Sectoral
Promotion Programs

The Mexican government recently announced 20 new programs that maquilas and other companies that import goods for production of exports to other countries need to be aware of.

The Sectoral Promotion Programs were developed in conjunction with the private sector to guarantee and enhance the efficiency and competitiveness of manufacturing operations in Mexico, regardless whether they export. The programs are sector specific and imports can only be used to produce goods contained in a specific program.

The following frequently asked questions and answers was provided by SECOFI.

Who can register in a sectoral promotion program (PROSEC)?
Firms that produce finished goods covered in any of the 20 sectoral promotion programs (PROSECs) and import inputs listed in the programs, including those that import for production of exports to another NAFTA country. These firms may or may not export their final products.

Imports of products included in these programs will pay a low import tariff.

How do you choose?
First, identify if the finished product is covered by any of the 20 PROSECs. Second, identify if the input that needs to be imported is included in the list of inputs covered in such program.

Can a firm import inputs at lower duties if such inputs are not included in the program in which the firm registered?
No, the Decree for the Establishment of Sectoral Promotion Programs (December 31, 2000) states that a firm can only import inputs paying the duties provided in the program(s) in which the firm registered.

Can a firm register in more than one program?
A firm can register in more than one program if it produces final goods that fit into more than one sector. Since these PROSECs are defined according to the final use that an input will have, firms need to register in as many programs as needed depending on the final goods produced.

What happens if the same input is used to produce different goods included in different sectoral programs?
If a firm uses the same input in production of different final goods that fit into more than one sector, then the firm has to register for different PROSECs. If the same input has different import duties in different sectors, then the firm will pay the duties specified for the input that will be used for production of goods in a specific sector.

If a firm has several plants is it necessary to apply for a program for each plant?
No, the PROSECs are firm-specific not plant-specific. If a firm has registered for a program this will apply to production of a final good in all of its plants. However, when applying for a program all plants should be included.

Can there be changes or additions to the sectoral promotion programs?
The PROSECS are dynamic and flexible. To make changes or add new products into a program or create a new program a firm has to address Secretariado Técnico de la Comisión de Comercio Exterior (COCEX), Alfonso Reyes número 30, piso 19, Col. Condesa, México, D.F., C.P. 06140. Tel: 011 (525) 729 9183 or (525) 729-9100 ext. 6612 and 6613. Fax: 011 (525) 729 9322 and 729 9413

Can indirect producers enjoy the benefits of the sectoral promotion programs?
Yes, all producers ­ direct and indirect- can enjoy the preferential benefits of the program. In order for an indirect producer to register, the direct producer has to enroll the indirect producer in a sectoral program first, and then the indirect producer can go ahead and register.

Is it possible to make permanent and temporary imports paying the PROSEC duty?

A firm can make permanent and temporary imports paying the PROSEC duty as long as the firm is registered in a sectoral program.

Where can the information for registration into a PROSEC be found?

On Oct. 13, 2000, the agreement that establishes several provisions for the Sectoral Promotion Programs was issued in the Diario Oficial de la Federación. On Nov. 10, 2000, the Decree that establishes the application form for the registration and modification of Sectoral Promotion Programs was published in the Diario Oficial de la. Federación

Where can application forms be found?

To register in a new PROSEC, it is necessary to submit an application form to be filed in the PROSEC.EXE software. This form can be downloaded from: www.secofi-dgsce.gob.mx/fbiblio.htm. The application must be submitted electronically in a floppy disk along with the original and copy of the hardcopy. The application must be signed by the firm's legal representative along with complementary documents.

What are the complementary documents that are required to register in a new PROSEC?

• Articles of Incorporation (Acta Constitutiva) and Power of Attorney or copy of the certificate provided by the Dirección General de Asuntos Jurídicos of the Secretary of Economy or the tax registration ID (Registro Federal de Contribuyentes) number of the firm enrolled in the register.

• Copy of the tax registration ID (Cédula del Registro Federal de Contribuyentes).

• The last 3 fiscal statements for the Income Tax, Asset Tax and VAT. In case of a new firm, it is only necessary to include documents that are relevant.