Changes made to the criteria for the temporary importation of “sensitive goods” into Mexico and restrictions on such imports create challenges for certain companies (particularly IMMEX companies) in the country and may create a basis for a constitutional challenge.
The Ministry of Economy issued a bulletin in April 2024 that amends the criteria for the temporary importation of sensitive goods under Rule 8 of the PROSEC program and eliminates the ability of companies to temporarily import certain goods (e.g., aluminium, steel, textiles, sugar and tobacco) without having to pay duties. In addition, changes were made to the VUCEM (a government portal used for import and export transactions) that affect the authorisation permits for temporary imports of sensitive goods listed in Annex II of the IMMEX Decree and Annex 28 of the General Foreign Trade Rules for 2024. Duties could vary depending on the imported goods, but normally are from 15% to 55%.
Rule 8 allows companies operating under a PROSEC program authorisation to import goods on a definitive basis (e.g., materials, parts, components, machinery and equipment, etc.) for use in a specific production project without having to pay duties.
The updated criteria are designed to address perceived deficiencies under Rule 8, such as the lack of statistical information and concerns about the traceability of imported goods. It is the Ministry’s opinion that it is necessary to eliminate the duty-free benefit for temporary imports of sensitive goods.
According to the Ministry of Economy, an IMMEX company can be certified by the Tax Administration Service (SAT) as qualifying for the deferral of VAT at the time of import. Once certification is granted, the company can request an authorisation to temporarily import sensitive goods or, alternatively, request an extension of its IMMEX program in accordance with the General Foreign Trade Rules. This was confirmed in additional guidance released by the ministry in May. (An IMMEX company is a company operating under a preferential Mexican program that encourages manufacturing and exports and offers tax and duty-free imports of raw materials, components and equipment to companies that export the finished goods within a specified time period.)
It should be noted that the statutory provisions relating to temporary imports, specifically article 106 of the customs law, provide that temporary imports of sensitive goods are those carried out with respect to goods that only remain in Mexico for a limited period of time. Article 108 provides that IMMEX companies can import goods temporarily without paying the general import tax as long as the goods are destined for a manufacturing, transformation or repair process and are subsequently exported, and the company meets other requirements established by the SAT. It is clear that the customs law allows an IMMEX company that is duly authorised by the Ministry of Economy to temporarily import raw materials, machinery, components, etc. without paying the general import tax provided the company complies with the export deadlines in the law and otherwise complies with rules set by the SAT.
Under the VAT law, companies operating under the IMMEX regime may obtain a VAT certification that allows them to defer the 16% VAT on temporarily imported raw materials and components provided these items are transformed into finished products that are subsequently exported. Various requirements must be met to obtain a VAT certification, including that the company adopt certain inventory control systems.
Based on the above, it seems clear that (as noted above)—based on a literal reading of the statutes—both the customs law and the VAT law allow companies operating under an IMMEX program and holding a VAT certification to temporarily import raw materials and machinery without having to pay general import tax and VAT, provided the goods are exported and all other requirements are met.
It is well established that the authorities (the tax authorities or any other authorities) cannot issue rules that impose greater requirements or obligations on taxpayers than what is mandated by the law, and this has been confirmed by Mexico’s Supreme Court. If such requirements are imposed, the rules would be susceptible to challenge through a constitutional procedure (amparo) in Mexico’s federal courts.
This author is of the opinion that the rules and bulletins published by the Ministry of Economy that impose higher requirements and obligations on IMMEX companies (even those with a VAT certification to carry out temporary imports of sensitive goods without paying VAT or general import tax) are unconstitutional and thus may be challenged. However, affected companies should consider whether the time and resources needed for a court challenge (amparo suits can last, on average, two years) outweighs the ensuing limitations on their ability to temporarily import sensitive goods.
Affected IMMEX companies should understand the revised rules, consider reviewing their processes for obtaining certification and communicate with the authorities with a view to minimizing delays or disruption to their operations. However, based on anecdotal information from importers, the revised rules already have created delays and complications. Companies should take steps to avoid losing the continuity of their production processes as a result of their inability to make temporary imports of raw materials or having to increase the price of their products to compensate for the imposition of import taxes due to having to import raw materials on a permanent basis.
Guillermo Massieu
BDO in Mexico
The Ministry of Economy issued a bulletin in April 2024 that amends the criteria for the temporary importation of sensitive goods under Rule 8 of the PROSEC program and eliminates the ability of companies to temporarily import certain goods (e.g., aluminium, steel, textiles, sugar and tobacco) without having to pay duties. In addition, changes were made to the VUCEM (a government portal used for import and export transactions) that affect the authorisation permits for temporary imports of sensitive goods listed in Annex II of the IMMEX Decree and Annex 28 of the General Foreign Trade Rules for 2024. Duties could vary depending on the imported goods, but normally are from 15% to 55%.
Rule 8 allows companies operating under a PROSEC program authorisation to import goods on a definitive basis (e.g., materials, parts, components, machinery and equipment, etc.) for use in a specific production project without having to pay duties.
Updated Criteria
The updated criteria are designed to address perceived deficiencies under Rule 8, such as the lack of statistical information and concerns about the traceability of imported goods. It is the Ministry’s opinion that it is necessary to eliminate the duty-free benefit for temporary imports of sensitive goods.According to the Ministry of Economy, an IMMEX company can be certified by the Tax Administration Service (SAT) as qualifying for the deferral of VAT at the time of import. Once certification is granted, the company can request an authorisation to temporarily import sensitive goods or, alternatively, request an extension of its IMMEX program in accordance with the General Foreign Trade Rules. This was confirmed in additional guidance released by the ministry in May. (An IMMEX company is a company operating under a preferential Mexican program that encourages manufacturing and exports and offers tax and duty-free imports of raw materials, components and equipment to companies that export the finished goods within a specified time period.)
It should be noted that the statutory provisions relating to temporary imports, specifically article 106 of the customs law, provide that temporary imports of sensitive goods are those carried out with respect to goods that only remain in Mexico for a limited period of time. Article 108 provides that IMMEX companies can import goods temporarily without paying the general import tax as long as the goods are destined for a manufacturing, transformation or repair process and are subsequently exported, and the company meets other requirements established by the SAT. It is clear that the customs law allows an IMMEX company that is duly authorised by the Ministry of Economy to temporarily import raw materials, machinery, components, etc. without paying the general import tax provided the company complies with the export deadlines in the law and otherwise complies with rules set by the SAT.
Under the VAT law, companies operating under the IMMEX regime may obtain a VAT certification that allows them to defer the 16% VAT on temporarily imported raw materials and components provided these items are transformed into finished products that are subsequently exported. Various requirements must be met to obtain a VAT certification, including that the company adopt certain inventory control systems.
Based on the above, it seems clear that (as noted above)—based on a literal reading of the statutes—both the customs law and the VAT law allow companies operating under an IMMEX program and holding a VAT certification to temporarily import raw materials and machinery without having to pay general import tax and VAT, provided the goods are exported and all other requirements are met.
Potential legal issues
It is well established that the authorities (the tax authorities or any other authorities) cannot issue rules that impose greater requirements or obligations on taxpayers than what is mandated by the law, and this has been confirmed by Mexico’s Supreme Court. If such requirements are imposed, the rules would be susceptible to challenge through a constitutional procedure (amparo) in Mexico’s federal courts.This author is of the opinion that the rules and bulletins published by the Ministry of Economy that impose higher requirements and obligations on IMMEX companies (even those with a VAT certification to carry out temporary imports of sensitive goods without paying VAT or general import tax) are unconstitutional and thus may be challenged. However, affected companies should consider whether the time and resources needed for a court challenge (amparo suits can last, on average, two years) outweighs the ensuing limitations on their ability to temporarily import sensitive goods.
BDO Insight
Based on the Ministry of Economy’s revisions to the procedural rules, it is now necessary for a company to obtain certification from the SAT and request an expansion of its IMMEX programs to continue to benefit from the temporary importation of sensitive goods rules.Affected IMMEX companies should understand the revised rules, consider reviewing their processes for obtaining certification and communicate with the authorities with a view to minimizing delays or disruption to their operations. However, based on anecdotal information from importers, the revised rules already have created delays and complications. Companies should take steps to avoid losing the continuity of their production processes as a result of their inability to make temporary imports of raw materials or having to increase the price of their products to compensate for the imposition of import taxes due to having to import raw materials on a permanent basis.
Guillermo Massieu
BDO in Mexico