In the highly competitive global manufacturing landscape, companies are constantly seeking ways to enhance efficiency, reduce costs, and improve their market positioning. One valuable program in Mexico that has helped numerous manufacturers achieve their goals is the PROSEC (Programa de Promoción Sectorial), established in Mexico in 2002.
What is PROSEC?
PROSEC is a program that allows a reduction of the general import tax (IGI) on imported goods to be used in the production of specific products of the 24 PROSEC sectors.
The program is beneficial for businesses that produce goods for both domestic and international markets. Nevertheless, in order for the company to be able to obtain the PROSEC authorization, it must manufacture the goods listed in Article 4 of the PROSEC Decree, using the goods/materials listed in Article 5 of the PROSEC Decree.
By lowering import costs, PROSEC enables manufacturers to optimize production processes and remain competitive.
Key Benefits of the PROSEC Program in Mexico
- Reduced Import Duties: Companies enrolled in PROSEC can import necessary materials and equipment at lower or zero tariff rates, significantly reducing operational costs.
- Increased Competitiveness: By lowering costs, manufacturers can price their products more competitively in both local and international markets.
- Encourages Investment: The program makes Mexico a more attractive destination for foreign direct investment (FDI) in manufacturing.
- Eligibility Across Various Sectors: PROSEC is available for a wide range of industries, including automotive, electronics, textiles, and pharmaceuticals, among others.
How to Apply for the PROSEC Program in Mexico?
Manufacturing companies interested in joining PROSEC must:
Rule 8th (Regla Octava)
According to Article 2, Section II, of the Complementary Rules of the General Import and Export Tax Tariff Law, Eight Rule is an import permit to reduce the general import tax (IGI) for those goods that are not listed in Article 5 of the PROSEC decree. Depending on the criteria to which they are subject, they can be authorized or not by the Ministry of Economy.
To be a company applicable for this permit, it is indispensable to have the PROSEC Program first, and in case of temporary imports, it must also count with an IMMEX Program.
Companies that have a manufacturer’s registration and authorization to import under the 8th rule may import such goods through any of the HTS Codes of heading 98.02 of the tariff of the general import and export taxes (TIGIE), solely and exclusively to expand an industrial plant, replace equipment or integrate an article manufactured or assembled in Mexico.
Obtaining PROSEC or Rule 8th
PROSEC and Rule 8th are both considered valuable tools for manufacturing companies seeking to enhance efficiency, reduce costs, and remain competitive in a globalized economy. These programs present compelling opportunities worth exploring.
For manufacturing companies seeking to explore these programs and optimize their operations, Mexcentrix can help you!
At Mexcentrix, we can support you in analyzing whether your company is eligible to obtain PROSEC or Rule 8th and assist you through the complete application process and compliance with obligations, such as the Annual Report of Foreign Trade Operations.
Contact us for more information!