SECTION 3.358. Maquiladoras

(a) Maquiladora enterprise. Maquiladora enterprise means a business entity chartered by the government of the United Mexican States and authorized by that government to make duty-free imports of raw materials, component parts, or other property into Mexico to be used in manufacturing, processing, or assembling items by the business entity in Mexico primarily for export from Mexico.

(b) Maquiladora permits.

(1) Any maquiladora enterprise wishing to make tax-free purchases in Texas for export to Mexico may apply to the comptroller for a maquiladora export permit.

(2) The applicant must provide copies of their maquiladora authorization form issued by the Mexican Secretaria De Comercio Y Fomento Industrial showing the number by which they are listed in the registry of in-bond companies. They must also post any bond or security the comptroller may require.

(3) When the application is complete, the comptroller will issue at no charge a numbered maquiladora export permit which will be valid until canceled by either the maquiladora enterprise or the comptroller.

(c) Security required. The comptroller may require a maquiladora enterprise to post a bond or other security in the amount the comptroller considers reasonable to ensure the payment of state and local sales and use taxes.

(d) Permit cancellation.

(1) The comptroller may suspend or revoke a maquiladora export permit to make tax-free purchases under this section without notice for good cause. Examples of acts which will be considered good cause to suspend a permit include failure to provide an updated maquiladora authorization form or other records upon request, to post a required bond, or to file returns and pay all tax due in a timely fashion.

(2) Any enterprise whose maquiladora authorization is canceled or not renewed by the Mexican Secretaria De Comercio Y Fomento Industrial must immediately notify the comptroller to cancel their maquiladora export permit.

(3) Any enterprise whose maquiladora export permit is either voluntarily forfeited or canceled by action of the comptroller's office must immediately notify in writing all persons to whom they have issued a maquiladora exemption certificate advising that the exemption certificate issued to them pursuant to the maquiladora export permit is no longer valid.

(e) Tax-free purchases. A maquiladora export permit holder may make tax-free purchases of goods for export to Mexico. To claim the exemption, the purchaser must give the supplier:

(1) a blanket maquiladora exemption certificate; and

(2) a copy of their maquiladora export permit issued by the comptroller of public accounts.

(f) Records. An applicant for a maquiladora export permit must agree to retain records in accordance with §3.281 of this title (relating to Records Required; Information Required) and §3.323(c)(1) of this title (relating to Imports and Exports). The records must establish whether the items purchased by them were actually exported to Mexico.

(1) Records may be kept in either the United States or Mexico, but the applicant must agree to make them available in Texas upon request.

(2) Records must be kept for four years, unless the comptroller authorizes in writing a shorter retention period.

(g) Reports.

(1) Each person holding a maquiladora export permit must file a report of its tax-free purchases and pay the tax required under the Tax Code, §151.101, for any goods used or consumed in Texas. Items may be stored in this state prior to export to Mexico without incurring a tax liability.

(2) Reports required under this section must be filed on a quarterly basis on a form prescribed by the comptroller and must include any payment due. Reports must be postmarked by the 20th day of month following the end of the calendar quarter unless that day falls on a Saturday, Sunday, or holiday, in which case the report must be postmarked by the next business day.

(3) Payments made after the due date will incur a 5.0% penalty for the first 1-30 days that the payment is late. An additional 5.0% penalty will be assessed for payments that are made 31-60 days late. Interest at a rate of 10% will begin to accrue as of the 61st day after the due date and will continue until payment is made.

(h) Sales. A maquiladora enterprise that sells taxable items, including used equipment, in this state must obtain a sales tax permit and collect and remit tax on the transaction. A maquiladora enterprise may not make a tax-free occasional sale in this state unless the sale is qualified under §3.316(d) or (e) of this title (relating to Occasional Sales). If a maquiladora makes a sale and claims it is exempt under §3.316(d) or (e) of this title (relating to Occasional Sales), he must provide the purchaser with a statement to that effect.

(i) Form of certificate. A maquiladora exemption certificate must be substantially in the form set out as follows.

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Source Note: The provisions of this §3.358 adopted to be effective November 13, 1989, 14 TexReg 5735.