Until a few years ago, a low-risk model was sought without having sales in national territory, as was the case with maquiladora companies. This model has been in the country since the 1960s and has been a generator of foreign investment in Mexico, as well as a promoter of jobs and foreign exchange. Despite its success, it has been questioned on the grounds that it has not contributed to the growth of the Mexican manufacturing industry, nor to the supply chain of local suppliers. It has also been debated whether over time tax benefits have been granted that place foreign companies in a more competitive situation than the national manufacturing industry.
Due to the above, there have been changes in the way in which foreign maquiladoras are taxed in Mexico, and coming from little or no payment of income tax (ISR), in the 1990s, compliance with rules was mandatory. for transfer pricing, which increased ISR collection and worker participation in profits. Despite these changes, the manufacturing sector continued to be competitive in Mexico, taking advantage of several factors, among which we can mention the following:
1. A tax and customs scheme designed to make efficient operations in national territory; Although foreign companies are forced to pay taxes in Mexico, their collection remains reasonable in a global context.
2. Geographical location strategy to access the North American market. The United States continues to be one of the most important economic engines worldwide and companies seek to establish themselves in Mexico in order to access this market. The same is the case for Canada, since the level of growth of the Mexican economy and the favorable demographic campaign we have in the country are extremely attractive.
3. The trade agreement network signed by Mexico with the United States, Canada, the European Union and various Latin American countries.
4. Economic and social stabilitywhich has contributed to the maturation of the manufacturing sector.
5. The Mexican workforce It is another important factor, since by being efficient and qualified, it becomes competitive in terms of costs.
All these factors have contributed to the growth of the sector in Mexico, however, in recent times, specifically as of January 1, 2022, its operation has been mostly observed by the authorities. As of said date, companies that operate in this industry have to comply with transfer pricing rules to determine the value of maquila services using the methodology known as safe harborwhich implies the determination of a fiscal profit equivalent to the greater of 6.9% of the assets used in the maquila operation or 6.5% of the total costs incurred in the operation.
This mechanism is resulting in operating profits that are out of range and generate loss of competitiveness and double taxation challenges for companies residing abroad and operating as principals in the maquila contract. Although some maquiladora companies still have the option of using the Advance Price Study (APA) methodology until the year 2024, all new companies will no longer have this possibility and from 2025 all maquiladora companies will have to migrate to safe harbor.