The term “maquiladora” is derived from the word “maquila”, which originally referred to the process of grinding wheat into flour in medieval Spain, as well as the grain retained by the miller as compensation. Since that time, the word has evolved to represent today’s modern meaning: a manufacturing operation that processes raw materials into finished products to be sold in countries other than where they were manufactured.
Maquiladoras in Mexico were first started in 1961 following the National Border Industrialization Program (Bracero program), an initiative created by the Mexican government to encourage foreign investment and stimulate domestic markets. These efforts came out of the downfall of the Bracero Program, which was a United States Program created to allow Mexican agricultural workers to cross and work in the USA for season basis. When the Bracero Program ended it left high unemployment rates along the U.S./Mexico border, and the government created the first maquiladoras in response in 1964.
Shortly after the program’s launch, a few U.S. electronics companies set up shop in the border town of Tijuana, but the value of the Mexican peso at the time drastically reduced incentives to manufacture under the maquiladora example. Mexico borrowed a great deal of money in the 1970s to fuel the exploration of oil resources, and inflation rose steadily with the peso’s devaluation. Bankruptcy in the 1980s created an urgent need for hard currency – a need that was eagerly met by the U.S. manufacturers that wanted low-cost labor in an increasingly competitive global economy.
What is the IMMEX Program?
November 1, 2006, the Federal Government published the Decree for the Promotion of the Manufacturing, Maquila and Export Services Industry (IMMEX Decree), aimed at strengthening the competitiveness of the Mexican export sector, and granting certainty, transparency and continuity to business operations by identifying and simplifying compliance factors, allowing them to adopt new ways to operate and do business; reduce logistics and administrative costs; and modernize, streamline and reduce processes in order to raise oversight capacity in an environment which encourages the capture and retention of investment.
This instrument includes the programs for the Development and Operation of the Maquila Export Industry and that which establishes Temporary Import Programs to Produce Export Goods (PITEX), whose companies jointly represent 85% of Mexico's manufactured exports.
What is a IVA (VAT) Certification?
Mexican government published in 2013 the Ley del Impuesto al Valor Agregado (Value Added Tax, VAT) and Ley de Impuesto Especial Sobre Productos y Servicios (Product and Services Tax, IEPS). One of the more relevant amendments to the law was the VAT and IEPS, which are applicable to specific Mexican customs regimes for temporary importations performed by IMMEX and others. Prior to these amendments, importers were not required to pay the VAT or IEPS for purchasing goods from foreign residents, nor for their temporary importations.
However, the new laws and rules set forth require that Mexican importers are now responsible for paying the VAT and IEPS taxes. Due to the enacting of these laws, the IMMEX industry publicly stated that their business operations in Mexico would be severely damaged and negatively impacted. After a few debates and formal meetings, the government agreed to diminish the impact of these laws to those importers that could obtain an “A”, “AA” or “AAA” certification.