November 11, 2019

November 11, 2019

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November 08, 2019

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IMMEX Highlights: NAFTA Implications on IMMEX Operations

Under an IMMEX Program, a company may temporarily import materials and assets into Mexico to be used in the production of final products to be exported, or in rendering export-related services with certain benefits. 

IMMEX authorized companies may, as a general rule, import raw materials and take advantage of benefits such as the exemption from the payment of import duties, preferential fixed customs processing fees, and when applicable, an exemption in the payment of countervailing duties.

However, it is worth noting that in accordance with the North American Free Trade Agreement (NAFTA), when importing materials originating from non-NAFTA countries (non-NAFTA materials) to incorporate into final products to be exported to NAFTA countries, the exemption from the payment of import duties is restricted. 

According to NAFTA, duties upon the importation of non-NAFTA materials (even under an IMMEX program) must be paid, but may be deferred until the moment of the exportation of the final product or within 60 days after the date of exportation.

Under NAFTA provisions, duties could be reduced or exempt in an amount not exceeding the lesser of: (i) the custom duties to be paid on the imports into Mexico, or (ii) the custom duties payable in the NAFTA country upon the importation of the finished goods (Lesser of the two rule). Under this rule, it is most likely that duties to be paid in Mexico will not be reduced nor exempt since for almost all the cases no duties will be paid upon the importation of final products to the United States of America or Canada.

It is worth mentioning that under the applicable law in Mexico, for purposes of calculating the amount to be paid upon the importation of non-NAFTA materials incorporated into finished products to be exported to other NAFTA countries, IMMEX exporting companies may apply preferential duty rates under other free trade agreements entered into by Mexico or those established in other Mexican trade facilitation programs (i.e.: Sectorial Promotion Programs), instead of applying the general import duty rates (most favored nation rates).

As a final consideration, please note that if the final products are exported to countries other than NAFTA countries, NAFTA restrictions will not be applicable and consequently no duties shall be paid upon the temporary importation into Mexico of non-NAFTA materials.

© 2019 Foley & Lardner LLP

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About this Author

Marcos Carrasco Menchaca International Trade Attorney
Partner

Marcos Carrasco-Menchaca provides advisory and consulting services related to international trade compliance, customs, free trade agreements, customs litigation and taxation on foreign trade, as well as rendering services in international business transactions and administrative litigation.

Marcos has broad experience in advising the implementation of governmental exportation programs, such as the registration of companies in the Mexican Maquila Program (IMMEX), VAT certification, Sectorial Promotion Programs (PROSEC) and Drawback, among others.

A recognized international...

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Erika Padilla Foley Gardere Arena in Mexico City Transactions Corporate
Associate

Erika Padilla is an associate at Foley Gardere Arena in Mexico City. She has experience in tax and customs litigation and controversy, representation before tax and customs authorities, corporate and international taxation (tax planning and consulting). She also has corporate counsel experience with knowledge in the legal needs of a corporation from the inside, such as drafting, reviewing and negotiating all types of contracts and legal documents, including finance and banking agreements, providing legal advice to the commercial and investment departments and developing the organization’s policies on specific issues, corporate governance and regulatory affairs.

Before joining Foley, Erika was a senior legal manager at Grupo Gigante, where she drafted, reviewed and negotiated all types of contracts and legal documents, including finance and banking agreements, franchise, distribution and license agreements, real estate leases, merges and acquisitions, etc. She also provided legal advice to the commercial and investment departments. Additionally, she developed the organization’s policies on specific issues, including corporate governance and regulatory affairs.

Erika was an associate law professor at Universidad Panamericana, where she developed and taught “Mexico’s Fiscal Code” and “Income Tax” courses.

Erika also worked as a tax counsel. She prepared and filed legal remedies before tax and judicial courts and tax authorities. She also addressed complex tax and customs issues, performed tax-planning operations, and advised clients on corporate tax and foreign trade and customs matters.

Erika began her law career as a law clerk. She prepared tax memoranda and other legal documents, filed legal remedies and documents before tax and judicial courts and tax authorities, handled legal research and analysis for assigned cases, and assisted in the elaboration and registration of certified documents and notary duties.

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