Publication Category: Legal Updates

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

Recent Jurisprudence – Jurisdiction by Expressed Submission in Commercial Contracts

By Adrian Salgado

Recently, all the magistrates of the Third Circuit in Civil Matters published a thesis of jurisprudence in response to thesis number PC.III.C.J 33 C (10a.), the heading to which reads: “Jurisdiction by express submission. For the validity of the agreement described herein, it suffices that the court to which the parties are bound is expressly designated, even if only one of the parties waives the jurisdiction granted by law.” In this decision, all the magistrates of the Third Circuit in Civil Matters concluded that in order to be effective, in the submission of an oral agreement to the court designated by the parties to a contract, it is sufficient if the parties manifest in a clear and definitive manner, which … read more

Recent Jurisprudence – Burden of Proof in Claims of Days of Weekly Rest and Compulsory Rest, by Adrian Salgado

The Second Chamber of the Supreme Court of the Nation recently published decision number 2a./J. 63/2017 (10a), entitled: “Days of weekly rest and compulsory rest. Burden of proof in regards to claims for such items.” This decision resolves the contradiction between the prior decisions of the Circuit Collegiate Tribunals, the Third of the Auxiliary Center of the Tenth Region, and the First of the Auxiliary Center of the Fourth Region, the latter being the subject of an article in the June 2014 CCN MexicoReport™. In the present case, the Second Chamber concluded that two procedural burdens are generated in accordance with the general principle that whoever makes a claim is obligated to provide the proof. As such, the first burden … read more

A New Era in the Regulation of Natural Gas in Mexico, by José María Lujambio

July 1, 2017 is an historic date for the natural gas sector in Mexico. On such date started the so-called “permanent regime” of capacity reservation in the National Integrated Transportation and Storage System. In addition, the terms and conditions for the first-hand sales of natural gas made by Pemex Industrial Transformation, and the natural gas trading contract model for the affiliate MGC México, entered into force. The last time the Energy Regulatory Commission (“CRE”) had sought to launch the “permanent regime” was in September 2011. At that time, Pemex Gas and Basic Petrochemistry successfully challenged the resolution by such regulator. In fact, that was the last attempt by the CRE to demonstrate that the regulatory framework, institutional arrangement and industrial … read more

Restructure of the VAT Certification System, by Edmundo Elias and Marisol de León

Based on the First Resolution of Modifications to the General Rules of Foreign Trade for 2016, published on May 9, 2016, a new comprehensive certification scheme was established, consisting of a permanent compliance program for companies that will be certified in new modalities, including VAT Certification and Authorized Economic Operator. Under this new comprehensive certification scheme, obligations that used to be of instant or temporary compliance, have become permanent. Even though the VAT certification renewal process has been simplified, compliance with the obligations derived from the VAT certification may be reviewed at any time and, in case of non-compliance, a cancellation procedure may be initiated. The government authorities that review compliance with a VAT certification have a stricter policy and … read more

Customs Valuation

The recent publication of new Regulations to Mexico’s Customs Law offer important changes in customs valuation methodologies. The obligations established in Article 81 of such Regulation, which consists of presenting documentation attached to the statement of value provided to a customs agent, should have entered into force. However, this obligation has been extended on several occasions and will now enter into force in January 2018. The documents that will be required to be delivered to the customs agent include the following: a) Commercial invoice; b) Bill of lading, packing list, airway bill and/or other transport documents; c) Certificate of origin; d) When the value declared in customs is less than the estimated prices by the Secretary of Economy, the document … read more

Money Laundering Prevention in Outsourcing Services, by Miriam Name and Fernando Juárez

In November 2016, the Financial Intelligence Unit (“UIF”) of the Ministry of Finance and Public Credit (“SHCP”) published on its website new rules in relation to outsourcing activities. In such rules, the UIF determined that the provision of services constituted a vulnerable activity under the terms of the Federal Law for the Prevention and Identification of Operations with Resources of Illegal Origin (“LFIPIORPI”) or “Anti-Laundering Law”. This new rule may reviewed at The new rules imply that companies that provide personnel services (outsourcing and/or insourcing) must comply with a series of administrative burdens established by the Anti-Laundering Law. These obligations include identifying operations, appointing representatives before the UIF, filing notices and keeping documentation on file, among others. As can … read more