Chihuahua, Chih., January 31st, 2024.

Dear Clients and Friends,

We hereby inform you that in October 2023, the High Regional Court for Administrative Matters of the Central North Region issued the contradiction of Criterion 38/2023 (among those confirmed by the Fourth and Sixth Collegiate Courts for Administrative Matters of the First Circuit). This resolution conclusively establishes that in scenarios where a company registered in the Certified Companies Registry, specifically in the Authorized Economic Operator modality, engages in the transfer of temporarily imported goods or those resulting from processing, transformation or repair activities to national companies through the use of virtual “V5” customs entry forms, the national acquiring company is only required to pay the import VAT, without the corresponding obligation to withhold sales VAT from the foreign entities that do not have a permanent establishment in Mexico.

It should be noted that, until the amendment of December 12, 2023, the General Foreign Trade Regulations (RGCE, in Spanish) expressly provided that, in addition to paying the import VAT, the acquiring company was obligated to withhold the sales VAT from the foreign entity. This was due to the fact that such transactions were considered sales within the national territory.  Based on this new legal interpretation, companies conducting virtual operations are not required to withhold taxes until 2023, as long as they meet the conditions and deadlines set forth in the RGCE.

This legal precedent binds Federal Courts or Tribunals, as well as any jurisdictional authority located in the Central North Region, which includes the following states: Mexico City, State of Mexico, Nuevo León, Sonora, Coahuila, San Luis Potosí, Sinaloa, Baja California, Guanajuato, Chihuahua, Tamaulipas, Querétaro, Zacatecas, Nayarit, Durango, Baja California Sur, Tlaxcala, and Aguascalientes.

For further information concerning this matter, please do not hesitate to contact Mr. Sergio Humberto Salas Medrano, Partner of the Fiscal and Administrative Area, at ssalas@iclmx.com.

Lic. Sergio H. Salas Medrano.
Inintegrum Corporación Legal, S.C.