Impact on IMMEX companies
On June 30 2010 the Ministry of Finance published the Fifth Resolution Amendments to Exhibits 10 and 22 of the Foreign Trade Rules.
Amendments were made to the logistics scheme that has benefited companies certified and registered under the Promotion of Manufacturing, Maquiladora and Export (IMMEX) programmes by increasing their level of competitiveness, as well as attracting new business to Mexico. The scheme was devised to help foreign residents to sell products manufactured by certified IMMEX companies in Mexico, thereby making important savings. However, under the amendments, sales are now deemed to occur in Mexico and become subject to value added tax (VAT), which must be withheld by the individual or entity that purchases the goods.
The amendment will further increase administrative burden and raise costs for IMMEX companies, given that the withheld VAT will be credited towards VAT due the following month. It also appears that foreign residents which sell goods in Mexico that are manufactured by certified IMMEX companies will now be obliged to register with the Federal Taxpayers Registry, issue electronic tax receipts and separately account for VAT. These requirements effectively eliminate the possibility of exporting and importing goods 'virtually', and appear to echo the original scheme where risks and costs (eg, delivery) directly affected the end consumer.
It seems that the authorities have ignored the customs framework that was created for these special transactions. This allowed for:
- the export of goods from Mexico through the use of virtual export summaries without actual physical extraction of the goods from the country;
- the sale of such goods abroad; and
- further down the line, definitive importation of the same goods through virtual import summaries, where import duties were paid without the sale being subject to VAT, since the sale was deemed to have occurred abroad.(1)
That the tax authorities may conduct tax audits on companies that have purchased goods via this scheme cannot be ignored. Also important are the possible implications of this amendment in connection with the presumptive existence of a permanent establishment of foreign companies for tax residency purposes; these have yet to be determined.
There have been a number of announcements regarding anti-dumping duties:
- Sunset and administrative reviews of the anti-dumping duties imposed on the import of rolled steel plate from Russia, as classified under Tariff Headings 7208.10.02, 7208.25.99 and 7208.37.01 of the Harmonised Tariff Schedule. The period of investigation for both proceedings was April 1 2010 to March 31 2011, while the period of analysis for the purpose of injury determination was January 1 2007 to March 31 2011.
- Sunset and administrative reviews of the anti-dumping duties imposed on the import of plastic sharpeners (with or without a depository for shavings) from China, as classified under Tariff Heading 8214.10.01 of the Harmonised Tariff Schedule. The period of investigation for both proceedings was April 1 2010 to March 31 2011, while the period of analysis for the purpose of injury determination was June 1 2006 to March 31 2011.
- Anti-dumping investigation on the import of radio guide coaxial cable (with or without connectors) from China, as classified under Tariff Headings 8544.20.01, 8544.20.02 and 8544.20 of the Harmonised Tariff Schedule. The investigation of core coaxial cable was rejected. The period of investigation was December 1 to 31 2010, while the period of analysis for the purpose of injury determination and causation was January 1 2007 to December 31 2010.
For further information on this topic please contact Adrián Vazquez or Horacio A López-Portillo at Vázquez Tercero y Asociados by telephone (+52 55 5534 36 36), fax (+52 55 5534 91 95) or email ([email protected] or [email protected]).
(1) The essence of this scheme is similar to sales conducted by foreign residents of imported goods in a bonded warehouse, where courts have held that sales maintained in a bonded warehouse take place outside Mexican territory while subject to the bonded warehouse import regime.