On October 12, 2011, the Mexican Department of Finance and Public Credit published the Decree, in the OfficialJournal of the Federation, by which the tax subsidies granted to the maquiladora industry are extended untilDecember 31, 2013. Such tax subsidies were the result of the Decree granting various tax benefits with respect toincome tax and the single rate business tax published on November 5, 2007. The tax incentive granted to themaquiladora industry is in the form of a tax credit applied against the final accumulated single rate business(IETU) tax due by the taxpayer for the fiscal year. This tax incentive was originally in place from 2008 through2011, but the new Decree extends the tax benefits throiugh 2013. It is important to mention that such taxincentive, in accordance with the terms of the Tax Subsidy Decree, will apply only to maquila entities thatcomply with their tax and customs obligations, including, among others, their transfer pricing obligations, byusing the maquiladora transfer pricing methods set forth in article 216 Bis of the Income Tax Law. Consequently,if the maquila entity does not use such methods or has a transfer price authorization issued by the Mexican government which uses a different method, that maquila entity may not obtain the benefits of this new taxincentive.
