Issue #
July–August 2017

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Restructure of the VAT Certification System, by Edmundo Elias and Marisol de León

July 20, 2017

Based on the First Resolution of Modifications to the General Rules of Foreign Trade for 2016, published on May 9, 2016, a new comprehensive certification scheme was established, consisting of a permanent compliance program for companies that will be certified in new modalities, including VAT Certification and Authorized Economic Operator.

Under this new comprehensive certification scheme, obligations that used to be of instant or temporary compliance, have become permanent. Even though the VAT certification renewal process has been simplified, compliance with the obligations derived from the VAT certification may be reviewed at any time and, in case of non-compliance, a cancellation procedure may be initiated.

The government authorities that review compliance with a VAT certification have a stricter policy and have begun to carry out verification visits. An example of this policy change is that previously a person with a general power of attorney for acts of administration had sufficient corporate authority to be the legal representative for purposes of VAT certification. Today, however, such person must have a general power of attorney for acts of ownership, otherwise the VAT certification may be canceled.

Companies should pay particular attention when complying with these obligations, not limiting themselves to filing the initial balances and exhibit 31 reports. Rather, companies should keep in mind that such reports must be filed with information that is correct and consistent with their inventory control system detailed in exhibit 24. In our experience, Mexican officials have been open to receiving corrections of the initial balances and reports of exhibit 31. It is important to mention that even though these reports have been registered as valid in the Control of Credits and Guarantees System, this only means that the information was complete on the form when submitted, but does not imply a confirmation of the specific content of the filing.

Customs Valuation

July 20, 2017

The recent publication of new Regulations to Mexico’s Customs Law offer important changes in customs valuation methodologies. The obligations established in Article 81 of such Regulation, which consists of presenting documentation attached to the statement of value provided to a customs agent, should have entered into force. However, this obligation has been extended on several occasions and will now enter into force in January 2018.

The documents that will be required to be delivered to the customs agent include the following:

  1. a) Commercial invoice;
  2. b) Bill of lading, packing list, airway bill and/or other transport documents;
  3. c) Certificate of origin;
  4. d) When the value declared in customs is less than the estimated prices by the Secretary of Economy, the document that evidences the guarantee paid into in the customs account;
  5. e) Proof of the payment of goods;
  6. f) Documents that evidence expenses related to the transportation, insurance and other matters related to such customs entry;
  7. g) Contracts related to the transaction concerning the goods;
  8. h) Documents that evidence any additional charges (i.e. commissions, brokerage, packing charges, among others); and
  9. i) Any other information and documentation necessary to determine the value at customs.

In relation to this obligation, companies with a VAT certification are exempt from delivering the declaration of value to Mexican customs and, consequently, the documentation established in Article 81. Notwithstanding the foregoing, they are not exempt from the obligation to carry out a customs valuation analysis, to keep the respective supporting documentation and make it available to the competent authorities, upon request.

There has been relaxation and confusion on these issues. Therefore, companies should be aware of the changes that are constantly occurring regarding VAT certification, customs valuation and, in general, Mexican international trade and customs laws and regulations.

Money Laundering Prevention in Outsourcing Services, by Miriam Name and Fernando Juárez

July 20, 2017

In November 2016, the Financial Intelligence Unit ("UIF") of the Ministry of Finance and Public Credit ("SHCP") published on its website new rules in relation to outsourcing activities. In such rules, the UIF determined that the provision of services constituted a vulnerable activity under the terms of the Federal Law for the Prevention and Identification of Operations with Resources of Illegal Origin ("LFIPIORPI") or "Anti-Laundering Law". This new rule may reviewed at

The new rules imply that companies that provide personnel services (outsourcing and/or insourcing) must comply with a series of administrative burdens established by the Anti-Laundering Law. These obligations include identifying operations, appointing representatives before the UIF, filing notices and keeping documentation on file, among others. As can be seen, the obligations established by the Anti-Laundering Law generate a considerable administrative burden for companies. The fines for failing to give such notices, or late or erroneous deliveries, could be up to 65,000 times the Actual Minimum General Wage (approximately 5 million pesos) or from 10% to 100% of such activity that is considered vulnerable (whichever is greater).

In our view, in cases where the provision of services are in-house or between subsidiaries and/or related entities, such obligations provided by the referenced law are not applicable to companies with such structure. In this regard, working with a SHCP certified auditor in anti-laundering matters, we have obtained several favorable rulings for the benefit of our clients, and such rulings state that inter-company operations, including the rendering of services, are considered as non-vulnerable activity. Therefore, such related party contractual arrangements should not be subject to compliance with the requirements established in the Anti-Laundering Law. Such rulings benefit only the companies who obtain them. If your company is interested in obtaining more information about this, please contact Miriam Name ( and/or Fernando Juárez (fjuarez@ at 210-244-0224.

Relevant Aspects to Consider When Managing Employee Attendance Records, by Maria Fernanda Magallanes

July 20, 2017

In Mexico, it is vital for companies to take appropriate measures to control their employees' attendance. This not only entails confirming their schedules, but also issues related to the measurement of productivity within the company and how to avoid claims in the event of a labor lawsuit.

It is the employer whom, in case of labor lawsuit, has the burden to prove the following to the labor authorities: i) the work schedule; (ii) whether or not the employees worked overtime, and, if applicable, the payment of the such; and (iii) if the employees were absent from work with a justified or unjustified reason, and, if applicable, be able to prove the corresponding discounts for these absences or even to prove the rescission of the employment relationship without liability to the company for missing more than three days in a thirty day period.

The Federal Labor Law does not establish specific requirements on the type of attendance control that companies must have. However, the most common include attendance lists, punch cards and fingerprint or cornea scanners. The latter two being the most recommended, since such prevent employees from checking in for one another.

It is important that employers take into consideration that the check-in process must take place when the employee enters to provide services, when the employee leaves for food or breaks and when the employee concludes the work shift. Likewise, it is advisable that every pay period a hardcopy of the timesheet is printed to be signed by the employee, even in case of electronic control systems.

Another alternative is to include on the payment invoices a section reflecting attendance for pay period. With the signature of the receipt, the employee's work schedule is also validated and acknowledged. In addition, for the purposes of controlling an employee’s absentees, it is very important to include on paystubs or statements an item detailing the employee’s absences and confirming whether or not absences were justified. Whenever applicable, paystubs should indicate the absences and corresponding deductions. In case of overtime payments, paystubs should also indicate the number of hours to be paid and if such hours correspond to double or triple overtime pay.

For employees in management or otherwise not deemed hourly, it can be difficult to track their attendance. In these cases, it is important that the individual employment contracts contain a clause corresponding to the work schedule and state that they are obligated to abide by the work schedule established by the employer. Such document should also state that the employee may only work overtime with prior written authorization signed by a legal representative of the employer and require these workers to submit a daily record of their activities in such a way that the company can prepare the corresponding attendance reports to be signed by these employees.

Having adequate attendance controls provides companies with the necessary evidence to respond to and defend potential labor lawsuits and inspections by the of labor and Social Security authorities.

Criminal Liability of Entities, by Eduardo Parroquín Patiño

July 20, 2017

With the new National Code of Penal Procedures entering into force and the reforms made to the Federal Penal Code on June 18 and 17, 2016, respectively, entities in Mexico may now incur criminal liability and, consequently, be severely sanctioned for crimes committed under the auspices and with the assets of the entity. The foregoing is regardless of the liability incurred by the individual whom committed, participated in or provided instructions as to the criminal act.

It may be possible to mitigate an entity’s criminal liability by demonstrating that authorized individuals monitor and take precautions to prevent criminal conduct by the organization.

Article 11 Bis of the Mexican Federal Penal Code establishes a list of crimes for which an entity may be punished, as well as the various special laws listing such crimes. These crimes include tax fraud, narcotics trafficking, bribery, fraud, transactions with illicit funds and crimes against the environment, among others.

Penalties for the individuals vary, so a judge may order the payment of fines or even order the dissolution of the entity that has been found guilty of criminal conduct.

It is thus important for companies to designate individuals to be responsible for monitoring corporate conduct, as well as procedures aimed at maintaining good business practices, for the purpose of preventing conduct that may involve the commission of a crime.

Sources and legal notice: The following sources, among others, have been used in the elaboration of this document: Diario Oficial de la Federación, Banco de México, Suprema Corte de Justicia de la Nación, Secretaría de Hacienda y Crédito Público. The CCN MéxicoReport™ does not constitute legal or tax advice and shall not be used for other than informative purposes to the general public. For further information about the CCN MéxicoReport™, any of the matters discussed or in order to receive legal advice, please contact Rob Barnett ( or Mario Melgar ( at the phone number (210) 222-1642.

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