Issue 154 - July - August 2021

August 30, 2021
An End to the Judicial Conflict in Mexico

300 Palabras

By Mario Melgar Adalid

After a long legislative process, Mexico’s Federal Congress has approved amendments to several laws implementing a judicial restructuring in Mexico. Among the amendments restructuring the Mexican Judicial Branch is a transitory article that has sparked national debate in numerous: political, judicial, academic and the media. Mexican public opinion was that such transitory article came as a surprise, because it was not included until the very end of the amendment process. Transitory article thirteenth approves a two-year extension to the existing four-year term of the chief justice of the Mexican Supreme Court, Arturo Zaldivar, which existing four-year term had already been approved by the full Supreme Court, as required under the Constitution. As opposed to the United States, where the executive … read more

August 30, 2021
Mexico’s Recall Process

Political Thermometer

The removal from office process, or recall, is a direct democratic process through which citizens decide whether an elected official should continue to serve after the expiration of his term or be removed. Amendments to the Mexican Constitution published in the Official Journal of the Federation on December 20, 2019 establish that the removal from office process is a citizens’ right. In accordance with such amendments, the process to recall the Mexican President must be invoked by the National Electoral Institute (INE for its acronym in Spanish). It must be requested by at least 3% (2.6 million) of Mexico’s registered voters and may be requested only once. Such single request must be made within the three months following the end … read more

Economic Indicators

On August 30, 2021, updated financial indicators reflected:

Peso/Dollar Exchange Rate: $20.2293 pesos per Dollar.

Mexican Stock Exchange: The Mexican Stock Exchange (BMV) closed 52,602.07 points.

Interest Rates: The Average Interbank Rate (TIIE) for a 28-day period was at 4.7500%.

General Recommendations for Specialized Services Providers in Mexico
By Abigail Maya

Based on recently approved amendments to Mexican labor laws prohibiting the outsourcing of personnel (with the only exception being those providing specialized services), it is crucial for those companies that customarily engage specialized services to take certain actions to avoid any violations of Mexico’s new labor regulations. As such, companies with specialized service providers should consider carrying out the following actions: Prepare a detailed list of vendors to identify which vendors must be registered with the Providers of Specialized Services or Works Registry (REPSE per its acronym in Spanish) of the Mexico’s federal Department of Labor and Social Welfare. Carefully review the terms and conditions of any contracts and/or purchase orders executed with such providers. Notify service providers of the … read more

Mexico Creates Introductory Program to Audit Specialized Services
By Rene Cacheaux, Miriam Name and Esteban Gómez Aguado

A special tax resolution published in the Official Journal of the Federation on April 23, 2021, amends several current rules to establish that Mexican tax authorities will now disallow any credit or deductions for wages or other payments made for outsourced services that relate to the taxpayer company’s purpose and main economic activity. Once Mexico’s new Outsourcing Decree enters into force, such payments will be considered violations of the Decree. The Decree’s entry into force has been extended until September 1st, 2021. The General Federal Tax Auditor’s Office of the Mexican Tax Administration Service (“SAT”) has created an Introductory Program to Audit Specialized Services (the “Program”), designed to identify taxpayers with inconsistencies which could harm Mexico’s federal treasury. Mexico’s Federal … read more

Mexico Repeals Rule 5.2.5. from 2020 General Foreign Trade Rules
By Enrique Hill

The Fifth Resolution Amending Mexico’s 2020 General Foreign Trade Rules (the “Resolution”) was published in the Official Journal of the Federation on May 27, 2021.  Among other amendments, it repeals rule 5.2.5. Rule 5.2.5. allowed a sale of temporarily imported goods to be considered as a sale that occurred abroad between a foreign seller and a Mexican IMMEX entity buyer.  This meant that such sales would not be subject to the Value Added Tax Law. In essence, rule 5.2.5. established a legal fiction whereby such sales were considered to have occurred abroad, even if the subject goods were physically located within Mexican territory. In accordance with the Resolution’s First Transitory Article, the repeal entered into force 30 days following publication … read more

Mexico’s CFE Requests Regulator to Suspend Generation Permits
By Antonio Riojas and Elena Hernández

Toward the end of last month, Mexico’s Federal Electricity Commission (“CFE”) stated in a press conference that a December 28, 2020, interruption in electricity supply was mainly due to a failure of the San Carlos wind power plant in Tamaulipas, which is owned by the Spanish company Acciona. Such conclusion was based on an expert report ordered by CFE itself, which has not been made public. This statement is consistent with the declarations made by CFE in January, in which it blamed the variability of some renewable energy power plants as the cause of the failure, and it is consistent as well with numerous affronts by the government against foreign companies over the last few months, including Iberdrola and Enel. … read more