IMMEX vs Maquiladora: Is There a Difference?

Published On: October 20, 2021

Mexico has a long manufacturing history, but the industry truly skyrocketed in the mid-20th century after the establishment of the Maquiladora program, now known as the IMMEX program. The IMMEX decree improved and expanded on provisions laid out by the original Maquiladora program and continues to position Mexico as one of the top manufacturing locations worldwide.

How the Maquiladora Program Started

The maquiladora program was established back in the 1960s in response to the termination of Mexico’s Bracero program, which had led to high rates of unemployment for individuals along the U.S./Mexico border. In an effort to encourage foreign investment and support domestic markets, the Mexican government offered various incentives for import-export services in Mexico under this new program.

Maquiladoras, or factories that are run by foreign companies in Mexico, became exempt from the 16% Value Added Tax on imported manufacturing goods and materials, as long as those items were subsequently exported out of Mexico as a finished product. These benefits later increased under a program revision, which allowed companies to sell up to half of their products to domestic Mexican markets. After the passing of NAFTA, the Maquiladora industry saw even more cost-saving benefits as they were able to operate under a preferential tax model.

IMMEX: The Modern Maquiladora Program

The Mexican government saw the value, and success, of the Maquiladora program and in 2006, expanded, modernized and renamed it to the IMMEX program (the Manufacturing, Maquiladora and Exporting Services Industry). With the creation of the IMMEX program, the Mexican government modernized import and export processes and reduced overall costs to make Mexico’s export sector even more competitive.

Similar to Maquiladora regulations, the IMMEX decree allows companies to temporarily import raw materials and goods into Mexico without having to pay VAT, import taxes, and, in some cases, duties. To qualify for these exemptions, however, the goods must be exported as a finished product within a designated time frame.

In addition to improving the tax incentives carried over from the Maquiladora program, the new IMMEX program also gave companies new ways of operating in Mexico. There are now five distinct types of IMMEX registrations that companies may choose from depending on the approach they want to take: Holding Company, Industrial, Services, Shelter, and Outsourcing.

What’s the difference?

Today, the Maquiladora and IMMEX programs are essentially synonymous, but one key improvement was the addition of shelter companies as a modality of IMMEX. Under the IMMEX shelter program, companies are able to set up operations in Mexico without establishing a legal Mexican entity. Companies that take advantage of the IMMEX shelter program operate under a “shelter” company, which acts as the legal entity. This route allows manufacturers to bypass the long waiting times associated with getting an IMMEX certification.

The main reason, however, that many manufacturers choose to nearshore to Mexico through the shelter program is because of the valuable legal benefits it offers. Not only are companies able to hand off administrative duties to experts in the local laws and business landscape, but they also hand off legal risks to the shelter company and maintain full control of manufacturing processes.

While tax benefits under shelter companies vary slightly from those under other pathways in the IMMEX program, such as the option to register as a standalone entity and apply for an IMMEX license, companies are drawn to the fact that the shelter company becomes responsible for ensuring compliance with Mexico’s laws.

Take Advantage of the IMMEX Program with NAPS

Whether you’re looking to nearshore to Mexico or are already established, NAPS has the resources and experience to help you ramp up your manufacturing operations. We’ll not only take over the complex IMMEX certification process, one of our many administrative services in Mexico, but also provide complete administrative support so you can do what you do best—overseeing the direction and quality of your manufacturing and production processes.  

Contact NAPS today to learn more about how you can set up your manufacturing quickly, at a low cost, and without worry.

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