COVID-19 Response

How Can I Get Preferential Customs Duty Rates When Manufacturing in Mexico?

Textile Materials for Mexico cut and sew resized 600

When evaluating whether to manufacture in Mexico, it’s wise to consider customs issues such as import duties and taxes in order to accurately calculate your total landed cost.

For example, items produced and assembled by maquiladoras (or contract manufacturing companies) in Mexico are eligible for preferential customs duty rates, some as low as 0%, when working through the IMMEX program.

Mexico’s IMMEX (or maquiladora) program enables companies to temporarily import materials so they can be manufactured into goods and then re-exported without payment of taxes and compensatory quotas. Under IMMEX, companies can avoid the General import tax and the pricey VAT tax, which can be as high as 15%.

But in order to qualify, these goods must first be classified to meet certain Rules of Origin requirements, described here on the NAFTA Certificate of Origin form provided by the U.S. Department of Homeland Security.

Most of the Rules of Origin criteria have to do with whether the raw materials come from a NAFTA member. If so, duty fees are waived. But because the language is complex, it can be easy for an inexperienced manufacturer to make a mistake that can blow out your bottom line.

MFI International works closely with clients to evaluate and classify raw materials and goods correctly.

Even if your product doesn’t qualify for preferential import duty rates, MFI’s Corporate Custom Broker Jorge Fierro advises, you can still work through these other avenues:

  • Mexico’s PROSEC (or “promotional sector”) program provides specific industries, such as automotive and medical, with reduced duty rates as low as 0%.
  • Regla Octava allows the maquiladora to petition the government for a 0% duty rate.
  • Industry-specific programs, such as a  “Tariff Preferential Level” also known as TPL’s, permits Mexican manufacturers to import materials temporarily without preferential import duties.

To learn more about special customs duty rates and Mexico trade incentives, visit our post entitled “Understanding the Maquiladora Program and NAFTA’s Role,” or call an experienced MFI International specialist at 866-918-2260.

Download: MFI's Presentation