many years, manufacturers located in the United States, as well as in other
countries, have resorted to the manufacture or assembly of their products in
countries such as Mexico, which offer attractive business incentives such as
reduced labor costs and tax abatements.
this regard, Brauer y Duffy, as the Firm is called in Mexico, may provide
assistance on how to establish a “maquiladora”
company (in-bond-processing plant) throughout Mexico.
After a thorough review with our client of its needs and expectations
regarding its investment in Mexican production, the Firm will recommend the
most suitable legal scheme under which the client may operate. Some of the
proceedings that this Firm may handle with the Mexican authorities on your
Incorporation of a maquiladora company, or purchase of an already existing
Procurement of governmental authorizations for said incorporation of purchase;
Filing with the Ministry of Commerce of documentation necessary to obtain an
approved Maquila Program. This approved program will enable the maquiladora
company to operate legally in Mexico. Other options, such as shelter programs,
are readily available to the foreign investor.
that a major incentive for the establishment of a maquiladora company in
Mexico is the reduced labor cost, special attention must be given to areas
such as the hiring and dismissing of personnel, adoption of
non-confrontational labor policies, drafting of labor contract and, in
general, conducting negotiations that will yield a more stable
companies receive preferential treatment from the Mexican Government in almost
every respect. Whilst the necessary procedures are rather simple and devised
for foreigners, there are some legal requirements imposed by the Mexican
Government that call for specialized attention. In fact, in most aspects a
Maquiladora company is just a regular stock corporation, with the difference
that it is engaged almost
exclusively in processing and assembly operations for export purposes.
requirements include filings with each of the authorities that regulate
foreign investment, customs, taxes, social security, transportation,
environmental protection and immigration. This Firm renders assistance in all
of those areas, as well as in general corporate matters, thereby protecting
our clients from fines, surcharges and lawsuits.
purpose of this work is, then, to familiarize you with the basic legal
concepts that must be taken into account when setting up and operating a
I.- WHAT DOES MAQUILA MEAN.- It
seems the term “maquila” comes from Spain, where, many years ago, owners
of mills converted into flour wheat and other grains produced by local
growers. As consideration for the service, the mill owner sometimes kept a
portion of the flour so produced. This process was called a “Maquila” and,
with time, the full or partial processing of
products on behalf of others was know as maquila also.
II.- WHAT IS A MAQUILADORA.- A
maquiladora company is a Mexican corporation operating under a special customs
treatment, whereby it may temporarily import into Mexico machinery, equipment,
replacement parts, raw materials, and, in general, everything needed to carry
out its production activities.
It is legally possible to locate a Maquiladora anywhere throughout the United
Mexican States, except in Mexico City and its suburbs. This restriction
however, is not applicable to already existing companies that intend to
perform maquila activities with their idle production capability.
general terms, maquiladoras must export everything they produce. Nevertheless,
maquiladoras may, under certain conditions, sell some of their products in the
Mexican market, provided that permit for such sales is obtained from the
INCORPORATING A MAQUILADORA.- From
the corporate law point of view, a
maquiladora is simply a commercial corporation that, as the holder of an
approved Maquila Program, is entitled to certain tax, customs and other
benefits. The requirements to form a Mexican corporation are discussed
elsewhere in this site, and we can provide you with information upon request.
LOCATION OF A MAQUILADORA.- The United States-Mexico border area is of
interest for U.S. and other manufacturers. Although is quite true that maquila
companies are now spread out through Mexico, mainly because scarcity of labor
and enticements by other cities and states make the location of manufacturing
plants elsewhere a very viable proposition, the border area still plays a
V.- REQUIREMENTS TO QUALIFY AS A MAQUILADORA COMPANY.- In
addition to the requirements to be attained and steps to be taken to
incorporate any company in Mexico, maquiladora companies must apply for and
obtain what is called a Maquila Program (“Programa de Maquila”). This
program is a document containing general data of the maquiladora company,
describing the manufacturing process, the characteristics of the products it
shall manufacture, as well as a listing of the necessary equipment and raw
materials to be temporarily imported into Mexico or bought in the Mexican
market, stating the volume of labor to be used, as well as an exports program.
These programs are approved by the Ministry of Commerce and Industrial
Development, and may be locally obtained, since said Ministry has offices in
all major cities where maquiladoras are located. When an application is filed
with said authorities, it is carefully analyzed, and when approved, they
inform the Customs authorities, so that machinery, equipment and materials
required to develop such program may be temporarily imported into Mexico.
It is important to point out that when a Maquila Program is approved, the
applicant is granted a Maquiladora Registry Number, which shall be used in all
VI.- TEMPORARY IMPORTATION.- As
it was mentioned above, the distinctive characteristic of any maquiladora
company in Mexico is that it is capable of importing, on a temporary basis,
machinery and equipment, replacement parts, raw materials, and in general,
anything needed to carry out its activities and fulfill its production goals,
without paying the otherwise applicable customs duties.
It should be noted that in order to carry out the importation procedures, a
customs broker, or an attorney-in-fact for customs purposes, should handle
such matters on behalf of the maquiladora company.
In general terms, there are three types of temporary importations related to
maquiladora companies: a) initial importations, which are those authorized for
the initiation of the Maquila Program; b) subsequent importations, which are
those necessary to continue fulfilling the Maquila Program; and c) emergency
importations, which are those imports needed at any given moment, which are
not included in the Maquila Program.
Specifically, our customs regulations provide for the following temporary
imports for a maquiladora company:
a). Raw and auxiliary materials required for the fulfillment of the
manufacturing or assembly operations, pursuant to an approved Maquila Program
and any additions or increases thereto.
Machinery, apparatuses, instruments, and equipment necessary to carry out
manufacturing or assembly operations, together with those required for the
quality control of its products.
c). Spare parts for the items referred to in the foregoing sub-section.
d). Tools and ancillary production and safety equipment, as well as
environmental pollution control devices, telecommunication and computing
equipment, work manuals and industrial blueprints; and
e). Containers, trailers, packaging material, tags and pamphlets.
VII.- IMMIGRATION MATTERS.- The
Ministry of the Interior (Secretaria de Gobernación), is the
Ministry in charge of immigration matters in Mexico, through the Instituto
Nacional de Migración . Said authority may permit the entry into the
country of the foreign administrative and technical personnel needed for the
proper operation of maquiladora companies. These authorizations may be
procured locally in most major cities.
In order to enable foreigners to work in maquiladora companies, they require
the status of no inmigrante-visitante (working visa). This
working visa, also known as an FM3, is valid for one year, renewable for the
same time period up to four times.
FM3 visas may allow their holders multiple entries into Mexico without having
to carry out the obtainment process every time. This very convenient, of
course, and in border areas such permit allows US citizens to live in the US
and work in Mexico.
VIII.- OTHER AUTHORIZATIONS.- It
should be noted that in the event of certain specific activities intended to
be performed by a maquiladora company, special authorizations may be needed,
as in the case of industrial activities that pollute the air, water or soil,
firearm manufacturing, and others.
IX.- ENVIRONMENTAL LAWS AND REGULATIONS.-
may import into Mexico materials required for their production processes, but
everything these companies bring into Mexico must, in due time, be exported
back to the country of origin. This includes the products themselves, of
course, but also byproducts, waste, and all hazardous waste.
Since the re-export of non-hazardous waste could be a very expensive
proposition maquiladora companies are allowed to destroy, donate or dispose of
waste materials, but a permit must be obtained in such connection.
The bottom line is that maquiladoras may generally import into Mexico all
those raw materials, hazardous or not, needed to carry out their production or
assembly processes, but all
hazardous waste generated by hazardous materials or substances imported into
Mexico must be re-exported.
There are only two cases when the importation of hazardous materials may be
permitted, which are for (i)
recycling; and (ii) re-use.
Hazardous waste may be legally imported if said waste is subject to a
recycling process by means of which it may be converted into useful material.
Thus, maquiladora companies that recycle their hazardous waste may be exempted
from re-exporting such materials, provided they comply with pertinent
November 13, 1998, the Ministry of Commerce published the terms under which
the Maquila Program will operate through the year 2001 and thereafter, divided
in two stages, the first from 1994 to 2000 and the second as of 2001.
until December 31, 2000, mechanisms for the free temporary import of inputs
and machinery will remain as above described. Machinery imported temporarily
may be maintained in Mexico as long as the Maquiladora has a valid Maquila
As of the year 2001
temporary import mechanisms in effect in the NAFTA countries will be modified
in order to equalize the tariff treatment that Mexico grants on non-North
American goods and machinery for the production of goods destined for the
North American market.
rules apply for the temporary importation of inputs and components when they
come from non-NAFTA countries and are bound to any NAFTA country. In this case
an exemption will be applied for the lowest amount between the import tariff
on these inputs and those to be paid for their import into the United States
or Canada. Goods exempted from this practice are described in Appendix 2.4 or
under number 6 of Attachment 300.B of NAFTA (Textile goods and women’s
apparel) as well as operations similar to the maquila processing of textile
goods and women’s apparel established by the United States and Canada.
objectives sought with this are to avoid:
the extension of tariff preferences to countries other than NAFTA; and
prohibits tax exemption on imports of machinery and equipment when it is a
condition for exports. Therefore, Promotion Programs have been devised to
create competitive conditions for the supply of inputs and machinery for the
export industry, as well as to foster a greater integration of efficient
first two Programs were for the Electric and the Electronics Industries, and
will be in effect as of November 1, 2000.
contain a list of the goods which may be imported permanently under favorable
conditions (exempt from payment of the ad valorem import tax or with a rate of
5%) when the goods are bound for these sectors.
has signed free trade agreements with the United States and Canada, the
European Union, Israel, several countries in Central and South America, and is
negotiating others, Singapore and Japan amongst them. Its unique geographical
location permits ready access to the largest markets in the world. A
maquiladora company is one of
several production tools available in Mexico, but not the only one. We would
welcome the opportunity of providing you more information on activities that
may be carried out in Mexico, and their regulation.