TAX, ADMINISTRATIVE and AMPARO. Regularization of illegal used vehicles October 29, 2021
On October 18th, 2021, the “Federal Executive Branch Agreement by which several actions were instructed to indicated government agencies in connection to the definitive importation of used vehicles” (Agreement) was published in the Official Gazette of the Federation (OGF), whose purpose is to provide legal security for the regularization of used vehicles of foreign origin interned in national territory and whose legal stay in the country (i.e. definitive importation) has not been processed in accordance to the applicable legal provisions.
By means of said Agreement the Federal Executive Branch instructed to the Ministry of Treasury and Public Credit, of Economy, and Security and Citizen Protection, to elaborate a Program that are encourages individuals residing in the states of Baja California, Baja California Sur, Sonora, Chihuahua, Coahuila, Nuevo León and Tamaulipas to regularize their used vehicles of foreign origin and located in those states (Program), based on the Decree in force by which the definite importation of used vehicles is regulated.
It should be noted that there was a relatively similar precedent with the Decree published on August 22th, 2005, by which the former Executive Federal Branch established the conditions for the definite import of used motor vehicles, arguing that the temporal internment of automobiles that are not returned abroad causes a social problem for Mexico and an important legal problem for the owners of such vehicles; nevertheless, said Agreement lead to violations to the tax principles of equity and proportionality, among others, to the detriment of the Mexican automotive industry of new and used vehicles.
The Agreement is highly questionable and regrettable, since once the pending Program is performed and implemented the regularization of used vehicles will be promoted, that on one side are illegally interned in national territory, since they lack of the import previous authorization, have not paid taxes (tax evasion), do not have the environment certificates and the ownership titles (e.g. invoices), and on the other hand, their owners and/or holders have committed the offence of smuggling by introducing to Mexico those used vehicles in terms of the Federal Tax Code.
We estimate that both the Agreement and the pending Program will provoke a considerable negative impact to the Mexican automotive industry, from both manufacturers of vehicles and dealers of new and used vehicles, because the intention of providing legal security to the owners of illegal interned vehicles in the country will cause the violation of diverse human rights in detriment of the members of such industry, such as the free competition and concurrence, and they will have a legitimate interest protected by the national legal system.
Even through the aforementioned Agreement and the pending Program, several provisions set out in the United States-Mexico-Canada Agreement (USMCA), among other commercial agreements entered into by Mexico will be violated.
It will be necessary to analyze the terms and conditions of the Program that is pending in order to identify the aspects of vulnerability of the legitimate interest of the Mexican automotive industry, from both manufacturers of vehicles and dealers of new and used vehicles.
If you have any questions regarding the foregoing, please do not hesitate to contact us.
Mexico City, October 29, 2021