1. RECENT TAX ANNOUNCEMENTS THAT MAY AFFECT THE MAQUILA INDUSTRY Héctor Silva Meeting - Breakfast Junio 17, 2009

2. ©2009 Galaz, Yamazaki, Ruiz Urquiza, S.C. Todos los derechos reservados. CONTENT Tax Code modifications. Income tax modifications. VAT criteria from the tax authorities on changes from Temporary import to Definitive import. Private resolution denying the income tax refund due to the authorized reduction of income tax allowed to maquiladoras in accordance with former-President's Decree. Interest and penalties waiver for Baja California local taxes. 2

3. ©2009 Galaz, Yamazaki, Ruiz Urquiza, S.C. Todos los derechos reservados. TAX CODE On June 4, 2009 the Federal Tax Code was modified to consider that, among other, the authorities may impute income as if the merchandise was sold in the domestic market when: a. Exported goods; if the taxpayer cannot prove the real transaction of acquisition of raw materials and its capabilities to manufacture the goods. b. Warehouse.- If the taxpayer cannot prove the warehousing facilities or prove the need not to warehouse the goods. c. Transportation.- if the taxpayer cannot prove the transportation of goods. If there is no transportation, must prove the delivery of goods and the identity of the person receiving the goods. These causes of deemed income would prevail regardless the taxpayer can prove with export pedimentos. 3

4. ©2009 Galaz, Yamazaki, Ruiz Urquiza, S.C. Todos los derechos reservados. INCOME TAX Article 31 was modify to state the conditions necessary to deduct welfare benefits paid by Co-operative Companies. Also article 109 was modified to limit the exemption of welfare benefits paid to member of Co-operative Companies. 4

5. ©2009 Galaz, Yamazaki, Ruiz Urquiza, S.C. Todos los derechos reservados. AUTHORITIES’ CRITERIA REGARDING VAT LAW VAT Law Taxes acts or activities. Alienation of goods Rendering of services Rent Import goods Alienation of goods is taxed when delivery or shipment takes place in México. Alienation of temporary imported goods is VAT exempt when goods are kept within the same temporary status. Switch from temporary to definitive import is VAT taxed. 5

6. ©2009 Galaz, Yamazaki, Ruiz Urquiza, S.C. Todos los derechos reservados. AUTHORITIES’ CRITERIA REGARDING VAT LAW The need to sale in Mexico requires: 1. Take title of the raw materials. Abroad (VAT exempt) While the goods are in Mexico 2. Change import status from Temporary to Definitive Two different acts (alienation and import) taxed for VAT purposes. 6

7. ©2009 Galaz, Yamazaki, Ruiz Urquiza, S.C. Todos los derechos reservados. Fox´s DECREE TO REDUCE INCOME TAX Tax authorities in Cd. Juárez denied the refund of income tax because the maquiladora reduced the income tax in accordance with Fox's Decree for maquiladoras. The Decree issued in October 30, 2003 did not include a maturity date for this benefit and there has not been any other Decree repealing its validity. 7

8. ©2009 Galaz, Yamazaki, Ruiz Urquiza, S.C. Todos los derechos reservados. LOCAL TAXES - WAIVER By means of a Decree issued by Governor Osuna Millan last June 5, 2009, a waiver not to pay interests and penalties was granted to taxpayers provided that: 1. Payment is made by June 30 at most. 2. A letter request is filed within this period 3. Withdraw any litigation regarding local taxes. 4. 50% discount is allowed if payment is made in six months; first payment due by June 30, and pending payment is bonded. 8

9. ©2009 Galaz, Yamazaki, Ruiz Urquiza, S.C. Todos los derechos reservados. RECOMMENDATIONS 1. Make sure your export files include: Purchase orders from the customers abroad Invoices for exports indicating sales conditions Bank account statements indicating the payment. Lease agreement and proof of payment for warehouses. Proof of delivery of goods to the customer Copy of port letters Copy of packing lists Proof of payment and invoices from the transporter Any other document proving the sale, export, delivery, storage and transport of goods. 2. Review any contract with Co-operative Companies 9

10. ©2009 Galaz, Yamazaki, Ruiz Urquiza, S.C. Todos los derechos reservados. RECOMMENDATIONS 3. If you are making changes of Temporary imports to Definiteve, make sure the supporting documentation includes: Raw materials are acquired abroad prior to import. If title is transferred while the goods are in Mexico; to prove the inventory stay in temporaty import. Switch to Definitive import after title passed to the maquiladora 4. Obtain confirmation from the tax authorities that the Decree of October 2003 is still in force. 5. To take advantage of the interests and penalties waiver for local taxes. 10

11. ©2009 Galaz, Yamazaki, Ruiz Urquiza, S.C. Todos los derechos reservados. Héctor Silva hsilva@deloittemx.com + (664) 622 7840