New Mexican regulation for IMMEX companies will impact operations

Mexican law provides that Mexico’s 16% Value Added Tax (VAT) is owed at the time of importation. In the case of temporary imports, such as those done by IMMEX companies, the importer may request the return of VAT after exporting the good made by the IMMEX company in Mexico.

Mexican tax authorities rigorously review all refund requests. These reviews can result in partial refunds and/or lengthy timelines for achieving refunds. To avoid these scenarios, many IMMEX companies obtain a VAT “certification” from the Mexican tax authorities. The VAT certification permits IMMEX companies to apply a credit that generally eliminates the VAT paid at time of importation, provided the goods are exported out of Mexico. IMMEX companies are required to meet several fiscal and tax requirements to take advantage of this certification. Among those requirements, they must maintain an accurate “Annex 24” inventory control system (distinct from the IMMEX company’s ERP software), and to apply for and obtain SAT approval.

There has been a noticeable increase in the past couple years of temporary suspensions, or even cancellation of, IMMEX VAT certifications. SAT officials have based these suspensions and cancellations on errors or inconsistencies in the IMMEX Annex 24 inventory control system.

By granting customs officials direct access to the Annex 24 system, the government seeks to ensure greater transparency in the management of imported goods and materials. This move is expected to facilitate more efficient monitoring and verification processes, reducing the risk of non-compliance and potential fraud. Companies will need to ensure that their systems are robust and secure, capable of handling external access without compromising sensitive information. Providing SAT online access to the IMMEX company’s Annex 24 software will allow the SAT to quickly detect possible inconsistencies or errors, which could likely result large and fiscally significant taxes and penalties, as well as an increasing the number of companies who will have their VAT certification suspended or cancelled.

This regulation also poses several operational challenges for IMMEX companies. Firstly, there is the need to upgrade or modify existing IT infrastructure to accommodate this new requirement. This could involve significant investment in technology and cybersecurity measures to protect against unauthorized access and data breaches.

Additionally, companies will need to train their staff to manage and monitor this new access, ensuring that customs personnel can navigate the system effectively without disrupting daily operations. This may require additional resources and time, potentially impacting productivity in the short term.

The requirement for SAT access to the Annex 24 system could also lead to changes in business processes. Companies might need to implement stricter inventory controls and more detailed record-keeping to ensure that all data entered into the system is accurate and up to date. This could increase administrative burdens and necessitate the hiring of additional personnel to manage these tasks.

While the new regulation aims to improve transparency and compliance within the IMMEX program, it also presents several challenges for companies. Balancing the need for enhanced oversight with the operational realities of implementing these changes will be crucial. Companies will need to invest in technology, training, and process improvements to meet these new requirements effectively.

The ONESOURCE Global Trade IMMEX solution has been enhanced to meet this new regulatory requirement and position our clients to comply with the new access obligation.

For more information on how the ONESOURCE Global Trade IMMEX solution can assist you in managing your Mexican maquiladora needs, please contact your Account Manager or Client Services Manager.