The maquiladora industry has long been integral to Mexico and US trade. Maquiladoras in Mexico are set up to import materials for processing into a final product to be exported. Maquiladoras historically benefited from significant tax preferences, including permanent establishment protection, transfer pricing simplification, and tax rate reduction. In addition, materials imported and goods exported by maquiladoras were effectively exempt from the value-added tax.
The new 2014 tax law significantly impacts maquiladora operations in the following ways:
Shelter maquiladora operations will potentially be determined to be a permanent establishment of the foreign owner.
Companies with maquiladora operations should carefully review the impact of the tax reform and evaluate whether revisions to entity structure, relevant contracts, or operations are warranted.
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