Our Legal Framework: Operate in Mexico with a Shelter

A legal framework refers to the type of legal entity in Mexico under which a foreign company carries out manufacturing activities in Mexico and the timing for making changes in the legal structure in order to benefit from income tax abatements.

The legal framework will determine how various agencies of the Mexican government will treat the entity in terms of permanent establishment exposure, income tax liability and calculation, value added tax liability, profit sharing, and import duties.

The Offshore Group’s most commonly used legal framework is one known as a “maquiladora” and also as a “shelter” which provides the foreign company with the means to carry out manufacturing activities in Mexico without the foreign company needing to form a legal entity themselves for four (4) years. The Mexican Government has instituted the “shelter” legal framework as an incentive for foreign companies to manufacture in Mexico goods that will ultimately be exported from Mexico, directly or indirectly by the manufacturer without the fiscal, employment, and regulatory obligations to which Mexican legal entities must abide. In essence, The Offshore Group’s legal entities in Mexico are registered as “shelters” and the foreign company operates within said entity.

By operating in Mexico in this manner, foreign companies are able to have their own production assets in Mexico (raw material, equipment, and machinery) without transferring their ownership, and are able to fully utilize, control, and manage a work force without the legal and administrative burdens of being an employer of record in Mexico.
For foreign companies that have specific short and long term objectives for manufacturing in Mexico and possibly for selling/invoicing within Mexico, The Offshore Group is able to configure a legal framework that can meet those needs.

For more information on this subject please contact us.