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What is a maquiladora?

15 Jul 2014

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This identifies a legal entity in Mexico as one that manufacturers goods in the country through a relationship with a foreign company. The term maquiladora is interchangeable with maquila operation which is how it is commonly referred to in Mexican law.

The Mexican government recognizes the benefit the country derives from foreign companies establishing manufacturing operations in the country and therefore extends certain tax and trade benefits to maquila operations.

To be eligible to capitalize on said tax and trade benefits, Mexican legal entities must satisfy a number of conditions to be considered a maquila operation. Those conditions include a requirement that at least 30 percent of the production assets under the Mexican manufacturing entity’s care is owned by the foreign company and the legally recognized entity does not receive revenue from activities other than its manufacturing activities. Simply stated, the company cannot , manufacture and sell products in Mexico if it wants to receive the tax benefits afforded to maquila operations.

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