VAT-IEPS Certification for IMMEX companies Follow up process Héctor Silva June 2014 VAT-IEPS Certification for IMMEX companies Background © 2014 Galaz, Yamazaki, Ruiz Urquiza, S.C. 2 Background Elimination in 2015 of the VAT Tax exemption for the following transformation customs regime: Temporary imports destined to transformation, manufacturing or repairs in accordance with the IMMEX program; Bonded Warehouse (Depósito Fiscal) destined to the assembly and fabrication of vehicles; Bonded Warehouse (Almacén General de Depósito) for elaboration, transformation or assembly of goods; Strategic customs warehouses (Recinto Fiscalizado Estrategico) Special free trade zone areas established in specific geographic spots colliding with customs facilities. © 2014 Galaz, Yamazaki, Ruiz Urquiza, S.C. 3 VAT / IEPS Certification Modes To have a VAT / IEPS exemption, the companies that are up to date in their tax and customs obligations, will be allowed to obtain a certification on VAT and IEPS, under the following categories: A, for all IMMEX companies AA, for IMMEX companies that comply with any of the following requirements: • Have customs operations during the past 5 years • During the previous year have at least an average of 1,000 IMSS registered employees • The value of the machinery and equipment must be superior to Ps$50 million AAA, for IMMEX companies that comply with any of the following requirements: • Have customs operations during the past 7 years • During the previous year have at least an average of 2,500 IMSS registered employees • The value of the machinery and equipment must be superior to Ps$100 million © 2014 Galaz, Yamazaki, Ruiz Urquiza, S.C. 4 VAT / IEPS Certification Benefits © 2014 Galaz, Yamazaki, Ruiz Urquiza, S.C. 5 Geographical zone schedule Companies that wish apply for certification on VAT and IEPS must do so in accordance with the following schedule for your offices, considering the circumscription of the Regional Management Audit of Foreign Trade (ARACE): © 2014 Galaz, Yamazaki, Ruiz Urquiza, S.C. 6 Response period by authorities The ACALCE authorities will resolve the certification in a term of 40 working days. In case of submitting the application in any date after October 22, 2014, the lapse time will start on the date of filing If during those 40 day period the application has not been resolved, it will be considered as a not favorable resolution. In case the authority detect any missing requirement, they will request it electronically and the company will have 15 days to attend the information requested, if not will be considered an application withdrawal The 40 days will start after all the requirements are met. If determined by the authority that the company does not have the proper controls to undertake its operation during the inspection, the company will no be allowed to submit a new application for 6 months. © 2014 Galaz, Yamazaki, Ruiz Urquiza, S.C. 7 VAT-IEPS Certification for IMMEX companies Requirements by authorities © 2014 Galaz, Yamazaki, Ruiz Urquiza, S.C. 8 Requirement by authorities People registered as authorized to hear and receive notifications may receive an email informing them that they have a notice. In case of failure to register a person is important to periodically verify at VUCEM (Ventanilla Única). Once at VUCEM, when applicable, must confirm the action of being notified by signing with the electronic signature FIEL. The date of the notification will start a 15 day period to reply the authorities. © 2014 Galaz, Yamazaki, Ruiz Urquiza, S.C. 9 Requirement by authorities The main requirements for documentation have been: For information that was submitted incomplete or that the authorities didn’t see it had two (or more parts) of the same document. Another one is related to the stated address on leases, that does not match with the registered at VUCEM. When not listing at the application the details of partners, shareholders and board members, as well as the positive review of compliance with their tax obligations, these could be requested also. When any of the contracts it is no longer in force. © 2014 Galaz, Yamazaki, Ruiz Urquiza, S.C. 10 VAT-IEPS Certification for IMMEX companies Inspection visits © 2014 Galaz, Yamazaki, Ruiz Urquiza, S.C. 11 Inspection visits Rule 5.2.13. of the General Rules on Foreign Trade, established as a requirement of Application: Allow access at all times to AGACE staff, for the initial inspection and for those of follow up of the compliance. Rule 5.2.17. establishes as grounds for cancellation of certification, preventing access to the staff of the customs authority. Therefore, it is extremely important to allow authorities to conduct visits. © 2014 Galaz, Yamazaki, Ruiz Urquiza, S.C. 12 Inspection visits (2) ACALCE staff contacts via email the person identified as the main link in the Certification Application, and will ask them the following: Phone: Official address: Address where the production process is carried out: Address of the inventory control system (Mexico): Security or special equipment for access to the facilities: Once you provide the requested information, the authorities will set the date of the visit. Then, a visit plan is delivered, covering the main data of the company, as well as the activities and personnel that will carry it out, the approximated duration, and documentation to be reviewed. © 2014 Galaz, Yamazaki, Ruiz Urquiza, S.C. 13 Inspection visits (3) The order of the inspection visits will be as follows: Identification of SAT and company’s personnel. Presentation of the company, which should explain a little history of the company, date of commencement of operations, what you do, etc.. The authority may request: Original and copy of the information submitted through VUCEM, such as lease agreements, maquila agreements, etc. as well as Tax ID registry, energy bills, and others. The authority may also request regarding the amount of the listed investment, the computations, documentary support such as invoices or pedimentos. © 2014 Galaz, Yamazaki, Ruiz Urquiza, S.C. 14 Inspection visits (4) To download of a recent export pedimento, related to imported material (discharged). Also, they may request to select one that still has stock and that is physically on the facilities, in order to physically locate it and then follow it the productive process. A report of inputs (imports) and outputs (exports) for the last two months. Derived from this report, they may ask specific questions in materials or transfers made (name, RFC of the companies they transfer) Subsequently, the authority will have a guided tour trough the plant to review the production process, being very weary on the reception of material and its export or transfer. The guided tour should be in the order the production process is carried out. The company should comment on the scrap export process. During the tour, the authority will be taking pictures of the production process. © 2014 Galaz, Yamazaki, Ruiz Urquiza, S.C. 15 Inspection visits (5) Usually the person making the tour of the production process is not the same person involved in the preparation of the Application for Certification, so it is important that the person is prepared to answer all questions that match with the information submitted at the application. The authorities will bring their computers, including the “glosa”, therefore anything that is being reported should match. Therefore, all staff involved in the visit should be aware of the situation of the company. © 2014 Galaz, Yamazaki, Ruiz Urquiza, S.C. 16 VAT-IEPS Certification for IMMEX companies Certification maintenance © 2014 Galaz, Yamazaki, Ruiz Urquiza, S.C. 17 VAT / IEPS Certification Maintenance The companies that obtain the certification in any of its modalities, will be subject to permanently comply with the following obligations: Comply permanently with the requirements for the certification of the modality that corresponds Notice SAT, in a term no longer that 5 days, of any change of business name, address, or modification of partners, shareholders, legal representative, sole director or member of the board Update the data from the certification application in case of change or modification of the carriers companies, bonded warehouses, strategic customs warehouses the list of clients and national and abroad supplier linked the productive process. Undertake all the customs operations with carrier companies that have a registered CAAT number assigned. © 2014 Galaz, Yamazaki, Ruiz Urquiza, S.C. 18 VAT / IEPS Certification Maintenance (2) The companies that obtain the certification in any of its modalities, will be subject to permanently comply with the following obligations: When the merger of 2 or more companies that have a certification for IVA and IEPS, and one of them subsists, notice should be given to ACALCE within 10 days prior to the date the merge takes place. When derived from a merger or acquisition of companies that have the certification for IVA and IEPS, a new company is formed, the company resulting from the merger and acquisition must present to the ACALCE authorities a new certification application. The companies with IMMEX program must update by electronic means the companies which they do virtual transfers, as well as the taxpayers ID (RFC) of the companies that perform sub-manufacturing processes. The companies that operate under the bonded warehouse regime for the automotive industry must update by electronic means the companies which they provide transfer certificates. © 2014 Galaz, Yamazaki, Ruiz Urquiza, S.C. 19 VAT / IEPS Certification Maintenance (3) The companies that obtain the certification in any of its modalities, will be subject to permanently comply with the following obligations: Allow the customs authorities the physical supervision inspections at the facilities to verify that the company still complies fully with the certification. Permanently be on time with the Social Security contribution payments made to IMSS and must be done online via the Referenced Payment System (SIPARE) © 2014 Galaz, Yamazaki, Ruiz Urquiza, S.C. 20 VAT / IEPS Certification cancellation grounds The ACALCE authorities may cancel a certification issued by any of the following causes: When certifying that they failed to comply with certain requirements for inscription on the applicable modality Do not grant access to customs authority, for the initial inspection and the compliance monitoring Once the procedure for suspending the specific importer exporter registry, it was not feasible to rebut the irregularity Do not prove, during the inspections, that proper infrastructure needed to undertake the manufacture operation or the service activity When the company fails to comply with the obligations under Rule 5.2.16 of RCGMCE When its not possible to prove that the temporary imported goods were returned, transferred, or destined to another customs regime. © 2014 Galaz, Yamazaki, Ruiz Urquiza, S.C. 21 VAT / IEPS Certification cancellation grounds (2) The ACALCE authorities may cancel a certification issued by any of the following causes: Where the authority finds that the temporary imported goods are not in the addresses authorized under the IMMEX program When legal tenancy can not be provided for merchandise above Ps$100,000 and the tax liability is not paid in the term established by SAT authority. Do not comply with the authorized terms by SAT authorities to oblige with they payment plan of the tax liabilities. When a cancelation procedure is initialized to operate subject to certification. © 2014 Galaz, Yamazaki, Ruiz Urquiza, S.C. under the customs regimes 22 VAT / IEPS Certification renewal The company will be allowed to request a certification renewal within the 30 days prior its expiration. The companies will have to demonstrate that they continue to comply with the requirements and obligations under the rule 5.2.16 of the RCGMCE The ACALCE authority will resolve the renovation within 20 working days. © 2014 Galaz, Yamazaki, Ruiz Urquiza, S.C. 23 Héctor Silva Rodríguez Tax Partner 011 52 (664) 622 7840 [email protected] Deloitte se refiere a Deloitte Touche Tohmatsu Limited, sociedad privada de responsabilidad limitada en el Reino Unido, y a su red de firmas miembro, cada una de ellas como una entidad legal única e independiente. 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