VAT Certification: What You Need to Know Today

Hopefully by now, all eligible companies have obtained a Credit Certification that avoids the need to pay Value Added Tax (VAT) on temporary imports. The Certification is a great benefit that prevents a negative impact to cash flow.  However just having the Certification is not enough.

There are a couple of things to be aware of to make sure you stay in compliance and don’t lose the benefit.

Hacienda (the Mexican tax authority) recently announced that in order to allow the government to monitor the VAT credit, VAT certified companies will be required to report certain information elements in connection with their operations under the IMMEX program. First, they have to provide Hacienda with the open inventory balance under the temporary importation regulation, by tariff classification and value, of all that is returned abroad as of December 31st, 2014. The deadline of this reporting requirement is the last day of January 2015.

In addition, going forward, VAT certified companies will have to submit to Hacienda a monthly or bimonthly report containing the export status of their goods temporarily imported, to allow Mexico Customs to discharge the temporary importation balance recorded by Customs, by tax identification number, tariff classification and value.

Hacienda will use these reports to monitor the temporary importation program, and to identify goods that are past the statutory time limit for temporary importation. If such instances are identified, Hacienda will recollect the VAT credit granted and eventually it could suspend the benefit of the VAT credit to the company.

One of the most important elements in all of this is the need for companies to maintain an updated BOM and highlight any modifications to the original. By assuring that you stay in compliance with these new regulations, you can continue to enjoy the benefit of the VAT Certification. If you have any questions or need assistance with these issues, please contact Juan Durazo at  juand@ivemsa.com.