Tax Credit for VAT and STPS
Sep 10, 2014 QuickCounsel Download PDF
The maquila and manufacture industry is one of the biggest and important industries in Mexico; Furthermore, such industries have been growing rapidly in the last years; their establishment in Mexico of the biggest transnational companies is proof of this fact. Therefore it is important to ensure the competitiveness of such industries in global markets.
Having this in mind and through several efforts of the legislative branch, on January 1st, 2014, the Ministry of Treasury, through the Mexican Revenue Agency, published the 6th amendment to the General Regulations on Foreign Trade Matters for 2013 (the "Regulations") in the Federal Official Gazette, to be effective on the same date of publication. Such amendments incorporate new sections to the Regulations (from the s. 5.2.13 to s. 5.2.17) that apply to IMMEX companies, and companies that operate Bounded Warehouses ("Recintos Fiscalizados"), Strategic Bounded Warehouses ("Recintos Fiscalizados Estratégicos"), and Fiscal Warehouses ("Depósitos Fiscales"), in order to obtain a certification that aims to grant a 100% tax credit for Value Added Tax (VAT) and the Special Tax for Products and Services (STPS) on temporary importations that would start being paid as of January 1st, 2015.
To obtain the tax credit, companies must apply for a Certification, through the Revenue Agency System ("Solicitud de Certificación en Materia de IVA y del IEPS"), at the website www.ventanillaunica.gob.mx
In general terms, companies in good legal standing with their tax and customs obligations, may be able to obtain the certification on VAT and STPS, classified under one of the following categories: "A", "AA", or "AAA".
Some of the requirements that companies must meet to obtain the certification are the following:
In addition, the Regulations set forth other specific requirements that apply in particular to IMMEX companies, companies that operate Bounded Warehouses, Strategic Bounded Warehouses, and Fiscal Warehouses, as the case may be. Some of them are the following:
For IMMEX Companies:
For automotive industries operating as a Fiscal Deposit:
For Bounded Warehouses and Strategic Bounded Warehouses:
Likewise, for certifications "AA" and "AAA", companies must fulfill with more provisions in order to obtain such level of certifications (e.g., have an average number of employees during 2013 of at least 1,000).
Some of the benefits of the certification program are following:
OBLIGATIONS ONCE OBTAIN THE CERTIFICATION
Companies that have obtained the certification shall permanently comply with, among others, the following obligations:
CANCELLATION OF THE CERTIFICATION
Some of the events that would trigger cancellation of the certification are the following:
Companies that wish to obtain the certification for the year of 2014 shall file their application depending on the company's address considering the territorial coverage of the Local Customs Authority ("ARACE") in accordance to the following calendar:
For the application process, the tax authorities will issue the relevant instructions and manual within 40 days following the publication of the Regulations' amendments. The lack of response by the Tax Authorities within the period above mentioned shall be considered resolved in a negative manner.
As result of these new provisions, we suggest to companies with IMMEX program, Bounded Warehouse, Strategic Bounded Warehouse, and Fiscal Warehouse, to start preparing the necessary documents and requirements to submit their applications within the corresponding periods on time.
Additionally, due to amendments to tax and foreign trade laws bring a lot of changes and new obligations to IMMEX entities, we highly suggest to review the operations and conduct a correction plan to adjust to the new obligations applicable to the Companies.
As mentioned before, the maquila and manufacture industry is one of the biggest and important industries in Mexico. Despite this fact and derived from the amendments to tax and foreign trade laws such industries suffered the elimination of the VAT special rate for temporary exports at the border zones, therefore the implementation of the aforementioned certification to obtain the tax credit for VAT and STPS will ensure the competitiveness of the maquila and manufacture industries in Mexico and global markets by helping the companies to achieve an acceptable cash flow with the refund of the VAT.
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