Why Shelter Companies Are Invaluable to the Manufacturing Process

10.19.21

Manufacturing in Mexico offers foreign companies tax advantages, cost savings, and a vibrant industrial workforce to support their operations. There are several operational structures available when setting up a new operation in Mexico. However, working with a shelter company is one of the most cost-effective, efficient, and safest ways to get a project up and running.

 

Here are a few key reasons why partnering with a shelter is an invaluable part of the manufacturing process.

Fast Startup Time

Partnering with a shelter company offers savings in multiple ways, one of which is time. When a U.S. or other foreign manufacturer decides to operate in Mexico, they have the option of creating their own entity and operating as a standalone or working under the umbrella of an established shelter.

 

When working under a shelter, manufacturers maintain complete control over their processes, while all administrative responsibilities fall to the shelter, resulting in a quicker launch time. It takes approximately three to four months to get up and running with a shelter compared to six to seven months when working as a new entity.

Minimal Risk and Liability

Another added value is minimized risk and liability. Working with a shelter company is one of the safest ways to do business, since foreign manufacturers do not have to establish a legal entity. The shelter is also responsible for keeping up-to-date with all new information and compliance measures, which reduces the learning curve necessary for manufacturing companies new to the space.

 

Tax and customs compliance are key areas where manufacturers face challenges as regulations change constantly. For example, in 2020, Mexico’s tax reform affected the fiscal rules and terms previously set forth in 2014. Initially the term under a shelter was limited to four years after which they could continue in the shelter paying income tax for four more years or transition to a standalone maquiladora.

 

The tax reform repeals the four-year period for nonresident entities to operate in Mexico without paying income tax. The language and specifics of changing regulations can become confusing and overwhelming. Fortunately, the expertise and experience of a shelter protects companies and helps keep projects on track.

Full Production Control

A shelter works as a partner to alleviate the administrative tasks, such as HR, accounting, legal, customs, and tax compliance, so manufacturers can fully focus their attention on production. Manufacturers maintain complete production control and retail full intellectual property rights throughout their time working with a shelter. Additionally, a shelter company can eventually help companies graduate from their services to eventually work as a standalone.

Working with IVEMSA

These are a few of the many unique benefits of working with a shelter. When manufacturing in Mexico, it’s valuable to have a reliable resource with experience and expertise in the field that can seamlessly guide your efforts.

 

Working with IVEMSA offers all of the advantages with none of the hassle. Find out more about the benefits a shelter company offers by contacting us today.

 

Source:

https://taxnews.ey.com/news/2020-0415-mexicos-tax-reform-significantly-affects-operations-implemented-via-the-shelter-regime

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