General background:
On May 9, 2016 the First Resolution of Amendments to the Foreign Trade Rules [in Spanish: la primera Resolución de Modificaciones a las Reglas Generales de Comercio Exterior (RGCE)] for 2016 was published in the Official Gazette of the Federation [in Spanish: el Diario Oficial de la Federación], and the same annexes that came into effect the day after their publication, except for a few exceptions, among the more important amendments are the rules that apply to certified companies in matters of the Value-Added Tax [in Spanish: IVA] and the Special Tax on Production and Services [in Spanish: IEPS].
Furthermore, Heading 7: “Comprehensive Framework for Certification”, is incorporated in the First Resolution of Amendments to the Foreign Trade Rules for 2016 (RGCE) where the certification methods are standardized for customs purposes in matters of the Value-Added Tax and the Special Tax on Production and Services; and which were previously scattered into different headings of the First Resolution of Amendments to the Foreign Trade Rules (RGCE); whose implementation comes into effect on June 20, 2016.
Changes to consider:
With the incorporation of Heading 7: “Comprehensive Framework for Certification” in the First Resolution of Amendments to the Foreign Trade Rules for 2016, the requirements, benefits, and obligations of the companies that request the following types of certification are grouped together:
• The Value-Added Tax and the Special Tax on Production and Services [in Spanish: IVA and IEPS respectively], item A, AA and AAA.
• Authorized Economic Operator (AEO).
• Trading company and importer.
• Authorized Trading Partner.
It is important to point out that there are specific requirements that must be fulfilled for each type of the previously mentioned certifications.
Some of the new requirements are mentioned below:
• To be up-to-date with your tax obligations and to authorize and make available in the webpage of the Mexican Taxpayer Administration [in Spanish: SAT], the positive judgement of compliance.
• The Mexican Taxpayer Administration has not filed any complaint or criminal charges against associates, shareholders, legal representatives, or constituent members of the administration in the last 3 years.
• To maintain accounting records through electronic means and to enter it through the website of the Mexican Taxpayer Administration.
• Not to be shown as suspended in the “Importer’s Registry” or in the “General and by Sector Importer’s Registry Sector” or the “Sector’s Importer Registry”.
• To report within 5 days of the following month the changes made to the drivers and the constituent members of the company.
• For cases in which you already have company certification in the Value-Added Tax and the Special Tax on Production and Services category, and are up-to-date in the submission of initial inventory, offload reports, and don’t have past-due loans, for the purposes of the Accounting Control System for Loans and Collateral [in Spanish: el Sistema de Control de Cuentas de Créditos y Garantías (SCCCyG)], as referred to in Annex 31.
• That the Legal Representative for ownership rights prove that he/she is up-to-date with his/her obligations.
• The Authorized Economic Operator (AEO) must submit, through the Single Window for Mexican Foreign Trade [in Spanish: VUCEM], the new format for the application named: “Application for Registration in the Framework for Company Certification”, fulfilling the requirements of the related instructions.
• For companies that temporarily import goods using the codes for sensitive products, the obligation of having capital stock and/or machinery of at least 4 million pesos and an 80% return is eliminated.
In these amendments we can also identify some of the additional benefits or modifications to those that were already there, such as:
• Temporary imported goods under the IMMEX program will remain in national territory up to 36 months, when in addition the framework for company registration is obtained under some other system. This benefit will only apply as of June 20, 2016.
• Some cases of customs rectification without the need to request authorization from the authorities.
• Standardized periods if there is a Value-Added Tax certification and an AEO, which is for the “AA” and “AAA” categories, whose validity is 2 and 3 years respectively.
Some of the requirements that are amended are the following:
• Tax liabilities from companies that request the information can now be guaranteed. Previously, they had to cover those liabilities.
• For VAT credit balances that were previously rejected, the period is reduced from 12 months to 6 months, in order to gain access to the certification, but to maintain the same specifications with regards to amounts and percentages.
• The sub manufacturing notice is eliminated and is simplified on a quarterly basis.
• For companies that are certified under the VAT and the Special Tax on Production and Services [in Spanish: IVA and IEPS respectively], related to the payment of tax liabilities because of irregularities detected, the term to resolve the irregularity is increased from 10 to 30 days.
• To have clients and suppliers abroad and those who may have carried out foreign trade transactions in the last 12 months, taking into account the submission of the application. Previously, this certification requirement regarding VAT and the Special Tax on Production and Services was only reported in the event of having them. The request for information relating to clients and suppliers will no longer relate to the previous tax year but rather to the period that corresponds to the previous 12 months.
• In relation to the additional requirements for the items “AA” and “AAA”, the period has been modified by which the claimant must have carried out foreign trade transactions under the regimen, and the request for information changes from 5 to 4 years.
Authorized Economic Operator (AEO):
Included in the entity of the AEO is the new heading that substitutes what we previously recognized as certified companies for customs purposes (New System for Certified Companies) [in Spanish: NEEC].
In this section we can find the following categories:
• Item for Importer and/or Exporter.
• Controlling Item.
• SECIIT Item.
• Aircraft Item.
• Textile Item.
• Strategic In-bond Site Item.
• C-TPAT Item.
Trading Partners:
Previously, the obligation was established to include customs agents and ground transportation drivers. Stemming from these reforms they added the in-bond site, rail freight carrier, industrial park, and courier and parcel service companies.
All of these trading partners will be on a list for the purpose of the companies that want to gain access to the Authorized Economic Operator; so that they may review the aforementioned list to see what partners they can work with.
Other considerations:
Through the reform of the general rules of foreign trade, companies can also request simultaneously the VAT certification and access to the Authorized Economic Operator. The authorities provide terms from 40 and 120 days respectively.
The grounds for suspension from the Importer’s Registry is established, which is applicable to companies that have a VAT and the Special Tax on Production and Services certification, and which fail to send in a timely manner their transactions in an electronic form as stated in annex 31. This new motive for suspension will come into effect 30 working days after the publication of the resolution as discussed.
Annex 31: “Accounting Control System for Loans and Collateral” is amended [in Spanish SCCCyG].
The Mexican Taxpayer Administration [in Spanish: SAT], published the “Renewal notice for registration in the framework for company certification” [in Spanish: el Aviso único de renovación en el Registro del Esquema de Certificación de Empresas], by which it will no longer be necessary to include all documents that were previously requested by the authorities. However, companies must comply with the requirements issued by the Mexican Taxpayer Administration (SAT), and fulfill the established requirements in order to continue having the VAT and the Special Tax on Production and Services program. The aforementioned notice must be submitted 30 days prior to the expiration date of the the current certification. The contract manufacturing companies that already had a VAT and the Special Tax on Production and Services certification may continue to enjoy the aforementioned terms, provided that the authorization document is valid.
Not maintaining a legal domicile for tax purposes will be grounds for cancellation, or in the event that the establishment cannot be determined or is nonexistent.
Conclusion:
Several of the benefits that national certified companies have through these changes, and which are granted by VAT certification, as well as several requirements for VAT certification, are being included for those who may want to be an AEO.
Resulting from the analysis of the amendments with respect to the referred to certifications, we conclude that for 2016 the authorities tried to simplify into one statute in the General Foreign Trade Rules [in Spanish: las Reglas Generales de Comercio Exterior (RGCE)] the requirements, obligations, benefits, revocations, and renewals of the various certifications that exist in matters of foreign trade. However, it can be difficult to identify what is applicable to each of the certification methods, since the rules break off from what is general and end in something specific. Also considered are the inconsistencies that are currently in the provisions that regulate certifications and the formats that have been issued.
In addition to this, it is worth notingthat with the inclusion of the term “Authorized Economic Operator”, safety and confidence come to mind in the supply chain, since it is a concept that is used at an international level.
We recommend that you contact your trade advisors to comply with the new guidelines in a timely manner.
