Fixed assets represent a significant capital investment for manufacturing companies. Such assets can include land, buildings, equipment, furniture, machinery and vehicles. Global manufacturing companies usually have an important number of foreign fixed assets (machinery and equipment) at their production sites in Mexico, that were either acquired from third parties in Mexico (local vendors), or imported from abroad.
In the following notes, I will briefly refer to the importance of keeping records to demonstrate the legal acquisition or importation into Mexico of foreign machinery and equipment and to the consequences of not having the necessary documents to demonstrate such circumstances; so that manufacturing companies may protect their investment in fixed assets.
The Mexican Customs Law provides that, when importing foreign goods into Mexico, importers are obligated to transmit to the customs authorities through the Customs Electronic System (known by its Spanish acronym “VUCEM1”), an electronic importation document known as “pedimento”. Such pedimento must be submitted along with other documents such as the document proving the value of the good (known by its Spanish acronym “COVE2”), certificate of origin, transportation bills, certificates of compliance with Mexican Official Standards, among others.
For purposes of the submission, the importer is obligated to declare the particular identification information of the goods, when such information exists. For instance, machinery and equipment should be identified by trademark, model, serial number and commercial description.
Importers must keep the aforementioned importation documents complete and in the same form than that in which they were submitted; this is, electronically. Some importers choose as a common practice to keep such records physically, but the proper way to keep them is electronically.
On another hand, the Mexican Customs Law establishes that the legal importation and tenancy of foreign goods shall be proven at any time upon request of the competent authorities, with any of the following documents: i) importation documents as described above, ii) sales note issued by the Ministry of Finance and iii) Electronic invoice (known by its Spanish acronym “CFDI3”) issued in Mexico by a registered taxpayer that complies its legal requirements.
In connection with the foregoing, it is worth to mention that the Mexican tax and customs authorities have authority to verify at any moment, the legal importation and tenancy of foreign goods. Whether detecting the existence of foreign goods but not delivering the proper documents to prove their legal importation or acquisition from a Mexican supplier, the authorities are entitled to issue an assessment requiring the payment of omitted importation duties, importation value added tax, customs processing fees, and antidumping fees whether applicable, followed by relevant penalties.
Moreover, not proving the legal acquisition or importation of foreign goods may have as a consequence that the goods shall become property of the Federal Treasury.
Please note that the Mexican Customs Law provides as a remedy to the lack of documents to prove the legal importation of foreign goods, a procedure to self-correct the situation through their definitive importation, by paying omitted duties, taxes, fees, and applicable fines.
Considering the above, it is highly recommendable for manufacturing companies in Mexico, to perform periodically internal audits to verify if they are keeping all of the documents to prove the legal acquisition or importation of the machinery and equipment in their production sites, in the form required by the law.
[1] VUCEM stands for Ventanilla Única de Comercio Exterior
[2] COVE stands for Comprobante de Valor Electrónico
[3] CFDI stands for Comprobante Fiscal Digital
