Auto part manufacturers that operate under an IMMEX Program and sell their products to Original Equipment Manufacturers (OEMs) in Mexico, should be aware that Mexican applicable regulations provide that OEMs that acquire such products, must issue and deliver them a report called “Constancia de transferencias de mercancías” (certificate of transfer of goods, to be referred hereinafter as “CTM”).
For purposes of this work, it is relevant to understand that OEMs in Mexico operate under a specific customs regime identified as Automotive Fiscal Deposit, that enables them to introduce into their premises machinery, equipment, tooling, components, and auto parts among others, to be destined to the assembly process of vehicles. Introduction of foreign trade or local (Mexican) goods is made on an in bond basis, so OEMs may defer the payment of duties and taxes to be paid upon their extraction from their premises for importation or exportation purposes.
As a benefit established under Mexican applicable regulations, IMMEX auto part manufacturers may sell the products resulting from their IMMEX processes to OEMs for introduction into their Automotive Fiscal Deposit and subsequent incorporation to the OEMs assembly process of vehicles.
IMMEX auto part manufacturers may consider as returned abroad those foreign trade parts and components that were temporarily imported under their IMMEX program,1 or as exported those local or definitively imported goods, as long as such products are identified in a CTM delivered by an OEM.
The CTM is a preset form to be completed by an OEM, to inform and provide evidence of the destination of the products acquired and transferred from an IMMEX auto part manufacturer. Specifically, a CTM informs if those products were incorporated to vehicles: i) destined to the local market; ii) destined for exportation purposes to countries different from the United States of America, Canada, countries in the European Union or in the European Free Trade Association; or iii) destined to the United States of America, Canada, and countries in the European Union or European Free Trade Association.
Considering the destination given by the OEMs, the IMMEX auto part manufacturers will be able to comply with the return of temporarily imported goods in compliance to their IMMEX Program, or complete the exportation of those local or definitively imported goods, that were sold and transferred to the OEMs. As per the auto parts incorporated to vehicles destined to the local market, IMMEX auto part manufacturers must change their importation regime from temporary to definitive.
Both OEMs and IMMEX auto part manufacturers must verify and comply with a series of requirements and obligations pertaining to the operations covered by CTMs. For instance: CTMs must be delivered to the IMMEX auto part manufacturers by the OEMs on a monthly basis, before the last business day; IMMEX auto part manufacturers must carry out the return, exportation or definitive importation of the auto parts and pay the applicable taxes and duties within specific periods of time; upon sale, the IMMEX auto part manufacturers must charge the corresponding value added tax at a 16% rate; both parties must keep record of the parts and components sold or received, as well as keep record of the CTMs; among others.
Foley & Lardner LLP international-trade professionals based in our Mexico City office may provide advice to IMMEX auto part manufacturing companies on how to comply with obligations pertaining to sales to OEMs within Mexico.
1In compliance to the IMMEX Program return obligations.