore operations in Mexico are usually engaged to assist companies with joining the IMMEX program. There are also manufacturers who offer IMMEX support.

About AMREP Mexico

AMREP Mexico, established in 1994, is a leading provider of independent supplier management, quality control, auditing, quality inspections, technical recruiting, and manufacturing excellence solutions. For over 20 years, we’ve been working with US, European, and Canadian companies to get the best out of their Mexican manufacturing and supply base. We focus on the production aspects of manufacturing in Mexico, rather than the administrative and financial aspects of setting up facilities in the country.

AMREP Mexico is a member of the AMREP Supplier Management Services global group.