Since the last few years, the foreign investment in the manufacturing department in Mexico is increasing significantly. The reason behind that the Mexican government is making it better and easy for manufacturers to establish themselves here.
The IMMEX program is a part of the initiatives that the government has taken to give relief to manufacturers. This program favors foreign manufacturers to operate in Mexico at relatively low costs in various industries, including electronics, aerospace and automotive.
What is the IMMEX program in Mexico?
IMMEX is an acronym for “Manufacturing Industry, Maquiladora, and Export Service Industry.” This program was basically created to encourage exports. The program’s goal was to cover a wide range of industries to strengthen exports, and it achieved its goal in a short period. In a decade, the IMMEX program resulted in a 9 percent increase in exports.
This program enabled the manufacturers to import foreign goods without paying tax with the condition that all of the finished goods will be exported. The program’s primary goal was to expand the economy, so the government crafted cost-effective ways for manufactures while their all focus is on quality.
Many competent companies like Tacna understand all the IMMEX program’s technicalities and can save a lot of time and resources of manufacturers. With such promising opportunities, no wonder that Mexico is becoming a popular foreign investment destination for manufacturers.
How does this program work?
To get the tax exemption, the manufacturers must export a minimum of 500,000 dollars’ worth of finished goods annually. To get the benefits of this program, the manufacturing companies must enlist the raw materials to import and end products ready for export.
Also, this tax exemption policy only works for temporarily imported raw materials. IMMEX ensures that all the manufacturer companies’ activities are under control to create growth and improvement opportunities.
What are the benefits of the IMMEX program?
The tax exemption under the IMMEX program considerably reduces the manufacturing costs; this is the primary reason manufacturers want to set up in Mexico. The IMMEX program is based upon benefits given under the Maquiladora program in the 1960s.
With this program, the Mexican government provides tax exemptions that help the manufacturers build themselves while contributing to the economy. This program benefited the manufacturers in growing faster in a competitive environment due to reduced coats, better ways for operating, and effective contemporary manufacturing procedures.
The rules of this program are simple to provide a tax incentive to the manufacturing companies. This helped import raw materials without paying the general import tax or the value-added tax (VAT).
However, the temporarily imported materials must be exported as finished goods within a set timeframe. The rules and regulations are flexible and broad as they apply to both the raw materials and components utilized during the manufacturing process.
Moreover, the program covers the transportation and production process tools. So, the manufacturers can focus entirely on the quality of the finished products without worrying about other things.