The maquiladora regime in Mexico refers to an export-oriented manufacturing programme that allows foreign multinationals to establish factories (maquiladoras) in Mexico. Under Mexican Income Tax Law (MITL) regulations, maquiladoras operate in Mexico as manufacturers and import, on consignment, machinery, equipment, and inventory duty and VAT free; provide assembly services; then export the finished products to a principal operating company (POC) abroad. Due to the nature of the legal and economic relationships under a maquiladora agreement, foreign POCs are deemed to have a permanent establishment (PE) in Mexico.

The 2022 tax reform in Mexico introduced changes to the…

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