Mexico_VAT_ RULE 7.2.2: Casual Requirements for registry in the business certification scheme

RULE 7.2.2 is part of the General Rules of Foreign Trade (Reglas Generales de Comercio Exterior - RGCE) issued by Mexico's Tax Administration Service (Servicio de Administración Tributaria - SAT).

This specific rule outlines the grounds for requirement or review for companies already registered in the Business Certification Scheme (Esquema de Certificación de Empresas - ECE). It details the circumstances under which the tax authority can require a registered company to prove it still complies with the scheme's obligations.

In simple terms, instead of being about "casual" or initial application requirements, Rule 7.2.2 lists the triggers that could cause the authority to audit or review a company's existing certification.

The Business Certification Scheme itself is a trusted trader program, similar to the Authorized Economic Operator (AEO) programs in other countries. It provides trade and customs benefits to companies that demonstrate strong fiscal compliance and supply chain security.

According to the official rules, the authority (AGACE) will issue a requirement under Rule 7.2.2 if it detects that a certified company has failed to meet an obligation or falls into one of the following situations:

General grounds for review include:

• Tax Compliance: The company is not up-to-date with its tax obligations.

• Income Tax Withholding: Failure to correctly withhold and pay the income tax (ISR) for its employees.

• SAT Blacklists: The company appears on the lists published by SAT for non-compliant or fraudulent operations (under articles 69 and 69-B of the Federal Fiscal Code).

• Cancelled Digital Seals: The company's digital seal certificates have been cancelled.

Specific grounds for review can include:

• Failure to maintain the legal use of the property where production or service activities are carried out.

• For companies with higher-tier certifications (AA or AAA), having a definitive tax assessment issued against them.

• Having a significant percentage (over 20%) or high value (over $5,000,000 MXN) of VAT refund requests denied within a six-month period

(<=> If we get a negative resolution from SAT when we request the VAT refund, It could affect the VAT certification that MX entity uses to avoid paying 16% when we temporarily import "raw material" AND invoice for manufacturing activities without VAT (art 58) - could impact VAT certification. - always had that risk and we've been careful not having any rejection from SAT)