Three Presidential Candidates and the United States
Some have speculated that the U.S. government plays a defining role in Mexico’s presidential election. This popular belief unquestionably has no solid base in reality. No evidence exists in historical records showing such influence or intervention. Notwithstanding this speculation, the importance of the two countries’ relationship and the need to maintain security in the region is crucial given that Mexico and the United States share a border stretching almost 2,000 miles and economies that complement each other in important ways.The three leading Mexican presidential candidates (Andres Manuel Lopez Obrador, Ricardo Anaya and Jose Antonio Meade) have been careful in their statements regarding Mexico’s neighbor to the north. Under the circumstances, they have all stated their intention to maintain respectful relations with such neighbor. AMLO, in representation of the Morena-PES-PT coalition, is the presidential candidate that has utilized more nationalistic rhetoric to signal that he will seek more respect from the U.S. government toward Mexico and its citizens. In the same manner, Ricardo Anaya (PAN-PRD-MC coalition) knows the United States well based on his personal biography and has stated that Mexico desires to “collaborate and build” its relationship with the United States and that this will only be possible if there is respect among Mexicans themselves to avoid a lack of respect towards Mexico by the United States. The PRI candidate, Mr. Meade, has the deepest knowledge of the bilateral relationship based on his experience as Secretary of Treasury and Foreign Affairs and has stated that Mexico must maintain a united posture towards the United States.The above information shows that all of the candidates have a constructive attitude towards strengthening the relationship between both countries. It is clear that all three candidates place high value and importance on this vital bilateral relationship.
Mexico’s political temperature continues to rise as the political campaigns formally begin their march towards Mexico’s upcoming election. The public is now learning of the candidates’ proposals, and while there had been indications of what each candidate’s proposal would contain, they are now learning the details of each candidate: Andres Manuel Lopez Obrador, for the MORENA-PES-PT, Ricardo Anaya, for the PAN-PRD-MC, and Jose Antonio Meade, for the PRI-PVEM-PANAL, who are joined by Margarita Savala and Jaime Rodriguez Calderon (Mr. Rodriguez is also known as “El Bronco”), as two independent candidates who have gained entry onto the presidential ballot.In light of the confusion generated by the various party coalition, in which it has been difficult to distinguish the ideological formulas behind each coalition, all signs indicate that this will be an election more of candidates rather than parties or political orientation. To demonstrate the above, the National Action Party (Partido Acción Nacional or PAN), which is characterized as a center-right party, has teamed up with the Party of the Democratic Revolution (Partido de la Revolución Democrática or PRD), which is firmly aligned with the left side of the political spectrum. The coalition of Andres Manuel Lopez Obrador is comprised of the MORENA and Labor Party (Partido del Trabajo or PT), which are both undeniably leftist parties, combined with the Social Encounter Party (Partido Encuentro Social or PES), the most far right party on the political spectrum, also demonstrates this fact. While the parties’ proposals will be important, the personal profiles and personalities of the candidates will likely determine who will win the election.Many have leveled serious attacks against candidate Anaya for supposed money laundering activities. In response, the candidates of the PAN-PRD-MC coalition has alleged that candidate Meade mishandled public funds during his tenure as the Secretary of Social Development. It is unlikely that any of these allegations will result in formal legal charges. However, it is notable that Mexico’s Attorney General’s Office (PGR) opened a file investigating the alleged money laundering charges against candidate Anaya, which is currently under review. All of this is occurring against the backdrop of serious criticism from the general public, the media, academics and political rivals concerning Mexico’s criminal justice system. Further elevating the temperature was a divided decision (four votes to three) of the Mexican Federal Electoral Court approving the registration of Jaime Rodriguez Calderon as an independent candidate, notwithstanding numerous inconsistencies in documentation submitted to show the necessary number of signatures of citizens required to be placed on the ballot. This has generated protests and claims that will last throughout the campaign and will be a topic in the three presidential debates organized by Mexico’s National Electoral Institute (Instituto Nacional Electoral or INI).The presidential debates will in a way be voting contest themselves, as the candidates publicly level accusations against each other. In addition, debates will allow each of the candidates to show their ability to attack their rivals and defend themselves in open debate. Political polling continues to show candidate AMLO in the lead, followed by Mr. Anaya. Nothing, however, will be final until the election on July 1, when Mexican voters will decide who will serve as Mexico’s next President. This will be a difficult test for Mexico’s democracy and the political thermometer, which could rise to unprecedented temperatures.
In proceedings on February 7, 2018, Mexico’s Supreme Court held that lists of taxpayers detailing those who carried out false or non-existent transactions, as published in conformity with Article 69-B of the Mexican Federal Tax Code, are constitutional. This ruling is important because it means that all taxpayers must pay special attention and confirm that their suppliers and service providers are not found to be on such lists.Article 69-B of the Federal Tax Code establishes that when a supplier or service provider issues formal tax invoices without actually possessing the assets, personnel, infrastructure or capacity to provide the services or produce the goods being sold, the authorities will presume that such transaction did not occur, and, therefore, is “non-existent.” Based on the foregoing, upon publication of the names of the suppliers and service providers on the tax authorities’ list, all formal tax invoices that have been issued by such suppliers and service providers shall be invalid for tax purposes.The Court’s decision significantly impacts companies that receive formal tax invoices, which in many cases are used to support income tax deductions or claim credits for Value Added Tax that has been previously paid for products or services, and corresponding applications for tax reimbursement or refunds. Furthermore, if these formal tax invoices are deemed invalid, companies receiving them should take action to correct their tax records and filings.As a result, it is recommended that companies continuously monitor all of their suppliers and service providers in order to verify that they are not found on the list detailing taxpayers that have carried out false or non-existent transactions.
Based on the Electricity Industry Law ("LIE" for its acronym in Spanish) of 2014, many companies that currently consume large quantities of electricity can access the benefits of receiving their electricity supply from a company other than Mexico’s Federal Electricity Commission (CFE) as a Supplier of Basic Services, if they register as qualified end users with the Energy Regulatory Commission ("CRE" for its acronym in Spanish).In order to register with the CRE, the contracted load must be one (1) megawatt (MW) or more. This is not the actual volume of electricity consumption, measured in MWh, but instead a maximum consumption capacity. End users belonging to the same economic interest group may aggregate their loads to reach the minimum of 1 MW. To do this, the economic group must provide evidence of the affiliate relationship of the group’s various legal entities. In any case, registration as a qualified end user is optional for plants connected before August 12, 2014, but it is required for all those connected after such date, which is the day the LIE entered into force. The registration is a straightforward procedure, which was simplified further by the CRE through modifications to the applicable rules, published in the Official Journal of the Federation on December 6, 2017.The benefits of competition in the electricity are immediate, creating conditions which allow for lower prices and better contractual conditions. Since late 2016 and throughout 2017, several clients of Cacheaux, Cavazos & Newton began to receive proposals for alternative contracts for basic electricity supply, several of which have already been signed. Other clients have begun to approach the firm with questions about available opportunities under the new electricity distribution system. On the other hand, other clients who are qualified suppliers have requested the firm to assist in preparing model contracts to supply electricity in Mexico.Beginning in December 2017, applicable basic supply tariffs are determined based on the CRE regulation that provides for such to be based on real costs of service, instead of policies of Mexico’s Department of Finance and Public Credit (“Hacienda”). In the case of qualified end users, the new basic supply tariffs offer certainty regarding what is the “price to beat” by qualified suppliers who are now competing with the former State electricity monopoly. Despite the initial problems surrounding implementation of the new system and communications from the CRE, the new basic supply tariffs are a true milestone in Mexico´s energy history. They are also the price signal that the country’s wholesale electricity market greatly needed to develop its full potential.
Mexican companies commonly hire students to work in their businesses in order to enable such students to fulfill their community service or professional internship requirements, which can lead to complications given that this type of work is not regulated by Mexico’s Federal Labor Law (Ley Federal del Trabajo). Notwithstanding such gap in the law, the Mexican Federal Department of Labor (Secretaría del Trabajo y Prevision Social or STPS) has issued guidelines regulating how students may provide services to fulfill their community service or professional internship requirements and, at the same time, reduce the employer’s labor liability under Mexican Federal Labor Law. The STPS guidelines regulating students working in a community service or professional internship capacity include the following:
It is essential to comply with the guidelines set forth above in case a company desires to employ students to provide community service or professional internship assistance. Following such guidelines will enable employers to avoid labor risks that could arise from students’ community service or professional internship work in Mexico.
A decree published in Mexico’s Official Journal of the Federation on January 24, 2018 amended and supplemented numerous provisions of the Mexican General Law of Business Associations. Such changes are designed to simplify the process of dissolving and liquidating Mexican business entities and will enter into force on July 25, 2018.Consistent with the Mexican government’s efforts in recent years to facilitate legal procedures, reduce costs and eliminate complications in the formation of new companies in Mexico, the new amendments add a simplified process through which eligible entities may close down their operations in an easy, fast and cost-free manner, and thus provide legal certainty and closure for their shareholders or partners and third parties alike. Note, however, that the current procedure required to dissolve and liquidate a Mexican entity will continue to apply, in general, to companies that are not eligible for the new procedure.The new simplified procedure will be available only to those companies that can demonstrate compliance with the following requirements: i) all of the company’s shareholders or partners are individuals; ii) the entity does not have an illicit corporate purpose and does not carry out illicit acts; iii) has published its shareholder or ownership structure in the electronic system referred to as the Publication of Business Entities (“PSM” by its initials in Spanish) before dissolving; iv) the entity has not been commercially active or issued electronic invoices within the last two years; v) is current in its tax, labor and social security obligations; vi) does not have any pending financial obligations to third parties; vii) its legal representatives are not subject to criminal tax or asset-related crimes; viii) the entity is not subject to bankruptcy or insolvency; and ix) the entity is not a participant in the financial sector.The new simplified dissolution procedure shall be carried out according to the following steps: i) adopt resolutions at a shareholders’ meeting to dissolve the entity and name the shareholder or partner who will serve as liquidator, and publish such meeting resolutions in the PSM, without the need of formalizing such resolutions before a notary public; ii) subject to prior authorization, the Mexican Department of Economy will order the dissolution resolutions to be registered in the Public Registry of Commerce; iii) assets, record books and documents of the company shall be delivered to the liquidator; iv) upon receipt, the liquidator shall distribute to the shareholders or partners the remaining assets of the company in accordance with their capital contributions; v) all shareholders shall deliver their share certificates to the liquidator; vi) the liquidator shall publish a final balance sheet of the company in the PSM; and vii) the Department of Economy shall register the cancellation of the company’s corporate registry in the Public Registry of Commerce and shall notify the Mexican tax authorities of the dissolution. Note that the above steps must be carried out within the time limits established in the law. If the shareholders or partners make any false statements or filings in regard to the simplified dissolution procedure, such individual shall be individually liable to third parties on an unlimited basis and may also face criminal penalties.The legal reform described above presents a new opportunity to resolve problems many face when attempting to dissolve and liquidate business entities in Mexico. However, the new reform does not contain any incentives for parties seeking to liquidate companies that are currently abandoned, nor does it provide a complete solution that integrates completely with other laws that may be involved in the dissolution and liquidation procedure, most notable among which are the applicable Mexican tax laws.
As of April 2017, the manner of quantifying damages in Mexican civil liability lawsuits changed. Prior to such date, Mexico followed rules that provided a fixed cap on the amount of damages that could be claimed in wrongful death cases. Such determination varied, depending on the applicable laws of each Mexican state.In the past, it was common practice to use rules applicable to Mexico City, even if the incident or origin of the claim occurred in another state. This was because the applicable law in Mexico City established a broader range for these types of damages.Now, by virtue of the new binding legal precedent issued by Mexico’s Supreme Court, Mexico has a consistent set of rules that applies throughout the entire Mexican Republic. It is also important to note that despite the fact that the underlying statutory law has not been changed, such new Supreme Court criteria must be applied and analyzed in light of applicable principles of human rights law.In the case at hand, the Mexican Supreme Court determined that measures as to indemnification should be determined by taking into consideration the following principles:
The Supreme Court’s decision also mentions no unjust enrichment or impoverishment of the victim and/or their successors should result from the damages award. Given the law’s requirement that the victim’s compensation should not be excessive, such should be viewed in light of the factors listed above.Finally, note that in all cases it will be necessary to determine, from the point of view of all the parties involved, the manner in which said damages will be determined and paid to victims in a given case.