“The Miller’s share”
The maquiladora industry, started in the late 1960’s, whereby the foreign investor brings:
- Machinery, equipment and tools
- Materials, parts and components
- It requires a constant inventory that is manufactured, assembled, transformed or provided with services such as quality, control, packaging, labeling
The Maquiladora provider (independent entity or subsidiary also allowed), provides:
- The human resources (labor), logistics, control of operations, for which a maquila fee is paid by foreign Investor
- On condition that substantially all transformed merchandise end product, (and its byproducts) are exported from Mexico, and any and all costs for processing are paid to all stakeholders, including social security taxes, statutory fees, etc.
GE LEGAL: The maquiladora industry, also known as export-oriented manufacturing, plays a crucial role in Mexico’s economy, particularly along the US-Mexico border, Bajio and Monterrey region. Here’s an overview of the legal framework governing this industry:
Key Laws and Regulations
- Maquiladora Program (1989): Established the framework for export-oriented manufacturing in Mexico.
- North American Free Trade Agreement (NAFTA) (1994): Facilitated trade between Mexico, the US, and Canada.
- United States-Mexico-Canada Agreement (USMCA) (2020): Replaced NAFTA, maintaining favorable trade conditions.
- Mexican Foreign Trade Law (1993): Regulates international trade, including maquiladora operations.
- Customs Law (2009): Governs customs procedures and regulations.
- Value-Added Tax (VAT) Law (2014): Applies to maquiladora operations granting 0% rates.
- Labor Law (2012): Regulates employment conditions, wages, and benefits.
Compliance Requirements
- Registration: Maquiladoras must register with SE and SAT.
- Permits: Obtain necessary permits from relevant authorities as required.
- Tax compliance: Fulfill tax obligations.
- Labor compliance: Adhere to labor laws, regulations & standards.
- Environmental regulations: Comply with environmental standards.
Important documents:
- Maquiladora permit: Issued by SE.
- Export permit: Required for exporting goods.
- Certificate of origin: Documents goods’ origin.
- Commercial invoice: Details goods’ description, value, and quantity.
- Import and Export pediments, commercial invoices, certificates of origin if required, NOM standards if required.
Challenges and Opportunities
- USMCA implementation: Adjusting to new trade agreement requirements & Judicial Reforms in Mexico.
- Labor reforms: Adapting to changes in labor laws.
- Supply chain optimization: Improving logistics and efficiency/security.
- Investment opportunities: Attracting foreign investment.
Maquila Agencies
- Secretariat of Economy (SE): Oversees foreign trade and investment.
- Tax Administration Service (SAT): Enforces tax laws and regulations.
- Mexican Customs (Aduanas): Manages customs procedures.
- National Institute of Statistics and Geography (INEGI): Provides statistical data on maquiladora operations.
Key benefits:
- Duty-free imports: Maquiladoras can import materials and equipment without paying duties.
- Tax exemptions: Reduced or 0% VAT and reduced income tax.
- Streamlined customs procedures: Simplified customs clearance.
- Labor flexibility: Ability to hire temporary or contract workers.
A strong North America & Central America cooperation should help us have a strong Manufacturing Hub in the North part of the Western Hemisphere.
To navigate the complex legal framework, maquiladoras often consult with experts, such as us! Contact us here today for a consultation.
