Issue 139 – Sep / Oct 2017

Cacheaux, Cavazos and Newton is proud to present a new edition of the CCN MexicoReport™ in a revised and updated format. The new format continues the tradition of presenting relevant articles on recent Mexican political, business and legal developments. We hope you find this issue interesting and useful. As always, thank you for subscribing and reading our firm’s publication.

September 14, 2017
Harvey and NAFTA


By Mario Melgar-Adalid

The devastating effects of Hurricane Harvey in East Texas brought out the spirit and solidarity of those affected and touched by this tragedy. As shown in various media and social network outlets, East Texans carried out the initial rescue campaigns themselves. They worked diligently by organizing auxiliary groups and strategized on how to help those in need. The Texans’ initiative was not triggered by the inefficiency of the governmental authorities, which have done a heroic job, but instead by the magnitude of the natural disaster and the devastation that was left behind as it swept through East Texas. In the framework of the negotiation of the North American Free Trade Agreement (NAFTA), the Mexican government published a communication offering solidarity … read more

September 14, 2017

Political Thermometer

Mexicans have turned their political attention and sights toward 2018, a year in which the presidential tenure of Enrique Peña Nieto will conclude, and the presidential election will be held to determine who will succeed him in the executive office. Aside from the importance of the presidential electoral contest, Mexico will also hold elections for the 500 federal house and 124 senate members who make up Mexico’s federal congress. If this were not enough to raise the political temperature of the country, major state elections will take in nine states, including Mexico City’s (CDMX) Head of Government.   It goes without saying that that the presidential election is particularly relevant, given Mexico’s presidential system, which confers broad powers on the … read more

Economic Indicators

On September 14th, 2017, the financial indicators reflected:

Peso/Dollar Exchange Rate:

$ 17.7278 pesos per Dollar.

Mexican Stock Exchange:

The Mexican Stock Exchange (BMV) closed at 50,107.86 points.

Interest Rates:

The Average Interbank Rate (TIIE) for a 28-day period was at 7.3765 %

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

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 appetite of … 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 more recent reforms to … 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 determined whether … 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 established … read more