Mexico’s Treasury Department, acting through its Tax Service Administration (SAT), recently decided to add anew miscellaneous tax rule regarding refunds of the Value Added Tax (VAT) incurred in Investment Projects inFixed Assets (Published in the Official Journal of the Federation on October 16, 2014. Rule I.4.1.9.). As such,as of October 17, 2014, taxpayers that undertake investment projects on fixed assets may be able to obtainapprovals of their refund requests within a maximum time period of 20 business days (with respect to theacquisition or manufacturing of assets, including the rendering of services or granting the temporary use orenjoyment of assets relating to the acquisition or manufacturing of the assets).It is important to note that the same miscellaneous rule I.4.1.9 establishes certain requirements in order fortaxpayers to be able to take advantage of this benefit. Such requirements are as follows:I. That the VAT applicable to the investments represents at least 50% of the total VAT that is declared.II. That the refund requested be greater than one million pesos.III. That the acquisitions relate to new assets acquired or permanently imported beginning as of January2014, which are permanently used within Mexico (new assets are those used for the first time inMexico).IV. That the payments upon which VAT was incurred were made by means of a check, credit card, debitcard, service card, or electronic transfer of funds.V. With respect to related parties within a corporate group, VAT payments and credits, as applicable,must be properly evidenced and documented.Taxpayers should note that this benefit is being offered only if the requirements established in the rule continue tobe complied with until the conclusion of the investment project. In the case of a taxpayer’s first request for arefund, the response time shall be the regular time period of 40 business days. Subsequent requests for VATrefunds shall be resolved within 20 business days.In conclusion, this benefit is not recommended in certain cases; therefore, prior to filing VAT refund requests, itis important to review the specific case of each taxpayer.
Recently, the Full Session on Administrative Matters of the First Circuit of the Supreme Court of Justice of theNation approved legal opinion number PC.I.A. J/23 A (10a), titled: “Trademarks. The Mexican Institute ofIndustrial Property has the authority to translate words in a foreign language that are submitted for registration inorder to determine their viability for registration.” In this legal opinion, the court resolves, by contradictory legalopinion, that the Mexican Institute of Industrial Property may translate words submitted for registration that arein a foreign language in order to determine whether such may be registered through means of the trademarkexamination procedure. The foregoing applies, considering that section XXII of Article 6 of the IndustrialProperty Law authorizes it to carry out the necessary activities in accordance with its legal authority.
Article 89, section I of the Mexican Constitution confers upon the President of the Republic of Mexico the powerto provide, in the administrative area, for the compliance with laws. Such relates to the regulatory authority of theFederal Executive, which encompasses not only the issuance of rulings (reglamentos) but also of decrees,resolutions, orders and other regulatory instruments, which should be countersigned by the heads of thedepartments responsible for their implementation.Since the beginning of the last decade, the proposed presidential rulings, and actually all of the generalregulations issued by the federal public administration, must go through a prior process of public consultation,which seeks to provide a greater democratic legitimacy to governmental regulation. Additionally, the proposalsmust undergo a cost-benefit analysis by means of the necessary regulatory impact assessment. All of this is to bedone through the Federal Commission for Regulatory Improvement (Comisión Federal de Mejora Regulatoria, COFEMER), an agency within the Department of Economy, which in the last few years has been baptized as “theregulator of the regulators.”In the ceremony where the energy laws were signed, President Peña Nieto instructed that their implementationprocess be fully accelerated. Among the ten points announced for such purpose, he ordered that, at the latest, inOctober 2014, all of the respective presidential rulings would be published. All of this despite the fact that theFederal Congress gave the Federal Executive a term of 180 calendar days for the issuance of the HydrocarbonsLaw rulings, in accordance with transitory Article Four of that statute, and in the case of the Electric IndustryLaw, a term was not even established for issuing its rulings.During the third week of September, various proposed drafts of rulings were published on the COFEMERwebsite in order to kickoff the approval process. It should be noted that the Hydrocarbons Law, as well as theElectric Industry Law, are so detailed that they do not leave much room for rulings, in addition to the fact thatboth highlight the manner in which Congress delegated many of the regulatory functions directly to theregulatory agencies, which will be exercised by means of general administrative provisions. In any case, theHydrocarbons Law will initially be implemented through an instrument that is fundamentally dedicated toupstream activities and general matters and another that will cover midstream and downstream activities in thehydrocarbons’ value chain. The Electric Industry Law, with its 169 substantive articles and 24 transitory articles,would be developed by rulings consisting of 110 substantive articles and 9 transitory articles. Likewise, theamendment of various current environmental rulings was proposed in order to accommodate the new authority ofthe National Agency of Industrial Safety and Environmental Protection of the Hydrocarbons Sector.It is very positive news as to how soon the Federal Executive intends to finalize the energy reform by means ofthe various levels of regulation in order to accomplish, as soon as possible, the issuance of permits and thesubscription of specific contracts. The objective is commendable: provide full and timely legal certainty for newinvestment in the sector. Such is due to the fact that in the recent past there have been unfortunate delays in theissuance of regulatory provisions. An extreme case was the draft of the Natural Gas Rulings, which wassubmitted to never-ending negotiations during periods of varying intensity between 2010 and 2012 among theDepartment of Energy, the Energy Regulatory Commission, Petróleos Mexicanos, the Federal ElectricityCommission, private permit-holders and large industrial users, and, in the end, the instrument did not see the lightof day.The exercise of the presidential regulatory power is extremely delicate. The rulings should strictly abide by theletter of the law and adhere to the development of its content without establishing additional obligations forindividuals. The stakes involved are huge. The governmental haste has created a certain amount of concernamong the stakeholders, as several organizations have immediately requested to extend the time period to makecomments and opine regarding the proposed draft rulings.We must trust that the professionalism of the technical areas within the Department of Energy, the regulatoryagencies of the sector, and above all, the Legal Counsel of the Federal Executive, will give rise to solid rulings,complete in the details required by the industry, and which will stand up to constitutional challenges.