VAT-MAN RETURNS – Impacts On The Maquiladora Industry Began Jan. 1, 2015 - Tax - Mondaq Mexico - Mondaq Business Briefing - Books and Journals - VLEX 570193770

VAT-MAN RETURNS – Impacts On The Maquiladora Industry Began Jan. 1, 2015

Author:Mr Eugenio Grageda Núñez
Profession:Greenberg Traurig

As of Jan. 1, 2015, a 16 percent value added tax (VAT) will once again affect the temporary imports of goods performed by Maquiladoras, unless a certification is obtained from the Mexican Revenue Service or certain other conditions are fulfilled.

Tax reforms that became effective in 2014 brought changes to the VAT regime in Mexico. Before 2014, temporary imports performed by Maquiladoras or companies operating under the IMMEX program (a program that allows for the temporary importation of goods that are used in an industrial process or service to produce, transform or repair foreign goods imported temporarily for their subsequent export) were exempt of VAT, the general import tax, and other countervailing duties. Under the tax reform, such temporary imports were going to be subject to a 16 percent VAT, which generally is fully creditable but only for one month after such VAT is paid. That typically generates the right to a tax refund that usually may take from two to three months to be received by the taxpayers. As such, this has a serious effect on the cash flows of Maquiladoras.

To reduce such burden, in December 2013 the president of the United Mexican States issued a Decree granting certain benefits to that industry, some applicable indefinitely and some only in 2014. The practical effect of the Decree was to suspend the payment of VAT and eliminate the cash-flow concerns of Maquiladoras because it allowed for the VAT to be credited in the same tax return for the month in which the tax is paid. That generated a zero-VAT effect, at least during 2014, year in which this benefit was applicable. Unfortunately, as of Jan. 1, 2015, the...

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