Issue 151 - January-Februrary 2021

March 9, 2021
In Search of a Renewed U.S.-Mexico Relationship

300 Palabras

By Mario Melgar Adalid

Mexico has named a new ambassador to the United States, Esteban Moctezuma. Ambassador Moctezuma has previously held high level positions in the Mexican federal government, served in the Senate, and has worked in the private sector.  His appointment as ambassador sends a signal that the relationship is a priority for Mexico.  The bilateral relationship is undoubtedly important and complex for both neighbors. It is comprised of numerous factors, including a long historical background, a shared border, citizens of one country living in the other, high volumes of investments, trade, financial, technological and academic flows, cultural relations, and tourism, among others.  Joe Biden’s arrival at the White House gives both countries the opportunity to re-launch new paths which favor project initiatives … read more

March 8, 2021

Political Thermometer

June is approaching and Mexico will have the largest election in its history on the first Sunday of June. The figures do not lie:  the election involves the election of 20,868 positions in every Mexican state; the renewal of the Chamber of Deputies which means the election of 300 deputies with a relative majority and 200 with proportional representation; and elections in local councils and congresses and fifteen state governorships. The elections of the governments of Chihuahua, Nuevo León and Baja California, as well as the states of Baja California Sur, Campeche, Colima, Guerrero, Michoacán, Nayarit, Querétaro, San Luis Potosí, Sinaloa, Sonora, Tlaxcala and Zacatecas, stand out because they are of special interest for Texas. The election that is of … read more

Economic Indicators

On March 8, 2021, updated financial indicators reflected:

Peso/Dollar Exchange Rate: $21.4177 pesos per Dollar.

Mexican Stock Exchange: The Mexican Stock Exchange (BMV) closed 47,075.41 points.

Interest Rates: The Average Interbank Rate (TIIE) for a 28-day period was at 4.2850%.

Looking Forward Toward a New Bilateral Relationship on Energy Matters
By José María Lujambio

On January 18, 2021, a letter sent by the United States Secretaries of State, Energy, and Commerce to their counterparts in the Mexican government was made public. The letter, dated January 11, contains the clearest and most direct official message in defense of U.S. interests in the Mexican energy sector since President López Obrador ordered a freeze on the implementation of the country’s constitutional and legal energy framework and dictated a series of regulatory and administrative measures tending to inhibit competition from private, foreign and national investment with Mexican state companies, Petróleos Mexicanos (“Pemex”) and the Federal Electricity Commission (“CFE”). The main concerns expressed in the letter are the improper regulatory treatment in favor of Pemex and CFE, as well … read more

Mexico Modifies Rules for Reporting Intercompany Loans between Related Companies
By Esteban Gómez Aguado

On January 18, 2021, the Financial Intelligence Unit (“FIU”) of Mexico’s Tax Administration Service modified applicable rules governing loans made between entities that belong to the same business group.  This provides clarity to one of the most frequently asked questions regarding so called “vulnerable transactions” and mandatory compliance with the Federal Law for the Prevention and Identification of Transactions Conducted with Resources of Illicit Origin (“Anti-Money Laundering Law”). Put succinctly, the question is: “Will centralized treasury operations and/or intercompany loans made between companies from the same Business Group be considered vulnerable transactions?” Article 27 Bis, section I, subsection a) of the General Rules referred to in the Anti-Money Laundering Law (the “Rules”), establishes that loan transactions entered into between companies … read more

Mexico Publishes Actions for the Gradual Reduction of Glyphosate and Transgenic Corn
By Fernando Schoeneck

On December 31, 2020 the Mexican government published a decree in the Official Journal of the Federation detailing the actions to be carried out by Federal Public Administration agencies and entities to gradually replace the use, acquisition, distribution, promotion and importation of glyphosate and the agrochemicals used as an active ingredient in Mexico, with sustainable and culturally appropriate alternatives which allow for adequate production that is safe for human health, the biocultural health of the country and the environment (the “Decree”). Such Decree sets forth a transition period to achieve the total replacement of glyphosate, which period began on January 1, 2021 and will end on January 31, 2024. To reduce the impact of the gradual substitution of the use … read more

COVID-19 as an Occupational Illness under Mexican Law
By Esteban Gómez Aguado and Daniel Ramírez

In a December 15, 2020 session of the Technical Council of the Mexican Social Security Institute (“IMSS”), the Council issued decree number ACDO.AS2.HCT.151220/340.P.DPES  authorizing the Mexican Department of Economic and Social Benefits “…to implement a proactive assessment strategy as to the work-related risks of employees of related companies who died or were left with lingering symptoms from serious cases of COVID-19, during the (pandemic) emergency period…” (the “Strategy”).  The Strategy consists of an initiative by IMSS’ institutional services to specify the actions and criteria to be considered in classifying COVID-19 cases as an occupational illness.   The Strategy implements criteria to “prequalify” serious cases, those being cases with lingering symptoms and those that resulted in death due to COVID-19.  Both … read more

Mexico Issues New Requirements for Reporting Increases in Capital
By Esteban Gómez Aguado

For Mexican entities approving capital stock increases or decreases occurring December 31, 2020 or before, Article 30 of the Mexican Federal Tax Code provided that taxpayers were required to maintain records of all minutes and certificates relating to such transactions. However, beginning January 1, 2021, Mexican tax authorities now may require additional information from Mexican entities evidencing the economic substance of the increases or decreases in their capital stock. Accordingly, taxpayers who increase their capital stock through the capitalization of liabilities must,  in addition to keeping accounting records, meeting minutes, account statements and, where appropriate, appraisals of the goods contributed, maintain a document certifying both the accounting existence of the liability in question and its value. Such certification must comply … read more