According to the Mexican Government, the combination of the Maquiladora and PITEX Decrees was necessary in order to simplify the administration of the two export promotion programs, which at least from a trade and regulatory perspective were already similar if not identical, and also to consolidate the regulations and legal framework applicable to the export sector into a single document.

The IMMEX Decree maintains most of the features that are currently available under the PITEX and Maquiladora programs. It provides some additional benefits, but it also introduces some additional regulatory requirements and grants to government regulators more discretionary authority. Moreover, we believe that from a regulatory perspective the Decree has a lot of complications that could have been easily avoided if a more efficient legal technique would have been applied.

The Decree is carefully drafted to preserve the preexisting tax rules for existing maquiladora operations. Companies that were previously PITEX companies and that like maquildoras are now IMMEX companies will only obtain the full benefits from those tax rules if they adopt an appropriate structure for their operations.

For ease of reference, this bulletin is divided in two parts: (i) Customs and Regulatory Aspects, and (ii) Tax Aspects.

Customs and Regulatory Aspects

Modalities-Outsourcing

• Terciarizacion is a new modality under which companies (i) authorized to operate as Certified Companies and (ii) that do not have industrial facilities, may carry out industrial processes through third-party manufacturers. This is the first time that an outsourcing concept is included in the manufacturing export industry. However, the requirement of not having industrial facilities represents a limitation to IMMEX companies, since most Certified Companies already have industrial facilities.

• Submanufactura is now what used to be the submaquila operation. The new definition of submanufactura eliminates the requirement of performing a “complementary industrial process” and changes it to an “industrial or services process directly related with the manufacturing activity”, which now also includes services.

Approval Requirements

• Some of the requirements that were previously included in the application are now provided in the IMMEX Decree.

• As indicated in the preamble of the IMMEX Decree, one of its main purposes is to provide administrative certainty.

However, said certainty is not reflected in the new approval requirements, since:

a) The Ministry of Economy (“SECON”) may request any additional information and documentation in the same application; and

b) The application of certain requirements is subject to the provisions of the Foreign Trade General Rules (the “Rules”) and, in some other cases, to the discretion of SECON or the Ministry of Finance and Public Credit (“Hacienda”).

• The manufacturing agreement (maquila agreement) is no longer required to be notarized. Also, alternatively, the applicant may now file purchase and sale agreements, purchase orders or other documents evidencing the existence of an export project.

• Ratification of the domiciles of the applicant is now a requirement, while previously this ratification was required after the issuance of the corresponding authorization. This requirement appears to be complied with by providing the geographical coordinates of the applicant’s tax domicile and that of any industrial facilities to Hacienda. The way in which these coordinates will be provided (i.e. “x” and “y”, altitude and latitude, etc.) is regulated by Hacienda in the Rules. In practice, compliance with this requirement will be confusing, cumbersome and time-consuming.

• As part of Hacienda’s involvement in the IMMEX regulation, jointly with SECON, it will now perform an inspection visit to the premises of the applicant, when the authorization requested involves the importation of textile and apparel, regardless of the manufacturing activity of the applicant. Unfortunately, this joint visit can be performed whenever the authorities decide so.

• Companies requesting authorization to operate as Holding IMMEX Companies must comply with uncertain additional requirements to be published by SECON.