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Tax Benefits in Maquila Operations in 2012-2013

18 Nov 2011

On 12 October 2011, a Presidential Decree ("PD") was published in the Federal Official Gazette. The decree provided for application of Maquila tax credit against the single rate business tax ( "IETU") established for fiscal year 2008 to 2011 and that this benefit was being extended for fiscal years 2012 and 2013. This tax relief is an application of a tax credit against IETU dues of fiscal years 2012 and 2013 for the Maquila (manufacturing) companies. Taxand Mexico analyses the policy and requirements to be fulfilled by Maquila companies for availing this tax credit.

Maquila companies could avail the tax relief during fiscal years 2012 and 2013 if certain requirements set forth in the PD are complied with. If not, the Mexican tax authorities could suspend Maquila Company's registration with the Importers' Registry.

Further, if any Maquila company fails to submit the Maquila information in their annual tax return of income tax and IETUit cannot apply the Maquila tax relief during the fiscal years in which such requirements are not complied with. The Mexican tax authorities will require the payment of the full tax as if this tax relief was not applicable, with inflation adjustment and surcharges according to the Federal Fiscal Code.

Taxand's Take

The extension of the tax credit for Maquiladoras for 2012 and 2013 will continue to encourage the use of this form of manufacturing services in a tax efficient manner for non-Mexican companies by using the Maquila program without paying IETU and without exposure to permanent establishment in Mexico.

Your Taxand contact for further queries is:
Manuel Tamez Zendejas
T: +52 55 52017403

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Taxand's Take Author