Continuing with the study of customs regulations that I started in Customs Regulation in Mexico, it is now time to address the aspects related to the general import and export tax. That is, how its taxable bases are determined, its transaction values, exemptions, and other issues surrounding this contribution.

For this and following the coherent study already undertaken, I will base myself on Customs Law and its regulations, disregarding judicial criteria or scholarly aspects as these elements are foreign to mere informative publications. Without further delay, let’s begin:

List of Contents

• 1) General Import Tax
• A) Taxable Base
• B) What is Included in the Transaction Value of Imported Goods
• C) Exceptions to the Determination of the Value of the Transaction of Goods
• D) Customs Value in the Transaction
• E) Connection between persons (importer and exporter)
• 2) Special Determinations of the Transaction Value of Goods
• A) Transaction Value of Identical Goods
• B) Transaction Value of Similar Goods
• C) Value of Unit Sale Price
• Deductions
• D) Reconstructed Value of Imported Sales
• E) Determined Value
• Special Exception For Used Vehicles
• F) Rejection of the Declared Value of the Goods By Customs
• G) Consultations On the Valuation Method
• 3) General Export Tax
• A) Taxable Base
• 4) Determination and Payment of General Import and Export Taxes
• A) Self-Determination
• B) Payments
• C) Obligation to Guarantee
• D) Rectification of the Request

1) General Import Tax

A) Taxable Base

As a general rule, the taxable base of the general import tax is the customs value of the goods, except in cases where the relevant Customs Law establishes another taxable base. In this sense, the customs value of the goods shall be their transaction value.

On the other hand, the transaction value of the goods to be imported is understood to be the price paid for them, provided that all the circumstances I refer to in section D) of this section occur and that they are sold to be exported to national territory by the purchase made by the importer.

Finally, the price paid is the total payment that the importer has made or shall make for the imported goods, directly or indirectly, to the seller or for the latter’s benefit.

B) What is Included in the Transaction Value of Imported Goods

The transaction value of imported goods shall include, in addition to the price paid, the amount of the following charges:

I.- The elements mentioned below, to the extent that they are the responsibility of the importer and are not included in the price paid for the goods:

A) Commissions and brokerage fees, except for purchase commissions.

B) The cost of containers or packaging that, for customs purposes, are considered to form a whole with the goods in question.

C) Packaging costs, both for labor and materials.

D) Transportation costs, insurance, and related costs such as handling, loading, and unloading incurred in connection with the transportation of the goods.

II.- The value, duly distributed, of the following goods and services, provided that the importer, directly or indirectly, has supplied them free of charge or at reduced prices, for use in the production and sale for export of the imported goods and to the extent that said value is not included in the price paid:

A) The materials, pieces, elements, parts, and similar articles incorporated into the imported goods.

B) The tools, dies, molds, and similar elements used to produce the imported goods.

C) The materials consumed in the production of the imported goods.

D) The engineering, creation, and improvement work, artistic works, designs, plans, and sketches carried out outside the national territory are necessary to produce the imported goods.

III.- The royalties and license fees related to the goods being valued that the importer has to pay directly or indirectly as a condition of the sale of said goods, to the extent that said royalties and fees are not included in the price paid.

IV.- The value of any part of the proceeds from the subsequent sale, transfer, or further use of the imported goods that revert directly or indirectly to the seller.

C) Exceptions to the Determination of the Value of the Transaction of Goods

The transaction value of imported goods shall not include the following concepts, provided that they are broken down or specified separately from the price paid:

I.- Expenses incurred by the importer on his own account, even when it can be estimated that they benefit the seller.

II.- The following expenses,provided that they are distinguished from the price paid for the imported goods:

A) Construction, installation, assembly, mounting, maintenance, or technical assistance expenses incurred after importation in relation to the imported goods.

B) Transportation, insurance, and related expenses such as handling, loading, and unloading incurred in connection with the transportation of the goods.

C) Contributions and compensatory fees applicable in national territory as a consequence of the importation or sale of the goods.

III.- Payments from the importer to the seller for dividends and other concepts that are not directly related to the imported goods.

D) Customs Value in the Transaction

For import, the customs value shall be considered as the transaction value, provided that the following circumstances occur:

I.- That there are no restrictions on the sale or use of the goods by the importer, except for the following:

A) Those imposed or required by the legal provisions in force in the national territory.

B) Those limiting the geographical territory where the goods may subsequently be sold.

C) Those that do not affect the value of the goods.

II.- The sale for export to the national territory or the price of the goods does not depend on any condition or consideration whose value cannot be determined in relation to the goods to be valued.

III.- That no part of the proceeds of the subsequent sale or any subsequent transfer or use of the goods made by the importer reverts directly or indirectly to the seller.

IV.- That there is no link between the importer and the seller, or if there is, it has not influenced the transaction value.

E) Connection between persons (importer and exporter)

A connection between persons is considered to exist for the purposes of the Customs Law in the following cases:

I.- If one of them holds management or responsibility positions in a company of the other.

II.- If they are legally recognized as business partners.

III.- If they have a relationship of employer and employee.

IV.- If a person directly or indirectly owns, controls, or possesses 5% or more of the shares, partnership interests, contributions, or securities in circulation and with voting rights in both.

V.- If one of them directly or indirectly controls the other.

VI.- If a third person directly or indirectly controls both persons.

VII.- If together, they directly or indirectly control a third person.

VIII.- If they are from the same family.

On the other hand, in the case of a sale between related persons, the circumstances of the sale shall be examined, and the transaction value shall be accepted when the relationship has not influenced the price. For the purposes of the above, it shall be considered that the relationship has not influenced the price when it is demonstrated that:

1.- The price was adjusted according to the normal practices of price fixing followed by the branch of production in question or with how the seller adjusts the sale prices to buyers unrelated to it.

2.- With the price, all costs are recovered, and a profit is achieved that is consistent with the global profits obtained by the company in a representative period in the sales of goods of the same kind or class.

On the other hand, in a sale between related persons, the transaction value shall be accepted when the importer demonstrates that said value of those indicated below is very close to one of the criterion values ​​in force at the same time or at an approximate time and it has been stated in the corresponding declaration that there is a link with the seller of the goods and that this did not influence their price:

1.- The transaction value in sales of identical or similar goods made to importers unrelated to the seller, to be exported to national territory.

2.- The customs value of identical or similar goods.

In the application of the above criteria, the demonstrated differences in commercial level and quantity, and the costs borne by the seller in sales to importers not related to him, and that he does not bear in sales to importers with whom he has a link, must be taken into account.

2) Special Determinations of the Transaction Value of Goods

When the taxable base of the general import tax cannot be determined according to the transaction value of the imported goods in the terms of subsection B), section 1 of this entry, or does not derive from a sale for export to national territory, it shall be determined according to the following methods, which shall be applied in successive order and by exclusion:

I.- Transaction value of identical goods.

II.- Transaction value of similar goods

III.- Value of unit sale price.

IV.- Reconstructed value of imported goods.

V.- Determined value.

A) Transaction Value of Identical Goods

The value of this method of determination shall be the transaction value of goods identical to those being valued, provided that said goods have been sold for export to national territory and imported at the same time as the latter or at an approximate time, sold at the same commercial level and in similar quantities as the goods being valued.

When there is no sale under such conditions, the transaction value of identical goods sold at a different commercial level or in different quantities shall be used, adjusted to take into account differences attributable to the commercial level or quantity, provided that these adjustments are made based on verified data that demonstrate that they are reasonable and accurate, whether they involve an increase or a decrease in value.

In this sense, identical goods are understood to be those produced in the same country as the goods being valued, which are identical in all respects, including their physical characteristics, quality, brand, and commercial prestige. Minor differences in appearance shall not prevent goods that otherwise comply with this paragraph’s provisions from being considered identical.

The values ​​of identical goods imported for which changes in value have been made by the importer or by the customs authorities shall not be considered, unless such changes are also included.

B) Transaction Value of Similar Goods

The transaction value of similar goods shall be the transaction value of goods similar to those being valued, provided that said goods have been sold for export to the national territory and imported at the same time as the latter or at an approximate time, sold at the same commercial level and in similar quantities as the goods being valued.

When there is no sale under such conditions, the transaction value of similar goods sold at a different commercial level or in different quantities shall be used, adjusted to take into account differences attributable to the commercial level or quantity, provided that these adjustments are made based on verified data that clearly demonstrate that they are reasonable and accurate, whether they involve an increase or a decrease in value.

In this sense, similar goods are understood to be those produced in the same country as the goods being valued, which, although not identical in all respects, have similar characteristics and composition, which allows them to perform the same functions and be commercially interchangeable. In order to determine whether goods are similar, consideration shall be given to their quality, commercial prestige, and the existence of a trademark, among other factors.

The values ​​of similar goods imported for which changes in value have been made by the importer or the customs authorities shall not be considered, unless such changes are also included.

C) Value of Unit Sale Price

The value of the unit sale price is understood to be determined in the following terms:

I.- If the imported goods subject to valuation, or other imported goods, identical or similar to them, are sold in national territory in the same condition in which they are imported, the value determined shall be based on the unit price at which the largest total quantity of the imported goods, or other imported goods identical or similar to them, is sold in those conditions, at the time of importation of the goods subject to valuation, or at an approximate time, to persons who are not related to the sellers of the goods.

II.- If the imported goods, or other identical or similar imported goods, are not sold in the country in the same condition in which they are imported, at the choice of the importer, the value may be determined based on the unit price at which the largest total quantity of the imported goods is sold, after their transformation, to persons in the national territory who are not related to the sellers of the goods, taking into account the value added in the transformation, provided that such sale is made before 90 days have elapsed from the date of importation.

For these purposes, the unit sale price is understood to be the price at which the largest number of units are sold in sales to persons who are not related to the sellers of the goods at the first commercial level after importation, at which said sales are made.

Deductions

For the purposes of the above value, the following concepts shall be subtracted:

I.- Commissions usually paid or agreed upon, or supplements for direct or indirect profits and general expenses usually charged, in relation to sales in the national territory of imported goods of the same kind or class.

II.- The usual costs of transport, insurance, and related costs such as handling, loading, and unloading incurred in connection with the transport of the goods.

III.- Contributions and compensatory fees paid in national territory for importing or selling the goods.

D) Reconstructed Value of Imported Sales

The reconstructed value is understood to be the value resulting from the sum of the following elements:

I.- The cost or value of the materials and the manufacturing or other operations carried out to produce the imported goods, determined based on the commercial accounting of the producer, provided that said accounting is maintained in accordance with the generally accepted accounting principles applicable in the country of production.

II.- A global amount for profits and general expenses, equal to that normally added in the case of sales of goods of the same kind or class as the goods subject to valuation, carried out by producers of the exporting country in export operations to national territory.

E) Determined Value

When the value of imported goods cannot be determined according to the methods referred to in section 1, paragraph b) and section 2, paragraphs A), B), C), and D), said value shall be determined by applying the methods indicated in said sections, in successive order and by exclusion, with greater flexibility, or according to reasonable criteria compatible with the principles and legal provisions, based on the data available in national territory or the supporting documentation of the operations carried out in foreign territory.

In this regard, when the supporting documentation of the value is false or altered, or in the case of used goods, the customs authority may reject the declared value and determine the commercial value of the goods based on the quotation and appraisal carried out by the customs authority.

Special Exception For Used Vehicles

As an exception to all methods of valuing goods, in the case of used vehicles, the taxable base shall be the amount resulting from applying to the value of a new vehicle, with equivalent characteristics, of the model year corresponding to the fiscal year in which the import is made, a reduction of 30% for the first immediately preceding year, adding a reduction of 10% for each subsequent year, without in any case exceeding 80%.

F) Rejection of the Declared Value of the Goods By Customs

The customs authority, in the exercise of its verification powers and the final resolution issued, may reject the declared value and determine the customs value of the imported goods based on the valuation methods mentioned above in the following cases:

I.- When it detects that the importer has incurred any of the following irregularities:

A) Does not keep accounting records, does not keep or make available to the authority the accounting records or part of them, or the documentation that supports foreign trade operations.

B) Opposes the exercise of the verification powers of the customs authorities.

C) Omits or alters the records of foreign trade operations.

D) Omits to present the declaration for the year of any contribution until the moment in which the exercise of the verification powers begins and provided that more than one month has passed since the day on which the deadline for the presentation of the declaration in question expired.

E) Other irregularities in your accounting make it impossible to know your foreign trade operations.

F) You do not comply with the requirements of the customs authorities to present the documentation and information that proves that the declared value was determined per the legal provisions within the period granted in the request.

II.- When the information or documentation presented is false or contains false or inaccurate data or when it is determined that the declared value was not determined in accordance with the valuation methods mentioned.

III.- In imports between related parties, the importer is required to prove that the relationship did not affect the price, and he does not prove this circumstance.

IV.- When the name, denomination or company name, address of the supplier abroad or tax address of the importer, indicated in the request, or in the electronic transmission or in the consolidated notice, considering, where applicable, the corresponding acknowledgment declared, are false or non-existent or when the supplier abroad cannot be located at the address indicated or the importer at his tax address or when the supplier or the importer is in the situation of not being located or non-existent.

V.- In cases where the goods are destined for customs regimes that allow the determination of contributions without their payment.

G) Consultations On the Valuation Method

Importers may submit a query to the customs authorities on the valuation method or the elements to determine the customs value of the goods. The query must be submitted before the importation of the goods, comply with the requirements established in the Federal Tax Code, and contain all the information and documentation that allows the customs authority to issue the resolution.

On the other hand, when the aforementioned requirements are not met, or the presentation of additional information or documentation is required, the authority may require the promoter to comply with the omitted requirement or present the additional information or documentation within a period of 30 days. If the requirement is not met within the specified period, the promotion shall be considered not submitted.

Resolutions must be issued within a period of no more than 4 months. Once this period has elapsed without notification of the resolution, the interested party may consider that the authority has resolved negatively and file the means of defense at any time after said period while the resolution is not issued, or wait for it to be issued. If the promoter is required to comply with the omitted requirements or provide the necessary elements to resolve, the term shall begin to run from the time the requirement has been fulfilled.

Finally, the resolution issued shall apply to imports made after its notification, during the fiscal year in question, as long as the factual and legal grounds on which it was based do not change, it is not revoked or modified and provided that the person to whom it was issued has not falsely stated or omitted facts or circumstances on which the resolution was based.

3) General Export Tax

A) Taxable Base

The taxable base of the general export tax is the commercial value of the goods at the place of sale and must be recorded in the digital tax receipt or in the equivalent document and, failing that, in any other commercial document, without including freight and insurance.

However, when the customs authorities have elements to assume that the values ​​recorded in the digital tax receipt or equivalent documents do not constitute the commercial values ​​of the goods, they shall make the verification, leading to the imposition of the appropriate sanctions.

4) Determination and Payment of General Import and Export Taxes

Foreign trade taxes shall be determined by applying to the taxable base determined in the terms of sections 1, 2, and 3, respectively, the rate corresponding to the tariff classification of the goods.

A) Self-Determination

Importers and exporters, customs agencies, or customs agents, when acting on behalf of the former, shall determine the contributions and, where appropriate, the compensatory rates, for which they shall state, under oath, in the customs document or request in question, concerning the goods, the following:

I.-  Their description, condition, and origin.

II.- Their customs value, as well as the valuation method used and, where appropriate, the existence of links or the commercial value in the case of export.

III.- Their tariff classification and commercial identification number.

IV.- The amount of contributions incurred in connection with their import or export and, where applicable, compensatory fees.

B) Payments

Importers and exporters shall pay contributions upon submitting the request for processing at the authorized offices before the automated selection mechanism is activated. Payment in no case exempts from compliance with obligations regarding non-tariff regulations and restrictions.

Importers may choose to pay the general import tax, the value-added tax, and, where applicable, the compensatory fees by making the corresponding deposit in the customs accounts of the credit institutions or brokerage firms authorized by the Ministry of Finance and Public Credit provided that the goods are to be exported in the same state within a period not exceeding one year, counted from the day following the day on which the deposit was made, extendable for 2 more years, upon prior notice from the interested party to the credit institution or brokerage firm, before the expiration of the one year.

C) Obligation to Guarantee

Those who are required to guarantee through deposits in customs guarantee accounts are those who:

I.- Carry out the definitive import of goods and declare in the request a value lower than the estimated price announced by the Ministry of Finance and Public Credit for the contributions and compensatory fees corresponding to the difference between the declared value and the estimated price.

The guarantee shall be canceled 6 months after the import has been carried out unless the customs authorities have begun to exercise their verification powers, in which case the term shall be extended until a definitive resolution is issued, as well as when omitted contributions or compensatory fees are determined, which shall be made effective against the guarantee granted, or their cancellation is ordered by the customs authorities in the terms indicated by the Tax Administration Service, through general rules.

III.- Carry out the internal or international transit of goods, for the amount corresponding to the contributions and compensatory fees provisionally determined in the request or those corresponding taking into account the transaction value of identical or similar goods, in the cases indicated by the Tax Administration Service, through general rules.

This section’s provisions shall not apply to temporary imports carried out by maquiladoras and companies with export programs authorized by the Ministry of Economy, provided that the goods are included in the respective programs.

The guarantee shall be canceled when the corresponding request is processed at the customs office of clearance or exit, depending on whether it is internal or international transit, and the contributions and compensatory fees are paid.

Finally, when the guarantee is canceled, the importer may recover the deposited amounts, with the profits generated from the date on which the deposit was made and until its cancellation is authorized.

D) Rectification of the Request

The data contained in the request may be modified by correcting the request. In this regard, taxpayers may correct the data contained in the request as many times as necessary, provided that they do so before activating the automated selection mechanism.

Once the automated selection mechanism has been activated, the request may be corrected, except in cases that require authorization from the Tax Administration Service, which is established by rules.

However, if the automated selection mechanism determines that customs inspection must be carried out or when the exercise of verification powers has begun, the correction of the request shall not proceed until said acts are concluded and the authority has not found any irregularity regarding the data recorded in the request, except in those cases where the Tax Administration Service establishes it in rules.

Finally, fines shall not be imposed when the correction is made spontaneously. The rectification does not prejudge the statement’s veracity, nor does it limit the verification powers of the authorities.

By Omar Gómez

Mexican Tax, Administrative and Constitutional attorney

Partner

Contact me at [email protected]