IMMEX in Mexico: What is it and How it Works
What is IMMEX in Mexico?
The significance of the acronym IMMEX in Mexico in English is “Manufacturing Industry, Maquiladora, and Export Service.” This signifies a program for foreign-based manufacturers that allows them to import raw materials and components into Mexico, so that they may be processed into manufactured products for export. The benefit for those utilizing the IMMEX in Mexico program is that the import of raw materials and components enter the country free of general import duties, value-added taxes, and compensatory fees.
IMMEX in Mexico was created to expand the country’s economy by helping manufacturers in Mexico compete from within a globally competitive environment. In addition to this, one of the main purposes of IMMEX in Mexico has to do with modernizing the country’s infrastructure through the importation of new technology and modern intellectual property. This all has been done in order to attract foreign direct investment (FDI), as well as to create new jobs for the growing Mexican workforce.
In order to participate in the IMMEX program, manufacturers must meet certain basic requirements. Most important among these is that all raw materials, components, and products that foreigners import into Mexico are only allowed to be in the country for a temporary period. They must leave Mexico incorporated into an end product that has been exported from Mexican national territory.
The Mexican IMMEX program allows for preparation, processing, and repair of goods
When raw materials, components, and products are imported into Mexican territory for a temporary period, they may undergo three processes. They are:
- Elaboration – A simple example of this is the instance of a company importing wood into Mexico from a foreign country. The company’s factory in Mexico will then employ its manufacturing processes to convert the wood into a chair, a desk, or a table. Once the manufacturing of the item has been completed, the product must be exported from Mexico to be sold in a foreign market;
- Transformation – Transformation is the process under the IMMEX program in Mexico by which a commodity undergoes a change at the physical or chemical level. A simple example of this is food products. Inputs into food products are shipped to Mexican factories and are then delivered to export markets as a ready-to-eat product.
- Repair – Foreign companies may send products to Mexico for repair, or reverse logistics. Once repairs are completed under IMMEX in Mexico, products are then exported from the country to consumers and end-users.
Who is IMMEX in Mexico aimed at?
The IMMEX program in Mexico is aimed exclusively at legal persons. A legal person (or legal entity) is an individual with rights and obligations that exists, not as a natural person, but as an institution that has been created by one or more natural persons to fulfill a social objective that can be for or without profit.
The types of legal entities that can access the IMMEX program in Mexico are several. Among them are the following:
- The first is the industrial type, which includes foreign manufacturers;
- The second is the national factory that participates in the production chain of a company that manufactures products in Mexico for export;
- The third type of company is the providers of services. These may include companies that are in the business of providing services to other companies such as cleaning and machinery and equipment maintenance. If a foreign company is under IMMEX in Mexico, providers of services to such a company are able to enjoy the benefits of the program;
- The final type of company operating under the IMMEX program in Mexico is called a “tertiary” entity. This mode of operation is for companies that do not have facilities to carry out production processes in Mexico that carry manufacturing operations out through third parties that are registered in the IMMEX program.
The IMMEX program in Mexico originally focused on industries such as textiles, electronics, and general manufacturing. Today, IMMEX is applied to most industries in which foreign companies manufacture in Mexico to export products from the country to global markets.
Among the most important users of the IMMEX program in Mexico are companies that produce parts for the country’s burgeoning automotive industry. Today, eighty-nine of the top 100 automotive parts manufacturers have an established presence in Mexico. IMMEX is also utilized by manufacturers in the medical device and aerospace industries.
The requirements of the IMMEX program in Mexico
Companies that are eligible to reap the benefits of the IMMEX program must export a minimum of at least US $500,000 dollars’ worth of finished products on an annual basis or must have exports that account for a minimum of 10% of yearly sales. Also, in order to participate in the program, companies must specify what it is that they will receive from abroad and how these items will be incorporated into an end product that will be shipped overseas.
Companies that operate under the IMMEX program in Mexico must also use an inventory control system under ANNEX 24 of the foreign trade rules.