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  • Tipo: KPMG information
  • Fecha: 14/01/2014

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La Práctica de Impuestos analiza de manera detallada los efectos que puedan tener en su empresa las diversas disposiciones regulatorias.

Certification Rules in Relation to the Value Added Tax and the Excise Tax on Production and Services 

On December 11th, 2013, the amendments to the Value Added Tax Law and the Excise Tax Law were published (hereinafter referred to as VATL and ETL respectively). These reforms include the determination and the liability of payment of the respective tax on temporary imports carried out by companies with authorization to operate programs under the Decree for the Development of the Manufacturing Industry, Maquiladora and Export Services (hereinafter referred to as IMMEX); as well as those carried out under the customs regimes of the Automotive Bonded Warehouse, Free Trade Zones and the Elaboration, Transformation or Repairing within an In-Bond Warehouse.
In addition, in both the VATL and the ETL, it was established that the companies that obtain the certification of the Tax Administration Service (hereinafter referred to as SAT) would get a tax credit equivalent to the 100% of the payable value added tax and the excise tax (hereinafter referred to as VAT, and ET respectively), for the importation of goods under the regimes mentioned above.

 

In accordance with the new legislation, in order to obtain the certification, the companies will have to substantiate that they meet the requirements through which they enable an adequate control over the operations carried out under the customs regimes previously mentioned, abide by the general provisions issued for that purpose by the SAT.

 

If the importers are not willing or cannot get the certification, these can avoid the payment of VAT and ET on temporary imports as long as those taxes are guaranteed through a bond.

 

It is noteworthy that the provisions regarding the payment liability in the introduction of goods under the aforementioned customs regimes, as well as the obtaining the tax credit equivalent to the payable VAT and ET, will entry into force one year after the SAT publishes the rules to obtain the corresponding certificate.

 

In this regard, on 1st January, the SAT issued the Sixth Resolution of Amendments to General Rules on Foreign Trade for 2013, where it establishes the mechanism in order to obtain the certification.

 

The rules that are most relevant, from our standpoint, are analyzed below; however, our recommendation is that every rule should be analyzed separately, in order to identify any other issues of particular interest that might not be covered by this analysis.

 

Modalities and benefits

 

In accordance to the published rules, certification will have three levels: “A”, “AA” and “AAA”, each with different requirements and benefits.

 

Mode “A”

 

Companies, which become certified under this modality, will be able to obtain the tax credit equivalent to the 100% of the VAT and ET payable on their imports under the mentioned customs regimes.

 

In addition, it is anticipated that they might also obtain a refund of the VAT balances, within a period not exceeding 20 days from the day following the submission of the application.

 

Finally, the validity of the certification is 1 year, which may be renewed provided that the request is filed within 30 days prior to the expiration date; and that the companies show that they continued complying with the requirements of the registration.

 

The authority may require to the applicant any additional information or documentation, for which will grant 15 business days. Once all the requirements are met, as well as the information and documentation provided, the authority will have to resolve within 20 days on the corresponding renewal. Failure to do so within the established period, the response will be presumed positive.

 

Mode "AA"

 

Companies that become certified under this modality will be able to obtain the tax credit equivalent to the 100% of the VAT and ET payable, on their imports under the relevant customs regimes.

 

In addition, it is anticipated that they can also obtain the refund of outstanding VAT balances, within a period not exceeding 15 days from the day following the submission of the application.

 

Another benefit for companies who are certified under this modality is that if they detect any irregularity in their operation, and the tax authorities have not initiated its inspection powers, they will have the opportunity to submit a written request describing these irregularities and, if necessary, will be able to determine the omitted contributions and taxes. In that case, the tax authority shall allow a period of 30 business days for companies to correct their tax situation; otherwise, the authority shall exercise their respective powers.

 

Moreover, if prior to the exercise of powers of verification, tax authorities detect the alleged omission of taxes and credits derived from the foreign trade operations, carried out by the certified enterprises under this level, they will notify the latter through “invitation letters”. Failure to accomplish in its totality the noted on the invitation letter within the time limit, authorities may start at any time to exercise their powers of control.

 

On the other hand, if the customs authorities detect the update of any ground for suspension in the National Importers Registry, or the Specific Exporters Register, in either case, it must be followed the procedure for suspension; allowing to the certified enterprise to offer evidence and the arguments supporting their case, without its registration to be suspended immediately, regardless the reasons that could be updated.

 

Finally, the validity of the certification shall be 2 years, which will be automatically renewed, provided that the request is filed within 30 days prior to the expiration date; and that there is evidence of continued compliance with the requirements of the respective registration.

 

Mode "AAA"

 

Companies that become certified under this modality will be able to obtain the tax credit equivalent to the 100% of the payable VAT and ET, on their imports under the relevant customs procedures.

 

In addition, it is anticipated that they can also obtain the refund of outstanding VAT balances, within a period not exceeding 10 days from the day following the submission of the application.

 

As previously discussed, those companies certified under the "AAA " level, when detecting any irregularity in their operation, and while tax authorities have not initiated its inspection powers, they will have the opportunity to submit a written request describing these irregularities and, if necessary, will be able to determine the omitted contributions and taxes. In that case, the tax authority shall allow a period of 60 business days for companies to correct their tax situation; otherwise, the authority shall exercise their respective powers.

 

Moreover, if prior to the exercise of powers of verification, tax authorities detect the alleged omission of taxes and credits derived from the foreign trade operations, carried out by the certified enterprises under this level, they will notify the latter through “invitation letters”. Failure to accomplish in its totality the noted on the invitation letter within the time limit, authorities may start at any time to exercise their powers of control.

 

On the other hand, if the customs authorities detect the update of any ground for suspension in the National Importers Registry, or the Specific Exporters Register, in either case, it must be followed the procedure for suspension; allowing to the certified enterprise to offer evidence and the arguments supporting their case, without its registration to be suspended immediately, regardless the reasons that could be updated.

 

An operational benefit is that companies that obtain certification under this modality is that they will be able to clear monthly consolidated “pedimentos” (import/export documents).

 

Regarding the requirement to maintain an automated inventory control system, the companies that achieve certification under this modality, may demonstrate compliance, provided that the system tracks the destination, the outages, and the outstanding balances of raw materials according to the terms established by SAT.

 

Likewise, these companies will be able to carry out the customs clearance of goods for temporary importation without declaring or transmitting the corresponding serial numbers on the permit, the electronic document, the invoice, shipping document or packing list; provided that the registration of the relevant information is kept updated on the inventory control system; and that it issues automatic reports requested by authorities.

 

In addition, the company may choose to carry out the customs clearance for export at their own location as long as they meet the guidelines to that effect issues the customs authorities.

 

Finally, the validity of the certification shall be 3 years, which will be automatically renewed, provided that the request is filed within 30 days prior to the expiration date; and that there is showed evidence of continued compliance with the requirements of the respective registration.

 

From our point of view , some of the benefits identified in the issued rules are not entirely clear; or it is not certain that some rules may not continue to be carried out; as for example, handling consolidate motions for enterprises certified under the modes "A" and "AA".

 

Additionally, the "benefits" related to the inventory control for companies certified under the "AAA" mode, create uncertainty about how the companies under modalities "A" and "AA" might demonstrate compliance with the obligation of meeting this requirement.

 

We expect the tax authorities will clarify this and other points in modifications to the rules to be issued later.

 

Requirements for certification

 

General Requirements

 

  • File the request through the Digital Window (VUCEM), note that the format is pending of publication
  • Have an inventory control system in accordance with the provisions set forth by SAT
  • File a positive opinion regarding its tax compliance, issued within 30 days prior to the filing date of the application, including the related to the partners, shareholders, legal representatives, sole director or member of the board
  • At the time of the application, the applicant should not be included on the list of companies published by SAT concerning non-compliant entities regarding their tax obligations
  • Count with current and valid digital stamps licenses
  • Submit proof of all personnel registered with the Mexican Social Security Institute (IMSS, for its acronym in Spanish) and provide supporting documentation regarding the contributions paid to the IMSS of at least 10 employees made through online capture of the last two months of the immediate previous year; in case of subcontracting, show that the company has the positive opinion of tax compliance issued within 30 days prior to the date of filing, and proof that subcontractors have complied with the obligation to withhold and pay the income tax ( hereinafter referred to as ISR) of the workers
  • Submit evidence of their investment in Mexico
  • Report the name and address of foreign customers and suppliers with which the company conducted foreign trade transactions in the preceding year
  • Allow access at all times to the personnel of the General Administration of Foreign Trade Audit for the inspection/verification visit

 

Additional Requirements

 

IMMEX Companies:

 

  • Count with the IMMEX authorization valid to the application date
  • All the facilities in which the companies carry out the authorized activities under the IMMEX program, must be duly registered before SAT
  • Count with infrastructure for the IMMEX operation according to the corresponding modality
  • Evidence that during the last 12 months, the value of the transformed or returned goods represents at least 60% of the value of raw material temporarily imported during the same period
  • Evidence that the company has the legal tenancy of the facilities where the processes take place
  • Describe the activities related to manufacturing processes or services according the program modality, including the goods receiving, storage, production process and its return
  • Evidence that the company has a manufacturing/maquila contract, sale-purchase contract, purchase or service order, proving the continuity of the export project

 

The IMMEX companies that carry out temporary import operations and returns of the goods listed on Annex I TER of the IMMEX Decree related to the manufacture of iron and steel; or the goods listed on Annex 28 of the Foreign Trade Rules, when they are intended to produce certain goods for the apparel and footwear sectors, must comply, additionally, with the following requirements:

 

  • Have a 12 month experience with IMMEX operations, prior to the application date
  • Evidence that during the last 12 months, the value of the transformed or returned goods represents at least 80% of the value of raw material temporarily imported during the same period
  • Submit proof of all personnel registered before IMSS and provide documentary support of payment for the last 3 two-month periods, of the immediate preceding year
  • Evidence that the partners, shareholders, legal representatives, sole director or member of the board of the company have filed their last two yearly tax returns, declaring taxable income
  • List all freight companies used and, where applicable, all in-bond warehouses where customs operations take place
  • Count with fixed capital or, where appropriate, with machinery and equipment of at least $ 4,000,000.00 pesos

 

Automotive bonded warehouse:

 

  • Count with a valid authorization
  • Not be subject to cancellation process

 

Free Trade Zone and In-bond warehouses:

 

  • Count with a valid authorization
  • Not be subject to cancellation process
  • Comply with the guidelines set forth by the customs authorities for control, monitoring and security of the facility and the foreign trade goods.

 

From our perspective, the requirements listed above for obtaining the certification that would allow to get the tax credit, exceeds the requirements set on ETL, and VATL for getting the certification, leading to its possible illegality, especially since most of them do not refer to the due control that should be demonstrated at the customs procedure for which the goods are subject.

 

Specific requirements for certification under the modalities "AA " and " AAA"

 

Level "AA":

 

In addition to meeting the general requirements above, you must demonstrate:

 

  • At least 40% of their local suppliers (linked to their main business activity) must count with a positive opinion regarding its tax compliance and the supplier should not be included on the list of companies published by SAT concerning non-compliant entities regarding their tax obligations
  • Have a 5 year experience, according to the authorization for which the certification is requested; or that during the preceding year the applicant had at least 1,000 employees duly registered before IMSS; or the value of its machinery and equipment is greater than $50,000,000 pesos
  • SAT should have not determined any tax liability during the 12 months prior to the application date and if SAT has determined a tax liability, the applicant should have requested the payment in installments or that such tax liability has already been paid
  • SAT should not have issued any resolution of inadmissibility regarding VAT refund requests during the last 12 months prior the application date Level "AAA":

 

In order to obtain the certification under this level, in addition to the general requirements, the following requisites must be met:

 

  • At least 70% of their local suppliers (linked to their main business activity) must count with a positive opinion regarding its tax compliance and the supplier should not be included on the list of companies published by SAT concerning non-compliant entities regarding their tax obligations
  • Have a 7 year experience, according to the authorization for which the certification is requested; or that during the preceding year the applicant had at least 2,500 employees duly registered before IMSS; or the value of its machinery and equipment is greater than $100,000,000 pesos
  • SAT should have not determined any tax liability during the 24 months prior to the application date and if SAT has determined a tax liability, the applicant should have requested the payment in installments or that such tax liability has already been paid
  • SAT should not have issued any resolution of inadmissibility regarding VAT refund requests during the last 12 months prior the application date

 

Deadlines for Certification

 

Entities willing to be certified must apply according to the calendar described below, which has been set forth by the tax authorities.

 

The authority shall require the applicant any additional information or documentation, such requirement should be issued within 15 business days. Once the applicant has covered all the requirements, as well as the information and documentation, the authority must issue definitive resolution within 40 days. If the authorities do not respond within that period, it is understood that the answer is negative.

 

Based on their tax domicile, applicants must submit their applications according to the following calendar:

 

  • Companies certified under subsection L of rule 3.8.1. of the General Rules on Foreign Trade and enterprises operating under the regime of Fiscal Deposit to undergo the process of assembly and manufacture of automobiles, must apply for certification from 1 to 30 April
  • North Pacific must apply for certification from 15 April to 15 May
  • Northeast must apply for certification from June 3 to July 3
  • North Central must apply for certification from July 7 to August 7
  • Center must apply for certification from 7 August to 8 September
  • South West and will have to apply for certification from September 22 to October 22 .

 

The Foreign Trade Zones and In-bond Warehouses may apply at any of the 6 periods.

 

For companies certified under subsection L of rule 3.8.1. of the General Rules on Foreign Trade (NEEC authorized entities), as well as automotive bonded warehouses, may also choose to file the corresponding application according to the deadlines applicable to its tax domicile.

 

Applicants that do not submit their request within the time limits could apply afterwards. However, the 40 days period for the authority to issue final resolution would begin after October 22 or the application date, whichever is later.

 

It should be noted that if the certification is cancelled, the companies would be banned to get the certification again for a period of 24 months as of the effective date of the cancellation.

 

May you have any additional question, please contact your Tax & Legal specialist that would be more than happy to assist you.
 
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