Complete Guide to IMMEX Regulation

Boosting Manufacturing and Exporting Industry in Mexico

The Development Program for the Manufacturing, Maquiladora, and Export Services Industry, or IMMEX, is crucial to Mexico’s economic landscape. Conceived as a catalyst for the industrial and exporting sector, IMMEX plays a fundamental role in stimulating foreign investment, boosting competitiveness, and promoting job generation in the country.

Implemented and administered by the Ministry of Economy, this program fulfills a transcendent mission by providing companies with opportunities to temporarily import inputs, carry out manufacturing processes and services intended for export, thus contributing to Mexico’s export dynamics.

At the heart of IMMEX lies its capacity to enhance the manufacturing and maquiladora industry. Over more than 40 years, these companies have played a pivotal role in the Mexican economy. In October 2016, the presence of five thousand and fifty-six establishments generated an impressive figure of two million four hundred and fifty-one thousand four hundred and seventy-two direct jobs, indicating the significant impact these entities have on employment and economic growth.

AMN Quality Solutions: Certified under IMMEX

AMN Quality Solutions takes pride in being a certified participant in the IMMEX program, showcasing our unwavering dedication to manufacturing and exporting excellence. Our IMMEX certification substantiates our strict adherence to the regulations and stipulations set forth by the relevant authorities. As a certified entity, we reaffirm our pledge to deliver top-tier solutions to our clientele while substantially contributing to the nation’s economic advancement through active engagement in international trade.

In this article, we will meticulously explain the regulation that underpins the functioning of IMMEX, analyzing how this program influences business decision-making and its repercussion on the Mexican economy. Delving into the legal foundations and operational aspects, we will seek to uncover the essence of IMMEX and its role in transforming Mexico’s manufacturing and export industry.

Fundamentals and Definition of the IMMEX Program

What is IMMEX?

The IMMEX Program, officially known as the Manufacturing, Maquiladora, and Export Services Industry Program (Programa de la Industria Manufacturera, Maquiladora y de Servicios de Exportación), is vital for developing the manufacturing sector in Mexico, particularly in critical areas such as electronics, aerospace, and automotive. Established in 2006, IMMEX allows foreign companies to temporarily and tax-free import materials on the condition that they export the finished products within a specified period.

This approach encourages foreign investment and enhances global economic competitiveness by providing fiscal benefits to companies involved in manufacturing and exporting goods, including tax and tariff exemptions.

Purpose of the IMMEX Program

The fundamental purpose of the IMMEX Program lies in simplifying and streamlining industrial and export processes, with the clear objective of enhancing the competitiveness of foreign companies established in Mexico. This initiative aims to modernize manufacturing infrastructure, attract foreign investment, and stimulate job creation in the country.

Origins and Historical Evolution

The roots of the IMMEX Program trace back to the 1960s when efforts were made to capitalize on Mexico’s strategic geographical location and stimulate trade with the United States. However, the program gained significant momentum after implementing the North American Free Trade Agreement (NAFTA) 1994. This trade agreement eliminated tariff barriers and allowed for greater economic integration between Mexico, the United States, and Canada, creating an enabling environment for developing the manufacturing industry in Mexico.

Establishment and Scope of the IMMEX Program

The IMMEX Decree, implemented on November 1, 2006, aims to boost Mexico’s manufacturing, maquiladora, and export services industry to increase competitiveness. Consolidating the maquila and temporary importation programs within the framework of IMMEX has propelled 85% of Mexico’s manufactured exports.

The IMMEX Initiative in Mexico, established through a Presidential Decree, provides tariff differentiation benefits for importation to companies engaged in import and export activities. The program allows for the temporary importation of foreign goods intended for export or export services to attract international investors. Foreign companies can establish legal entities in Mexico, import tax-free raw materials, manufacture products, and export them within specific timeframes.

Sectors Benefiting from IMMEX

The IMMEX Program has significantly impacted various industrial sectors, bringing about a transformative effect on the Mexican economy and enhancing the global competitiveness of these strategic areas. Among the industries that have experienced notable growth thanks to the program’s benefits are:

1. Automotive Industry:

The automotive industry has been one of the most influential sectors benefiting from the IMMEX Program. Mexico has become a significant hub for manufacturing and exporting vehicles and automotive components, attracting foreign investments and fostering job creation. Streamlined processes and tax exemptions on material imports have contributed to the establishment of assembly and production plants in the country, enabling automotive companies to optimize operations and expand their global market presence.

2. Aerospace Industry:

Another sector that has experienced significant growth due to the IMMEX Program is the aerospace industry. Mexico’s strategic geographic location, skilled workforce, and fiscal benefits offered by IMMEX have attracted numerous companies in the sector to establish operations there. This has led to the development of supply chains and the production of high-tech aerospace components, elevating Mexico as a critical player in the global value chain of the industry.

3. Medical Devices:

The manufacturing of medical devices is another sector that has flourished due to the IMMEX Program. Tax exemptions on material and equipment imports have stimulated the production of high-quality medical devices, enabling companies to leverage Mexico’s manufacturing expertise and export infrastructure. This has positively impacted the provision of medical products both domestically and internationally.

4. Electronics and Technology:

The electronics and technology sector has also found significant advantages within the framework of IMMEX. Companies have established production facilities in Mexico to manufacture electronic components, consumer electronics, and high-tech equipment. Streamlined processes and fiscal benefits have driven foreign investment in this area, strengthening the competitiveness of Mexican companies in global technology production.

5. Other Sectors:

While the mentioned sectors are prominent examples, the IMMEX Program has also positively impacted the textile industry, furniture, chemicals, toys, and more. The program’s versatility and adaptability have allowed various industries to leverage its benefits to improve operations and competitiveness in the international market.

Benefits and Advantages of Being an IMMEX Company:

The IMMEX Program, promoted by the Mexican Ministry of Economy, offers a range of significant benefits and advantages to companies participating in industrial or export-oriented activities. Some of the key benefits include:

Temporary Importation: IMMEX companies can temporarily import inputs, machinery, and other goods necessary for the production, transformation, or repair of goods intended for export, without paying tariffs or value-added taxes (VAT).
Deferred Taxes: General import taxes, VAT, and compensatory fees are postponed until goods are sold or transferred to the domestic market, enhancing cash flow and company competitiveness.
Operational Flexibility: IMMEX companies have the flexibility to carry out multiple operations such as transformation, assembly, repair, blending, and manufacturing under the same program, allowing them to adapt to changing market demands.
Use of Foreign Inputs: Using foreign inputs in producing export goods facilitates access to high-quality raw materials and components internationally.
Simplified Customs Procedures: The program simplifies customs procedures by allowing companies to conduct operations in fiscal enclosures, streamlining the import and export process.
Certification of VAT and Excise Tax (IEPS): IMMEX companies can obtain accreditation for VAT and Special Tax on Production and Services (IEPS), enabling them to acquire domestically exempt inputs from these taxes.

Fiscal, Customs, and Commercial Benefits:

The IMMEX Program presents a range of fiscal, customs, and commercial benefits that boost company competitiveness:

Fiscal Benefits: The deferral of taxes like VAT and tariffs provides companies with positive cash flow, enabling reinvestment in operations and expansion. Certification of VAT and IEPS reduces the tax burden on domestic inputs.
Customs Benefits: Simplified customs procedures streamline operations and reduce administrative costs. Temporary importation of inputs facilitates Efficient production and fulfillment of international orders.
Commercial Benefits: The ability to temporarily import foreign inputs fosters product quality and diversity, potentially increasing demand and export opportunities.

Positive Impact on Company Competitiveness and Growth:

Participation in the IMMEX Program has a highly positive impact on company competitiveness and growth:

Market Expansion: Product quality and diversity improvement can lead to expansion into international markets and acquiring new customers.
Job Generation: Increased production and exports lead to job creation in industrial and service sectors.
Technological Development: The ability to import machinery and advanced technology for production can drive technological development and innovation in companies.
Supply Chain Strengthening: Temporary importation of foreign inputs enables efficient supply chain management and optimization of production processes.

Requirements and Procedures for Obtaining the IMMEX Program:

It is essential to meet specific requirements and follow a particular process to access the IMMEX program and obtain the authorization that enables companies to engage in manufacturing, maquila, and export activities. Below are the conditions and the procedure for obtaining the IMMEX program authorization:

Requirements:

Companies interested in obtaining the IMMEX program authorization must meet the following requirements:

Legal Entities: Companies must be legally constituted legal entities in Mexico.
Export-Oriented Activity: Company operations must be geared towards export, whether through production, transformation, assembly, repair, or preparation of goods intended for subsequent export.
Compliance with Regulations: Companies must comply with current customs, fiscal, and foreign trade regulations.
Financial Capacity: Companies must demonstrate financial solvency and the ability to carry out export operations.

Procedure for Obtaining the IMMEX Program Authorization:

The process for obtaining the IMMEX program authorization involves the following steps:

Submission of Application: The interested company must apply to the Mexican Ministry of Economy. This application must include detailed information about the company, its activities, investments, and export projections.
Evaluation: The Ministry of Economy will evaluate the application and verify that the company meets the established requirements.
VAT and IEPS Certification: If the company intends to obtain VAT and Special Tax on Production and Services (IEPS) certification, it must submit the corresponding documentation for evaluation.
Document Submission: The company must submit the required documentation, which may include information about ownership, investment, personnel, operations, and export projections.
Verification and Site Visit: The Ministry of Economy may conduct verification and visit the company’s facilities to verify the provided information.
Authorization: Once all requirements are met, and the Ministry of Economy approves the application, the IMMEX program authorization will be issued to the company.

Required Documentation:

The necessary documentation to apply for the IMMEX program may include the following:

Legal documents certifying the company’s constitution.
Financial and solvency information of the company.
A detailed description of the operations to be carried out.
Export projections and investment plan.
Documentation supporting facility ownership.

It’s important to consider that the process and required documentation may vary based on each company’s circumstances and the regulations at the time of application.

Various IMMEX Modalities and Their Characteristics:

Below are the primary IMMEX modalities, along with their specific characteristics:

Industrial Modality:

This modality is aimed at companies engaged in the production, transformation, assembly, manufacturing, or repair processes of goods intended for export. Its characteristics include:

Temporary importation of inputs, machinery, and equipment for industrial processes.
Ability to use both domestic and foreign inputs in production.
The requirement to export at least 100% of production conducted under the program.

Service Modality:

Designed for companies providing export-oriented services, this modality features characteristics such as:

Temporary importation of goods and equipment necessary for providing export services.
Services can include activities like design, engineering, research, and development.
The requirement is to export at least 100% of the value of services provided under the program.

Maquila Modality:

In this modality, companies can engage in the production, assembly, or manufacturing processes of goods owned by a foreign resident. Characteristics of the maquila modality include:

Temporary importation of goods and equipment to carry out maquila operations.
The requirement to export at least 100% of the manufactured goods under the modality.

Shelter Modality:

The Shelter modality allows foreign companies to establish themselves in Mexico and operate under the IMMEX authorization through a service provider (shelter). Characteristics of this modality include:

Comprehensive assistance from the service provider in human resources, administration, and logistics.
Facilitation of entry and operation for foreign companies in Mexico.

Each of these modalities involves specific requirements that companies must meet to obtain the IMMEX authorization and leverage its benefits. These requirements may include submitting detailed documentation about the operations to be conducted, the commitment to export, demonstrating financial capacity, and other aspects related to compliance with customs and fiscal regulations.

Obligations and Responsibilities of IMMEX Companies:

Companies participating in the IMMEX program have the responsibility to fulfill a set of obligations to maintain their status and take advantage of the privileges granted by the program. The following are the primary responsibilities that IMMEX companies must adhere to:

Reporting and Documentation:

Under the IMMEX program, companies must submit reports and documentation verifying compliance with program conditions and requirements. This includes submitting periodic announcements related to import, production, and export operations conducted under the program and documentation supporting these operations.

Proper Use of Imported Goods:

Companies must use temporarily imported goods only for the purposes stipulated in the IMMEX program, whether for production, assembly, manufacturing, or export services. Deviating these goods for other purposes is not authorized.

Product Export:

IMMEX companies are committed to exporting at least 100% of the products resulting from operations carried out under the program. Failure to fulfill this responsibility could result in consequences such as revoking the IMMEX authorization.

Inventory Control:

Companies must maintain strict control over inventories of temporarily imported goods and resulting products while keeping accurate and updated records.

Customs and Fiscal Compliance:

Companies must comply with applicable customs and fiscal regulations, including timely settlement of taxes and tariffs when applicable.

Maintenance of Authorization:

Companies that are part of the IMMEX program must keep their authorization up-to-date and valid by meeting the requirements set by authorities. This could include periodic authorization renewal.

Monitoring Legal Changes:

Companies must stay informed about modifications in foreign trade and IMMEX program-related regulations, adapting their operations accordingly.

Consequences of Non-Compliance:

Failure to meet obligations and responsibilities by IMMEX program participant companies can result in various consequences, such as:

Revocation or suspension of the IMMEX authorization.
Imposition of economic sanctions and fines.
Loss of fiscal and customs privileges.
Restrictions on future foreign trade operations.

Measures to Prevent Contingencies:

To avoid contingencies and ensure compliance with obligations, IMMEX companies can take the following measures:

Maintain accurate and detailed records of all operations conducted under the program.
Establish internal procedures to monitor inventories and track exports.
Provide training to staff on relevant customs and fiscal regulations.
Stay informed about changes in regulations and guidelines.
Collaborate with foreign trade experts and legal consultants to ensure proper compliance.

Inventory Control and Accurate Reporting within the IMMEX Framework

Meticulous inventory control and the generation of accurate reports are fundamental aspects of the IMMEX program. These processes enable companies to take advantage of the program’s fiscal and customs benefits and play a crucial role in regulatory compliance and efficient management of their operations.

Importance of Inventory Control

Within the context of IMMEX, inventory control involves meticulous tracking and comprehensive documentation of raw materials, components, work-in-progress, and finished products used in the production process. Maintaining accurate inventory records is not only an obligation for companies under this regime but also holds significant importance for several reasons:

Regulatory Compliance:

IMMEX companies are subject to stringent regulations in both customs and fiscal domains. Efficient inventory control ensures that operations align with established regulations, thus preventing potential sanctions or legal issues.

Fiscal and Customs Benefits:

IMMEX companies can temporarily import certain raw materials and components without the obligation to pay taxes upon importation. Accurate inventory control is essential to demonstrate that these materials are destined for export operations rather than the local market.

Resource Optimization:

Meticulous inventory control facilitates more efficient management of business resources, preventing surpluses or shortages of materials. This, in turn, contributes to cost reduction and more effective production planning.

Monthly and Annual Reports

Under the IMMEX regime, companies are required to submit monthly and annual reports to the relevant authorities. These reports provide information about the utilization of imported materials and the destination of finished products. Detailed and precise monthly reports should offer truthful information about inventory inflows and outflows and the production processes conducted.

On the other hand, annual reports offer a panoramic view of the company’s activities throughout the year. These reports are crucial in demonstrating compliance with regulations and the correspondence between the number of imported inputs and the amount of exported products.

Annex 24 and Its Role in Inventory Management

Annex 24 is an electronic tool provided by the Mexican Tax Administration Service (SAT), specifically designed for inventory control and submitting information related to the IMMEX program. Companies must use Annex 24 to register and report their import and export operations in a detailed and real-time manner.

Annex 24 simplifies the submission of necessary reports and empowers companies to monitor their operations and maintain continuous oversight of their inventories. This tool is essential to ensure transparency in operations, prevent errors in documentation, and effectively fulfill obligations to customs and fiscal authorities.

Legal Basis and International Data Collection Recommendations for IMMEX

Acquiring accurate and reliable data is vital for the efficient functioning and proper supervision of operations conducted under the IMMEX Program. To support this data collection process and ensure transparency in international business transactions, legal foundations, and international guidelines establish the basis for acquiring and managing statistics related to IMMEX.

Legal Basis for IMMEX Data Collection:

In Mexico, data collection related to the IMMEX Program is supported by the Customs Law and its Regulations and specific provisions issued by the Ministry of Economy. These laws establish the obligation for participating companies to provide truthful and complete information about their operations, both temporary imports and exports of goods, including those deemed sensitive.

Likewise, data collection regarding IMMEX is conducted in collaboration with the Ministry of Finance and Public Credit, the National Institute of Statistics and Geography (INEGI), and other competent entities. This collaboration ensures the cohesion and quality of collected data, allowing for adequate supervision and analysis of activities within the program.

Applied International Regulations:

Recommendations of an international nature play a crucial role in standardizing criteria for collecting commercial data globally. In this regard, Mexico adheres to guidelines provided by international organizations such as the World Customs Organization (WCO) and the United Nations Conference on Trade and Development (UNCTAD).

WCO issues guidelines related to tariff classification, customs valuation, and customs data submission, all of which contribute to global uniformity in data collection in the commercial sphere. On the other hand, UNCTAD promotes uniformity in international trade statistics, including the acquisition and analysis of relevant data for programs like IMMEX.

Adhering to these international standards ensures that collected data are comparable globally, facilitating economic analysis and monitoring trends in international trade.

Future Perspectives and Challenges of the IMMEX Program

The IMMEX Program has proven to be a strategic tool that drives foreign direct investment, promotes manufacturing, and boosts exports in Mexico. However, when considering future perspectives, it is crucial to reflect on how the program will adapt to the changing economic and trade landscape and identify challenges that could arise on the horizon.

Future Perspectives of the IMMEX Program:

Diversification of Sectors: As the global economy evolves, the program could expand into higher value-added sectors such as technology, biotechnology, and renewable energy, leveraging Mexico’s skilled workforce and natural resources.
Innovation and Technology: The incorporation of technologies like automation, artificial intelligence, and Industry 4.0 could revolutionize how operations are conducted under IMMEX, increasing efficiency and competitiveness.
Sustainability and the Environment: As sustainability awareness grows, companies may focus on more environmentally-friendly production practices, influencing program processes and requirements.

Potential Challenges and Business Preparedness:

Changes in Trade Policies: Modifications in global trade policies could impact access to international markets and demand for manufactured goods in Mexico. Companies must be prepared to adjust their business strategies based on these variables.
International Competition: Increased international competition may require companies to continuously enhance their efficiency, quality, and product offerings to maintain their competitive edge.
Regulatory Compliance: Changing regulations at both national and international levels could require companies to adapt and adjust their compliance practices to avoid sanctions and risks.

Global Factors Influencing the Program and Industry:

Global Supply Chains: The interconnectivity of global supply chains influences the organization and operation of companies under IMMEX. Events like the COVID-19 pandemic have highlighted the importance of supply chain resilience and diversification.
Consumer Trends: Changes in consumer preferences, such as the growing demand for personalized and sustainable products, can influence the types of manufactured goods and exports under the program.
Technological Innovation: Technological advancements and adopting new technologies can alter production processes and require companies to update their technical capabilities and skills.

Enhance Your Industrial Success in Mexico with AMN Quality Solutions

In Mexico’s dynamic industrial landscape, partnering with certified IMMEX companies like AMN Quality Solutions makes a difference. With a strong experience and reputation in the field, we are the reliable ally that maximizes your company’s benefits.

If you’re seeking a partner that provides personalized solutions, contact us. Our team of experts offers support in quality, advanced manufacturing, shelter services, and more. Connect with us now!