I'm in a quagmire and need help

[Montanan]

Importation into Mexico for resale.

For tax purposes, all Mexican importers must register and be listed with the Official Register of Importers (Padrón de Importadores), maintained by the Secretariat of Finance and Public Credit (SHCP), which also maintains special sector registries. To be eligible to import more than 400 different items (including agricultural products, textiles, chemicals, electronics, and auto parts), Mexican importers must apply to the SHCP to be listed in these sector registries. U.S. exporters have occasionally encountered problems when products are added to the list without notice or importers are summarily dropped from the registry without prior notice or subsequent explanation. It is important to keep in mind that in many cases releasing goods from Mexican customs can take more time than expected.

The basic Mexican import document is the Pedimento de Importación. Mexico requires import and export documentation including a completed pedimento for all commercial crossings. This document must be accompanied by a commercial invoice (in Spanish), a bill of lading, documents demonstrating guarantee of payment of additional duties for undervalued goods if applicable (see the Customs Valuation section of this guide), and, if applicable, documents demonstrating compliance with Mexican product safety and performance regulations (see the Standards section). The import documentation should be prepared and submitted by a licensed Mexican customs broker or by an importer with sufficient experience in completing such documents.

Products qualifying as North American must use the NAFTA Certificate of Origin to receive preferential treatment. This must be completed by the exporter and does not have to be validated or formalized. Mexican tax authorities conduct fiscal audits on certain exporters in sensitive industries. A good source of information is the Mexican Tax Administration Service’s website regarding Verification of NAFTA Certificates of Origin. (For future developments and information on eventual agreements related to the NAFTA renegotiation, check the Fact Sheets and NAFTA pages at the Office of United States Trade Representative at www.ustr.gov.)

Following a 2015 change in the law, the Mexican importer (registered in the Official Register of Importers) must assume responsibility for their own import paperwork and compliance with Mexico's customs regulations. Thus, the use of a customs broker for import transactions is no longer a requirement. However, Mexican customs law is very strict regarding proper submission and preparation of customs documentation. Errors in paperwork can result in fines and even confiscation of merchandise as contraband. As a result, a customs broker’s services may still be needed for the import process. Since customs brokers are subject to sanctions if they violate customs laws, some have been very restrictive in their interpretation of Mexican regulations and standards. Please also see our Temporary Entry section below.

[Montanan]

A couple of taxation issues with your vessel being imported and sold in Mexico:

Mexico has a value-added tax (IVA) on most sales transactions, including sales of foreign products. The IVA rate is 16 percent for all of Mexico.


Depending on whether your vessel is of USA origin or not. Previously boats built in the USA or Canada were exempt from tariffs when imported into Mexico under the North American Free Trade Agreement [NAFTA], but Mexico has imposed retaliatory tariffs to 71 categories of products imported from the USA, including Harmonized Tariff Code - 8903.92.01 Motor boats, except for outboard motor which may be a category into which your vessel applies. The Mexican retaliatory import tariff appears to be 15% due presumably upon cancellation of your Temporary Import Permit for the purposes of reselling the vessel imported in Mexico and likely require all the imposition of the importer permit procedure before cancellation of the TIP mentioned in my prior post of this thread. Hope you are fluent in Spanish as the bureaucracy and paperwork looks intense.

Reference: DOF - Diario Oficial de la Federación

An English translation of a snipet of the above reference is copied below.

I. Modifications to the Decree establishing the Applicable Rate during 2003 of the General Import Tax , for goods originating in North America


ARTICLE 1.- The preferential tariff treatment provided for in the Decree establishing the Applicable Rate during 2003 of the General Import Tax for goods originating in North America, published in the Official Gazette of the Federation on December 31, is suspended. December 2002 and its subsequent amendments, only to goods originating in the USA. UU., Regardless of the country of origin, classified in the following tariff fractions of the Tariff of the Law of the General Taxes of Import and Export:

II. Modifications to the Tariff of the Law of the General Taxes of Importation and of Exportation.

ARTICLE 2.- Tariffs of the Tariff of the General Import and Export Tax Law published in the Official Gazette of the Federation are modified on June 18, 2007 and its
Subsequent amendments, only as regards the importation of goods originating in the USA. UU., Regardless of its country of origin, in regard to the following tariff fractions :

[jmschmidt]

Like most everyone else on this forum you left out most of the details to get a reasonably complete answer to your dilemma.

Is the buyer a US citizen? Only a US citizen can document with the USCG, anyone can state register in the US.
Use a USCG notarized Bill of Sale even it the boat will not be US flagged.
Does he/she plan on leaving the boat in Mexico? If so cancel your TIP and have the buyer apply for a new one. Boat movement out of Mexico might be required for this.

And about 50 other things to do. Or hire a vessel documentation specialist who handles such transactions worldwide or at least in North American, Mexico and the Caribbean. Forget a lawyer, the vast majority have no experience or knowledge at international Admiralty and Maritime law and those that do go for about $1,000/hr. especially in foreign countries. If you hire a lawyer off the internet you will just be paying for their education in those disciplines at $200/hr.

[Montanan]

Depending on what type of vessel you are selling / importing into Mexico there may be a retaliatory tariff if it country of manufacturing was the USA.

Note that the Mexican retaliatory 15% tariff appears to applies to only motorboats HTC 8902.92 and not to sailboats HTC 8902.91 [even sailboats with an auxiliary motor]. Albeit if your vessel has a dinghy and / or an outboard those two items may be subject to separate importation and tariff duties and the dinghy may require separate registration / documentation with Mexico if they are not covered under the parent vessels TIP.

Reference the Harmonized Tariff Schedule of the USA. I was unable to locate the HTC for Mexico but it is likely similar, i.e., harmonized.

[Montanan]

Be sure to be explicit and detailed [make, model, serial number] as to each and every appurtenance included in your sale of the vessel, anchors / rode, a host of electronics, sails, generator, wind vane pilot, water maker, appliances, dinghy, outboard, life raft, stove, air conditioner, software [licenses], spare parts, pfds, etc. when you complete the USCG Bill of Sale document.

There always being gray / grey areas of whether a thing is an appurtenance to a vessel, or instead of a personal property nature.

Prepare separate Bill of Sale for any and all non-appurtenance equipment and personal property items, SUP, kayaks, dive and fishing gear, liquor, television / DVD player / stereo.

Maritime cases often discuss vessels and their “appurtenances.” Merriam-Webster defines “appurtenance” as “an object that is used with or for something.” But what does the word mean under general maritime law, and how do we determine what equipment constitutes an appurtenance?

“Appurtenance” Defined.

The Eastern District of Louisiana has defined “appurtenance” as “any identifiable item that is destined for use aboard a specifically identifiable vessel and is essential to the vessel’s navigation, operation or mission.” Clay v. ENSCO Offshore Company, 2015 WL 7306436 (E.D. La. Nov. 19, 2015).

The U.S. Fifth Circuit Court of Appeals identified three important inquiries when determining whether certain equipment is appurtenant to a vessel: (1) whether the equipment is attached to the vessel, (2) whether the equipment is “utilized in a manner fundamentally related to traditional maritime activities,” albeit this court cases deals with a claim injury that occurred on board. Drachenberg v. Canal Barge Co., Inc., 571 F.2d 912 (5th Cir. 1978).

However, equipment can still be an appurtenance even if it is only temporarily attached to the vessel, not part of the vessel’s usual gear, not usually stored on board, or not controlled by the vessel’s crew. Id. The Fifth Circuit explained that only “minimal attachment” is required when the accident occurs on the vessel. Id.

Note such items as commercial use permits are not considered appurtenances associated with a vessel, so I suspect that your TIP would also not be made an appurtenance under the vessels sale in Mexico.

As to Mexico TIP purposes: The “Vessel” is understood to be the hull, the machinery, its equipment and fixed or movable accessories used for navigation,
decoration, and functioning of the vessel in the terms established by
SAT by way of Rules

[Montanan]

Reference CruisersForum thread of similar subject in 2012.

http://www.cruisersforum.com/forums/...ico-75067.html

[Scorpius]

What about, with both buyer and seller aboard, canceling the current MTIP, clearing out of the country, going out more than 12 miles, and completing the sale on the high seas, then coming back in, preferably not into Mexico?

[heatherreimer]

Alan R......

an awkward, complex, or hazardous situation.
"a legal quagmire"
synonyms: muddle, mix-up, mess, predicament, unfortunate/difficult/awkward situation, mare's nest, quandary, entanglement, tangle, jumble, imbroglio

No, I am in a quagmire, but if you feel it's necessary to correct someone's use of the english language, then perhaps you should also make sure that you are correct.

[heatherreimer]

Unfortunately, A LOT has changed since 2012. But thanks for the referring article.

[Montanan]

Prospective solution to your quagmire / quandary. Cancelling the TIP and removing the vessel from Mexican territory to execute the private sale and transfer of ownership and having the new owner reflag the boat so as to avoid triggering Mexican obligations [import tariff, IVA - VAT, foreign income tax on profits, if any, arising from sale of vessel, importer registration, etc.] sounds like the most likely method of easing the transaction.

No money can change hands in Mexico.

No Mexico transaction / No Mexican liabilities or compliance issues.

The new owner should be able to re-enter Mexico with their reflagged vessel and a new TIP.

Of issue is that it takes a bit of time to reflag a vessel and to obtain a new TIP, not sure if the boat will need to stay out of country for the duration of the bureaucratic tasks and receipt of the paperwork and how one gets the paperwork of registration / documentation to the boat before it reenters Mexico, a logistics issue that.

Your TIP can be cancelled at the harbor you depart Mexico from.

[KP44]

Originally Posted by heatherreimer

Thank you for responding Freedom45. Okay, that makes sense. My other dilemma is that the boat is in Mexico with an active TIP, which I'll have to cancel so that the new owner can reinstate. Who knew it was so hard to sell a boat!

The second happiest day of a boat owner's life is within grasp......

I'd have an agent in Mexico handle the sale. It is not legal to sell a boat that is under a Temporary Import Permit but they have ways to handle that and create a new TIP for the new owner.

[Montanan]

Originally Posted by KP44

I'd have an agent in Mexico handle the sale. It is not legal to sell a boat that is under a Temporary Import Permit but they have ways to handle that and create a new TIP for the new owner.

It is illegal to sell, or offer to sell a foreign flagged vessel in Mexico under a TIP, i.e., a vessel that has yet to be imported into Mexico, hence no agent or broker will engage in such transaction as they too become criminally and civilly liable.

Similarly it is illegal to sell or offer to sell a foreign flagged vessel in the USA to a citizen or resident of the USA, which is why you will see any ads associated with a foreign flagged vessel that is for sale in the USA to state not for sale to a US citizen or resident.

One opens up the real risk of receiving a substantial fine in addition to the request ordinary taxation issues and customs duties due, and / or, to cause to have the boat confiscated [i.e., lose ownership by means of transfer to the government of such vessel] if you break a country's law.

One can legally avoid a law but it is illegal to evade a law.

Simplest solution is to take the vessel out of Mexico to offer it for sale and to complete the sale transaction, else one is doing business in Mexico and subject to all the regulations and obligations associated with that privilege.

[KP44]

Originally Posted by Montanan

…. hence no agent or broker will engage in such transaction as they too become criminally and civilly liable.

The Mexican boat brokers say they know how to deal with this. Hundreds of boats under TIP are offered and the complex transactions seem to be completed legally - somehow.


As cruisers visiting in Mexico, we never offer to sell or buy anything. We might offer to trade "for coconuts" but that's it. But the resident boat brokers say they have understanding and means to do everything legally.

[exMaggieDrum]

This was a few years ago. We bought a Canadian Registered boat. We are US citizens. The seller needed to take the boat off of the Canadian Registry. It was not difficult and the docs that were suggested above were what he used. The rules should be clearly given online. Buying the boat is not complicated from the experiences of close friends who have done so whether it was from a Mexican national or other national. A US buyer will either not get it USCG documented or will. The docs needed to do that are simple and I think the same as for Canada to de-register but that will be easy to figure out online.


A lawyer could be a luxury that helps or a nightmare that doesn't. Do what you think best of course. What I would suggest is that you hire a boat documentation/escrow service. I bought my previous boat without one but it was nerve-wracking to give a seller a deposit and possibly having him take it and run. He was nervous that I would follow through although he was in a much better position.



I bought my current boat through a broker but the major factor was the use of the documentation/escrow service. In this case the broker (with a long and good reputation) handled the escrow but the service verified and executed everything and told all parties exactly what documentation was required. They handled the USCG documentation change from the owner to me and the WA state registration, bill of sale, etc.



This was all done online via Docu-Sign but there are others. If a broker is involved in Mexico it could be more complicated. I am pretty sure there are Canadian documentation/escrow services but you could use one in the US too. Converting funds is not hard but there is always a small charge for that.



But it is your boat. You can also do all of the above but the escrow is something well worthwhile for peace of mind. Good luck.

[john61ct]

Many rave reviews of this lawyer

http://amrl.com/attorney/catherine-kent/

And boat sales do often get legally completed in international waters.