New Rules Applicable To Maquila Companies In Mexico Become Effective - International Law - Mondaq Mexico - Mondaq Business Briefing - Books and Journals - VLEX 574902978

New Rules Applicable To Maquila Companies In Mexico Become Effective

Author:Mr José Ángel Eseverri Ahuja, Ricardo Leon-Santacruz, Abel Francisco Mejía Cosenza and Guillermo Villaseñor Tadeo
Profession:Sanchez-DeVanny Eseverri, SC

As indicated in prior communications, the Mexican tax reform that entered into force in January 1, 2014 narrowed the concept of maquiladoras for income tax purposes. Under the new definition, maquiladoras income must come exclusively from its maquila services to shield them from creating a permanent establishment for their principals, specifically prohibiting them from selling any inventory or manufactured products in Mexico. Transitory provisions deferred the enforcement of the reform through September 30, 2014. Thus, considering that the deferred term for implementation of the revised maquiladora activities ends today, we would like to remind you that as of October 1, 2014 your maquiladora operations must be very careful not to be involved in sales of inventory or manufactured products to non-maquiladora entities in Mexico. Failure to comply with such provisions could trigger the risk of creating a permanent establishment in Mexico for the foreign principal, since the maquila companies will not be entitled to apply the safe harbor rules for such purposes. It is worth mentioning that maquila companies will continue to be...

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