Publication Category: Legal Updates

Adverse Possession Rights in Agrarian Matters

Adverse Possession Rights in Agrarian Matters, by Jorge Ojeda

By Jorge Ojeda

 In Mexico, lands subject to the social system known as “ejido” occupy more than 50% of the national territory. It is possible to acquire such lands by complying with a series of requirements, among them, that the owner/seller gives a right of first refusal as required by Article 84 of the Agrarian Law to “…family members of the seller, the persons who have worked the plots of land for more than a year, the ejido members, recognized neighbors, and the ejido…” The Agrarian Law establishes a particular method to notify such interested parties, including notification to an ejido board (Comisariado Ejidal). It also establishes that “if the notification is not made, the sale could be nullified.” It has been debated whether the violation of … read more

Criminal Liability of Corporations in Mexico and the Need to Comply with the National Code of Criminal Procedures

Criminal Liability of Corporations in Mexico and the Need to Comply with the National Code of Criminal Procedures, by Sandra Campillo

By Sandra Campillo

In recent years, due to the growing development of the international economy and markets, technological innovations and corruption, the number of cases in which crimes are committed in the corporate and business context by organized criminal groups and not by individuals have increased. Such acts committed by criminal groups include those committed by Mexican entities, such as corporations, which can be structured in a complex manner in order to perpetrate various illicit acts.  Such illegal acts include money laundering, urban development crimes, environmental crimes and economic crimes, among others.   In Mexico, prior to the publication in 2015 of the National Code of Criminal Procedures, companies could not commit crimes and, consequently, not be held criminally liable. Now, with the … read more

Steps to Follow for a Proper Receipt of Legal Notice from Mexican Labor Authorities

Steps to Follow for a Proper Receipt of Legal Notice from Mexican Labor Authorities, by Fernanda Magallanes

By Fernanda Magallanes

It is very common that when a company receives a subpoena or notification by a labor authority, such companies do not have the necessary knowledge to determine: (i) whether such company is the intended recipient of the documents conveyed; (ii) how the labor authority should identify themselves whenever conveying such documents; and (iii) what one should respond before said authority in order to avoid receiving documents that do not pertain to the company.   In this regard, it is important for companies to ask the labor authorities to identify themselves during a company visit. The representative acting on behalf of the labor authority should present an official identification pertaining to the agency to which he or she belongs.   Secondly, … read more

Tax Incentives and New Customs Regime in Special Economic Zones

Tax Incentives and New Customs Regime in Special Economic Zones, by Miriam Name and Fernando Juárez

By Fernando Juárez

On September 29, 2017, the Declaration of the Special Economic Zones of Puerto Chiapas (Chiapas), Coatzacoalcos (Veracruz) and Lázaro Cárdenas-La Unión (Michoacán) (the “Zones”) was officially published. In the new Decree, various tax benefits were granted to investors who participate in these areas. Among the most notable benefits is the reduction of Income Tax (ISR) payments. Such benefit will reduce payments up to 100% for the first 10 years, and a reduction up to 50% of the tax incurred for an additional five years. In addition to the above, there is a 50% reduction in employer/employee quotas during the first 10 years and 25% in the subsequent five years. As a general rule, transactions carried out within the Zones are … read more

General Import and Export Tax and Tariff Modifications

General Import and Export Tax and Tariff Modifications, by Edmundo Elías and Marisol de León

By Edmundo Elías

As part of the structural reform process of the General Import and Export Tariff and Tax Modifications (TIGIE) currently underway, which was discussed in issue 139 of this publication, Mexico’s President recently published a Decree that modifies Chapter 60 of the TIGIE, including the following decrees, in order to be consistent with such modifications: Decree Establishing the General Import Tax for the Border Region. Decree for the Promotion of the Manufacturing, Maquiladora and Export Services Industries (IMMEX Decree). The main changes that affect the textile industry are as follows: 120 tariff classifications were included, identifying in greater detail various goods from the textile industry, which result from the breaking down of 61 prior tariff classifications. The new 120 tariff classifications … read more

“Electricity Reform in Mexico” Third Annual Conference Highlights

“Electricity Reform in Mexico” Third Annual Conference Highlights, by José Maria Lujambio

By José Maria Lujambio

The third annual conference entitled “Electricity Reform in Mexico” was held in San Antonio, Texas on September 28-29, 2017. This recurring event was again organized by Kinetic ( It is worth noting the generous participation of many keynote speakers, such as: Commissioner Marcelino Madrigal of the Energy Regulatory Commission (“CRE”); Mauricio Herrera, General Director of Electrical Market Surveillance for the CRE; Efraín Téllez, founding partner of the Enix consultancy; Alejandro Ibarra, research professor of the EGADE of Tecnológico de Monterrey; as well as the illuminating contributions in discussion panels by Rebecca Bollenbach (Essentia Advisors); Cristian de Cosío (Cemex Energía); Alberto Ríos (Acclaim Energy); Austin Collins (Energy Network); Al García (Association of Energy Marketers); Tom Ottem (Yes Energy); Geoff Street (Tenaska); … read more

Important Aspects of Performance and Success Bonuses Paid to Employees in Mexico

By Pablo Sáenz

It is common for companies in Mexico to compensate their employees through bonuses correlating to their performance and/or results. It is very important that these bonuses are correctly regulated and documented. They should be sporadic and variable in amount in order to avoid them being considered as part of the employee’s base wage. This is essential for cases where possible indemnification for unjustified dismissal could be paid.   Since the Federal Labor Law does not regulate bonuses tied to performance and/or results as the ones mentioned above, it is important to implement a policy duly executed by any employee entitled to such bonus payments. Additionally, such companies should grant a bonus payment only when the employees satisfactorily meet the previously … read more

BEPS Modifications to Determine Permanent Establishment

By Miriam Name and Fernando Juárez

On June 7, 2017, Mexican tax representatives participated in the execution of the “Multilateral Convention for the Implementation of Measures Related to Tax Treaties to Prevent the Erosion of Taxable Amounts and the Transfer of Benefits” (also known as “Multilateral Instrument” or “MLI”) of the Economic Cooperation and Development Organization (OECD).   After such execution, Mexico and more than 70 countries (excluding the United States) have joined forces with the objective of implementing the anti-erosion measures established by the BEPS (Base Erosion and Profit Shifting) report. Among the most important changes is the concept of “permanent establishment” on income and estate taxes as established in the OECD Model Tax Convention.   In this sense, through the proposed modifications, it is … read more

Structural Reform of Mexico’s General Import and Export Tariff Classifications (TIGIE)

By Edmundo Elías and Marisol de León

Currently, Mexico’s Department of the Economy is in the process of a comprehensive and structural reform of the TIGIE. This reform is based on the following criteria:   Tariff classifications that, due to their complexity, are seldom used. About 40% of current tariff classifications have an annual total amount of trade transactions of less than one million dollars. Some tariff classifications that were designed without a reasonable criterion, such as classifications created for statistical purposes only, which ultimately hinder trade.   Therefore, the reform seeks to:   Harmonize the TIGIE with the Harmonized Tariff Schedule of the United States (HTSUS), Mexico’s main trade partner. Eliminate unused or underutilized tariff classifications. Create a database and reserve of statistical information.   Unlike … read more

The United States’ Energy Objectives in the NAFTA Renegotiation

By José María Lujambio

In mid-July, the United States government issued a 17 page document summarizing the country’s goals for the renegotiation of the North American Free Trade Agreement (NAFTA). It is noteworthy that the section on energy contains only three lines, but with huge substance and meaning:   Preserve and strengthen investment, market access, and state-owned enterprise disciplines, benefiting energy production and transmission and support North American energy security and independence, while promoting continuing energy market-opening reforms.   The Mexican reforms of 2013 and 2014 ended the state’s monopoly on the energy sector and welcomed competition. As a result, great opportunities for private investment in the Mexican energy sector, both domestic and foreign, arose. It was obvious that this opening would awaken the … read more