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Doing Business in Mexico 2015

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27 Doing Business in Mexico 2015 Free trade agreement The Mexican foreign investment legislation restrictions discussed elsewhere in this Guide (see in particular Chapter 5) are applicable to the entire country. Accordingly, no free-trade zones exist. Mexico, the United States and Canada signed a trilateral free- trade agreement commencing in 1994, and Mexico has entered into free-trade agreements with Colombia, Costa Rica, Nicaragua, Chile, the European Union, Israel, El Salvador, Guatemala, Honduras, Iceland, Norway, Liechtenstein, Switzerland, Uruguay and Japan. International financial center operations There are no tax concessions or treaties available to foreign corporations that establish regional, offshore or holding company activities in Mexico. Accordingly, Mexico should not be deemed a tax-haven country or a viable site for establishing an international financial center. Export incentives The most significant benefits under the Mexican economic development plan are precisely those provided to promote the export of manufactured goods. These export benefits apply to all entities, regardless of size and degree of foreign ownership, and are provided in both tax and non-tax forms. A series of executive decrees, general application rulings and government communications have been issued both to constitute the entities entrusted with the task of promoting export activities and to grant the related incentives to exporters. A summary of the existing export incentives, as well as the official entities involved, is given below. Ministry of the Economy (SE) export programs are as follows 1. Temporary imports of goods for subsequent export (IMMEX) Maquiladoras (mentioned in previous paragraphs). The Secretary of Economy (SE) created the Decree to Promote Manufacturing, Maquila and Export Services Companies (IMMEX) Entities exporting at least US $500,000 or 10% of their total sales may enter into an IMMEX program authorized by the SE and obtain the following benefits: • Temporary (duty-free) imports for up to 18 months (or 36 months for NEEC Companies1) for raw materials, supplies and packing materials used in the exported production. • Exemption from import duties on fuels, lubricants, spares parts and other consumables used in the production of goods to be exported. • As of January 2015, temporary importations will trigger VAT at a general rate (16%). An automatic credit of such import VAT may be obtained if a "Certification for VAT and Excise tax" is granted. • To enroll in this program, companies must be incorporated in Mexico and present a viable export project. 1 NEEC stands for its acronyms in Spanish of Nuevo Esquema de Empresa Certificada (New Scheme of Certified Entity) 4

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