A Maquiladora is a type of manufacturing facility that imports products or raw material into Mexico temporarily so that they may be assembled, finished, manufactured or repaired. The Maquiladora may import machinery, equipment, parts and materials without paying a tariff for the purpose of manufacturing. Additionally, equipment required for operating the Maquiladoras such as computers and administrative equipment my enter Mexico duty free subject to the provision of a bond.
Maquiladoras provide significant savings for exporters. Labor and other operational costs in Mexico are significantly lower than in many parts of the world, including the United States and Canada. So long as the products are exported, Mexican offers special duty-free customs treatment to those products and their raw materials. However, exporting is not required. Taxes will apply to products that become destined for sale within the Mexico.
Complexities Establishing a Maquiladora in Mexico is a complex undertaking involving accountants, lawyers and product specialists. The application process requires substantial time and investment to prepare correctly.
Procedure A corporation must be organized under the laws of Mexico. Second, authorization from the Secretary of Economy must be obtained. The application requires that the company have taken several steps prior to application, which include the following:
- Rights to the property where the Maquila program will operate for a period no less the 11 months.
- Purchase contracts and orders for existing projects.
- Details of the production process.
- Export and production projections for six-months prepared by a certified public accountant.
All existing labor requirements and regulations for employees are enforced in the case of Maquiladoras as they would be with any other Mexican manufacturing operation.
For more information regarding Maquiladoras, contact us or visit the website of the United States Department of Labor which has special information on the program available at “http://www.dol.gov/ilab/media/reports/nao/maquilad.htm#iii