Income Derived From Maquila Related Productive Activity

Article 181 of the Income Tax Law ("ITL") establishes the requirements that must be met in order to consider that taxpayers are performing maquila operations eligible for the transfer pricing safe harbor. Among these requirements, the ITL states that the maquiladora's entire productive activity must derive exclusively from maquila transactions, without providing further detail.

Rule I.3.19.1 of the General Administrative Guidelines for 2014 (the "Rule"), initially provided ambiguous guidelines which caused significant confusion regarding the activities that would be deemed compliant maquila activities. To avoid this confusion, on July 4, 2014 the Second Amendments to such Rulings were published, establishing a list of the activities which would be construed as active maquila activities, thus clarifying such safe harbor maquila concept.