ANNOUNCEMENT 31 Oct 2013In October 2013, the government of Mexico announced a change in import formalities.
NUMBER OF INTERVENTIONS
TradeWatch, December 2013
PWC, Latin American Tax News Alert of 31 October 2013: http://www.pwc.com/en_US/us/tax-services-multinationals/newsletters/latin-american-tax/assets/pwc-mexican-congress-approves-2014-tax-reform.pdf
PWC, 6 December 2013, Global Watch - Mexico: 2014 Tax reform law passed: http://www.pwc.com/en_GX/gx/hr-management-services/newsletters/global-watch/assets/pwc-mexico-2014-tax-reform-law-passed.pdf
On 31 October 2013, the Mexican Congress approved amendments to the Mexican customs, VAT and excise tax laws, which are expected to have a significant impact on customs and foreign trade operations
VAT tax on temporary imports
Previously, temporary importations of goods and fixed assets under article 25, section I of the VAT Law were not subject to the payment of VAT. This tax provision benefited temporary and in-bond import operations of industries as manufacture, transformation or repair, bonded warehouse for transformation (such as the one for the automotive industry) and strategic bonded warehouse.
Newly, an import VAT at the general 16% rate will have to be paid on temporary or in-bond importations. According to Ernst & Young while 'the VAT paid upon importation may be recovered through a credit or refund when the finished products incorporating the imported goods are exported or transferred via virtual operations, the recovery process may take significant time and effort.'
Excise tax on temporary imports
The provision exempting temporary or in-bond importations of goods from the excise tax was also eliminated. In contrast to the new VAT, the excise tax expenses may not be recuperated after re-exporting the products.
Among the affected goods are: beverages with alcohol content, beer, cigarettes, gasoline and diesel, junk food with caloric density of 275 kilocalories or more per 100 grams, such as snacks, confectionery products, chocolate and other cocoa-based products.
VAT in the border area
Reduced rate of VAT in the border area will be eliminated which means an increase from 11% to the standard rate of 16% on imports. The export tax, however, remains zero-rated.
VAT for tourists
The standard rate of 16% applies to hotel and related services to foreign tourists who attend conferences in Mexico (currently 0% VAT rated).
Customs broker for import and export operations
The new amendments of article 40 of the Mexican Customs Law, introduce the right and not the obligation (and thus enhance flexibility) for importers and exporters to file the customs clearance on their own behalf, in contrast to the mandatory previous use of a customs broker as their representative.
The new law taxes sales of goods located in Mexico, between a foreign resident and a maquiladora, at the regular 16% VAT rate (currently exempt). Maquiladoras will no longer withhold VAT on domestic suppliers