foreign investment in Mexico
Maquiladoras do not pay taxes or duties for temporarily imported materials for manufacturing. That’s how foreign investment in Mexico works
An ideal program for foreign companies
The maquiladora scheme
To know how the foreign investment in Mexico works, it is necessary to be familiar with the concept of maquiladora and how it works in this country. Also, starting a business in Mexico helps to improve economic growth.
A maquiladora is a business model born in Mexico. It consists of a foreign company that decides to set up an additional plant in another country to process materials and help with the economic development in Mexico.
To do this, materials from another country are imported to be assembled or manufactured. Once the material is processed, the merchandise is exported.
IMMEX regulates the behavior of any maquiladora
Guaranteed business model
To operate a maquiladora that creates business opportunities in Mexico, it is necessary to submit an application to the Secretary of Economy. This way, the regulatory decree of maquiladoras (IMMEX) is in charge of deciding if a company has the necessary requirements to enter this mode and improve the economic development in Mexico.
The concessions provided by this program are the exemption from the payment of the general import tax and the value added tax. There are times when compensatory dues are also deferred, and it depends on the IMMEX agreement.
Thanks to this model, starting a business is very attractive for foreign investment in Mexico due to the cost of not paying taxes and the low cost manufacturing environment.
Mexico carries out fabrication, assembly and manufacturing processes for foreign companies through maquiladoras
Operating models for manufacturing
There are four basic operation models for manufacturing. Depending on the intervention that a company wishes to manage with respect to its new plant, it must choose the one that most resembles its purpose.
1. Direct ownership
This model allows the investment company to settle in Mexico and manage its financial, legal and administrative operations autonomously, having a total corporate presence in the country.
2. Shelter
This is a form of outsourcing, where the foreign company hires administration and manufacturing services without having to worry about operating, it will simply receive the final manufactured product.
3. Subcontracting
When a company requires manufacturing services, it can assign production to the manufacturing company of its choice inside maquiladoras in Mexico.
4. Joint investment
When a company already exists in Mexico, another foreign company can join the operation to create a larger company.
Government programs to support the industry
Incentives for investment
Settling in Tijuana, Mexico, implies additional benefits because the region seeks government collaboration to generate plans and programs to promote foreign investment. Among the local, state and federal efforts, results have been translated into savings for investors.
- Exemption from the payment of the general import tax
- Exemption from payment of value added tax
- Sometimes countervailing duties are deferred
- No tariff rates
- International competitiveness
- Lower rates for companies in Asia
- Agreements with the Ministry of Economy
- Possibility of modification of program and modality
- Total control over the operations of the maquiladora
- Subsidies for employee training
- Exemption from payroll tax (25% -100%) from 1-5 years to new projects or large extensions
- Waiver of water connection payment (20% -50%)
- Access to funds for infrastructure (Strategy companies)
- Click here to view a complete list of State Incentives
- Fiscal: Reduction of payment of fees for municipal services (from 25 to 75%). This incentive is subject to the type of investment that the company is willing to make.
- Non-fiscal: Support in the creation, establishment and maintenance of business activities, advice on solving problems and links with government programs aimed at companies.
- Municipal government: Offers support in relation to public infrastructure in order to facilitate the optimal operation of companies in the city.
- In addition to the IMMEX program, which offers the option of modifying the regulation it handles, the municipality of Tijuana has the flexibility to reach agreements. The local government and the industry work together to make the establishment and operation of companies convenient. Tijuana is a land willing to the growth of the industry.
The state government provides assistance for the initial recruitment of a company.
Initial recruitment
Our team can connect you with the administrative services experts in the maquiladora model. Boost your automotive manufacturing, electronics manufacturing or medical device manufacturing in Mexico.
At Tijuana EDC, we link companies with the three levels of government to motivate dialogue, agreements and participation, in order to drive initiatives that benefit the industry.