Mexico Yanks <i> Maquiladora </i> Tax Status, Sparks Anger

Mexico has taken away the tax favor it has granted border maquiladora plants for years, and the plant operators are incensed.

“Everybody is up in arms about,” said Ned Dougherty, president of Pentex Enterprises in El Paso, Tex., which operates plants that assemble telephone equipment across the border in Juarez, Mexico.

The Mexican government has decided that as of Jan. 1, it will collect a corporate income tax the U.S.-owned assembly plants in Mexico previously weren’t required to pay, the Arizona Republic reported Friday.

Actual collection has yet to begin, and U.S. manufacturing executives are attempting to work out something with Mexico so collection never begins or at least is delayed.

Attorney Alex Gonzalez of Juarez told the Republic the tax has been on the books for years.

“They didn’t apply it as sort of a favor to the industry,” which employs hundreds of thousands of Mexican workers, Gonzalez said. “Now they’re taking away that special treatment.”

There are more than 1,000 maquiladoras in Mexico, most close to the border for easy access to the U.S. market.

Jesus Montoya, manager of the Samsonite luggage plant in Nogales, Mexico, on Arizona’s border, said the local maquiladora association has mobilized against the “transfer pricing” taxes.

“We’re trying to negotiate with Mexican authorities for a delay or elimination of the tax, if possible,” Montoya said.

A typical maquiladora assembles U.S.-manufactured components into products that are sold in the United States.