Annex 24 inventory control practices are an important part of maintaining IMMEX status and reducing tax liability and exposure to possible fines.
Annex 24, or Anexo 24 in Spanish, is the Mexican Customs statute that mandates that automated inventory control systems must be put into place and maintained in IMMEX registered manufacturing facilities. Annex 24 inventory control systems, whether they be software programs designed especially for this application, or adaptations of companies’ existing Enterprise Resource Planning (ERP) systems, should track the use and destination of goods temporarily imported into Mexico for incorporation into final products. Not fulfilling the requirements of this law will result in a company’s possible exposure to a sixteen percent value-added taxed levied upon foreign goods entering Mexico, fines and loss of IMMEX certification.
The implementation of IMMEX certification rules, regulations and procedures is one of the most significant outcomes of Mexico’s recent sweeping tax reforms. Under the fiscal reform, companies must be able to, at all times, maintain an up-to-date automated accounting of all of their trade cargo data. If a discrepancy exists between information held by Mexican Customs, and the company’s in-house Annex 24 inventory control system, manufacturers and export services companies may be fined in amounts ranging from approximately fifteen to thirty thousand dollars, in addition to being required to pay a sixteen percent value-added tax on the value of the goods that have been imported. Companies that do not meet the requirement of putting in place and maintaining an Annex 24 inventory control system will be stripped of their IMMEX certification. The capabilities that Annex 24 inventory control systems must include in order to meet Mexican Customs requirements include, but are not limited to:
- the ability to accurately track the import and export of temporary goods for an eighteen month period;
- the capacity to demonstrate which imports were classified as “definite” resulting from the payment of applicable duties;
- the capability of tracking “inter-maquila” transfers;”
- the ability to produce reports indicating any goods that may have been disposed of in the form of donations:
- the capability of indicating which materials were classified as waste and scrap, as well as the method of their disposal;
- the capacity to demonstrate which imported goods were classified as “non-originating” under Article 303 of the NAFTA, as well as to show that any duties owed to Mexican Customs were paid.
In the event of an audit by Mexican Customs, companies must have the ability to produce reports which provide detailed reports providing information in any one of the aforementioned areas. It is noteworthy that, thus far, in 2014, three hundred and twenty-one of the approximately 5,900 firms that have standing in the IMMEX program have lost their certification. According to the Mexico City-based consultancy, TLC Asociados, S.C., “two hundred and one of these companies failed to submit their annual IMMEX report for 2013,” while the remaining one hundred and twenty committed “an IMMEX requirement breach” that resulted in the loss of their status. Among this group of one hundred and twenty companies, it is likely that loss of IMMEX certification resulted from a failure to
maintain an adequate Annex 24 inventory control system.
Those that are seeking more information on Annex 24 and its importance to the maintanence of IMMEX status may contact the Tecma Group of Companies Import – Export professionals.