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Doing Business in Mexico 2015

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26 Tax and Legal Services - PwC Mexico In-bond processing industry (Maquiladora industry) The Mexican government, in order to create more employment opportunities, has adopted certain policies that allow the establishment of 100% foreign-owned companies that process or assemble temporarily imported materials into finished goods for export as well as IMMEX Service Programs (such as share services centers, back office services and international IT Services). Such companies were first created in the border area between Mexico and the United States and may now be established anywhere within the country. The main regulations for the operation of the Maquiladoras are contained in the Decree to promote Manufacturing, Maquila, and Export Service Companies (IMMEX). Companies wishing to operate as IMMEX companies should be registered as such by the Ministry of the Economy (Secretaría de Economía), which will approve an operating program. The program will specify, among other things, the machinery and equipment that will be temporarily imported; the types of materials, components, etc., to be brought into the country for processing, assembly or supplying services during specified periods; and the technical and other types of assistance to be provided by the foreign contractor. In many cases, U.S. import duties are levied only on the value added in Mexico, but even without this advantage, substantial savings are achieved by carrying out labor-intensive processes in Mexico at substantially lower wage rates, while the initial and, possibly, the final operations are handled in the United States or any other Country. These companies make extensive use of the procedures for temporary duty-free (specific exceptions apply) imports mentioned above, and their fees for assembly services charged to non-residents are considered as subject to the zero rate tax under the Value Added Tax (VAT) law. These companies can process or assemble temporarily imported materials from several countries, not only the U.S. Strategic Bonded Warehouse The Strategic Bonded Warehouse regime consists of introducing for a limited period of time, foreign, national or imported goods into authorized warehouses, with the purpose of being stored for safekeeping, exhibition, distribution or transformation or to be repaired. Authorized warehouses must be established next to a customs facility. The main benefits of this regime are: Neither import duties nor countervailing duties will be paid, except for those cases contemplated within the Free Trade Agreements Rules. Non-tariff restrictions and regulations do not have to be complied with, except for those regarding animal and vegetable sanitation, public health, environmental and national security. Industrial parks Industrial parks have been established in a number of areas all over the country to provide the needed infrastructure. Land is usually available in these areas on relatively favorable terms. Some states have donated land for new industry or sell it at relatively low prices.

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