Customs Classifications: What are they?

What are customs classifications?

They are the various categories used to assign a specific customs designation to the goods being shipped, based on a statement submitted by the interested party.

Any goods that enter or leave Mexico must be subject to a customs classification, which is established by the taxpayer and is based on the function that the goods will have either in Mexico or abroad. Mexican law lists six customs classifications:

1- Definitive import/export

Imports

Entry of goods from abroad that will be staying in Mexico for an unlimited amount of time. Parties involved in the import of these goods must:

• Be registered in the Ministry of Finance and Public Credit (SHCP in Spanish) registry of importers.
• Prove that they have met all tax obligations.
• Prove to the customs authorities that they are registered in Mexico’s Federal Taxpayer Registry.
• Meet all legal requirements regarding entry and departure of goods.
• Have an inventory control system to distinguish domestic goods from foreign goods.
• Have documentation proving the goods’ country and port of origin.
• Submit a document to the customs broker proving that orders were given to carry out these operations.
• Pay foreign trade taxes.
• If necessary, pay countervailing duties or transitional measures.

Exports

Parties involved in the export of goods must:

• Be registered in Mexico’s Federal Registry of Taxpayers.
• Be registered in the Registry of Exporters by Industry if exporting alcoholic drinks, beer, energy drinks, or processed tobacco.
• Hire a customs broker to submit an export form (“pedimento”) to customs.
• Pay the customs processing fee (DTA in Spanish).
• Meet all requirements established for the exported goods by the destination country.

2- Temporary import/export

Imports

Entry of goods originating abroad that will remain in Mexico for a limited time and for a specific purpose. There are two kinds of temporary imports of goods:

• To be returned abroad in the same condition in which they were imported; i.e. without any modifications.
• To be subject to production processes, modifications, or repairs.

No taxes or countervailing duties are paid to the Office of Foreign Trade for either type of import, except as provided by articles 63-A, 105, 108, section III, 110, and 112 of Mexican Customs Law.

Exports

Departure of goods from Mexico for a limited time and for a specific purpose. Under this classification, no taxes are paid to the Office of Foreign Trade; however, the non-tariff measures (NTMs) must be satisfied, as well as procedures for handling of goods under this classification. There are also two kinds of temporary exports of goods:

• To be returned in the same condition; i.e. returning to Mexico without any modifications
• To be subject to production processes, modifications, or repairs

3- Tax deposit

Storage of foreign or domestic goods in general depository warehouses, which must be approved by customs authorities. Goods deposited in these warehouses may be removed for:

• Definitive import, if they originated abroad.
• Definitive export, if they originated in Mexico.
• Return to another country or reincorporation into the national market of origin.

The goods under this classification may remain stored for as much time as necessary, as long as the warehousing agreement stands and service is paid for.

4- Goods-in-transit

• Domestic. Transfer of goods under customs control, from one Mexican customs port to another.
• International. Transfer of goods under customs control, from one international customs port to another, but crossing Mexican borders.

5- Production, modification, or repair in a bonded warehouse

Entry of foreign or domestic goods to said facilities in order to be modified, produced, or repaired, either to be returned abroad or exported permanently.

Entry of foreign goods under this classification is subject to the general import tax as provided by article 63-A and any countervailing duties applicable. The general import tax is determined when assigning the goods to this classification.

In no case may goods under this classification be removed from the bonded warehouse, except to return abroad or to be exported.

Goods that are stored in these warehouses may be modified or repaired if approved by the authorities. When returning modified or repaired products, the general import tax must be paid if they were part of a drawback program.

6- Strategic bonded warehouse

Entry of foreign, domestic, or nationalized goods to strategic bonded warehouses for a limited time, so they may be handled, stored, safeguarded, displayed, sold, distributed, modified, or repaired.

• Taxes and countervailing duties are not paid to the Office of Foreign Trade for goods under this classification.
• These goods are not subject to non-tariff measures or the Official Mexican Standards (NOM).
• Taxes are not levied on unreturned waste products if it is proven that the waste products were destroyed in compliance with the provisions established by the Mexican tax administration (SAT).