FYI - Baja MX - Importing Parts w/TIP

[mvweebles]

I am in the midst of a large refit in Ensenada MX, 70-miles south of San Diego. Thought I would update folks with my experience of bringing in replacement parts and upgrades. I am working with Niza Marine (Niza Marine - Home) who make runs to San Diego a few times a month for parts. All in, Niza has made over 25-trips to bring stuff over the border for my boat, some was low-value, some was really bulky (such as 4x8 sheets of perforated aluminum sheets for engine room insulation covering). Some was high-value bulky stuff (new Northern Lights generator). When I arrived last year, I had all paperwork completed, including a 10-year TIP.

First, Mexico uses a random spot-check system: if you get a red-light, you are checked. Also, if a vehicle looks at all fishy - such as weighed-down on back axles or 4x8 sheets of perforated aluminum hanging out the back, they will likely get pulled over regardless of value of goods.

Officially, you can bring up to $300 of stuff into the country duty free. After than, you declare it and pay 16% VAT. I am told by Niza Marine that up to $3000 in value can be declared at the border without use of a customs' agent. After that, you need to engage customs' agent. Failure to do so will result in a hefty fine and a really awkward moment at the border as the customs official threatens to seize (not just impound) your car. It's a serious risk - fairly low probability, but a very high impact if caught. Mind you, this is not me talking - this is the folks at Niza Marine who do this trip a couple times each month.

At the Tijuana border crossings at least, having a TIP means does nothing to reduce VAT, even for parts that are clearly replacements such as a Generator that is clearly listed on the TIP.

For high-value goods, Niza Marine has done a decent job of shopping an agent. Somehow, they have figured out a way to [legally] reduce VAT by more than half. But it takes a lot of time for someone to do it.

Another tip from personal experience of equipping a condo in Yucatan: for new stuff, we remove all packaging and try to make it look used in order to reduce value. Example: light fixtures. We have made 20+ flights into Cancun carrying large boxes of goods from US. We have had a red-light once (no issue despite having a lot of stuff) and were inspected despite a green light once (fortunately, we had a list - not a receipt - of goods and their estimated value).

Bottom line, for small stuff that doesn't look expensive, no problem spinning the wheel on red-light/green-light. If you get red, be prepared for a lengthy conversation. Helps to have a list of goods and their value (receipt is even better). If under $300, you will have no problem. If over $3000, be prepared for a very long day of finding an agent, and going to several offices/banks to complete paperwork. If you try to sneak something in that is clearly over $3000 and you get caught, best case scenario is a very long day of running around. Worst case scenario------well, it's pretty bad. Running around may mean, well, actually 'running' without your car.

Finally, Mexico doesn't really have rules, but rather guidelines that are subject to interpretation. Really depends on the official and what mood they are in on any given day.

[john61ct]

I'm surprised no mention of baksheesh?

[mvweebles]

What is baksheesh?

[john61ct]

To grease their palm, backhander, payoff, bribe

[mvweebles]

Ah, "la mordida." It's a way of life in places like Mexico. I don't ask too many questions. I'm sure there is a fine line between a "fine" and a bribe. In the end, it all works out, but does take a different mindset. I have to check my Americanism at the border when heading south.

[KP44]

Originally Posted by mvweebles

Ah, "la mordida." It's a way of life in places like Mexico. I don't ask too many questions.

When we get our tourist cards (6-month visa), we leave immigration office and pay the fees at a bank and return with a bank receipt. The new system prevents different fees at different places. There is no bribe expected or accepted. I've met only professional, honest officials in Mexico.

That said, I think wages have increased somewhat. When we arrived in Sonora and Baja, the mnimum wage was about 88 pesos per DAY. That is less than 5$US and about 5$CAN.
I am not big on handing out money or tips, but every little is appreciated. In Mexico, tips are not expected except at the very touristy locations where a night in a motel costs over a month's wages.

There is no percentage for tips. Certainly not the 15% that people think they deserve north of the border. As our Mexican friends tell us, "If you want to give a tip, it is always appreciated but not expected."
In the supermarkets, there are people who are not paid at all and they bag every customer's groceries. They "work for tips" and we always quietly hand them 5 or 10 pesos, which is 25 to 50 cents.

If you hire someone in Mexico on a regular basis, like a cleaning person for 2-hours once a week; you might find you owe some vacation pay and a Christmas bonus equal to one-month's wages. We have been told this is normal and part of the culture. But our experience has been only Sonora, Baja Sur, Baja Norte, and the Sea of Cortez.

TIPS is an anacronym like POSH.
When steamships powered from Europe to North America for a vacation, the wealthy booked their staterooms, "Port Out; Starboard Home", written as POSH. They were always on the sunny, south side of the ship.

A gratuity "To Improve Personal Service" was shortened to TIPS. And people today call it a tip and treat it as wages rather than gratuity.

[KP44]

Originally Posted by mvweebles

At the Tijuana border crossings at least, having a TIP means does nothing to reduce VAT, even for parts that are clearly replacements such as a Generator that is clearly listed on the TIP.

For actual replacements, bring the old generator, engine, or other item to immigration and take photos that document the old parts you are replacing. You usually need to take the old parts out of Mexico to show that you are not selling them in Mexico. (Foreign visitors may not sell anything. When sailors trade or barter, we offer the item "for coconuts" because we cannot sell it for pesos or dollars.) Have the photos and documents to certify the replacement parts when you enter Mexico. This has worked for many of us on the Sea of Cortez.

[mvweebles]

Originally Posted by KP44

For actual replacements, bring the old generator, engine, or other item to immigration and take photos that document the old parts you are replacing. This has worked for many of us on the Sea of Cortez.

Is there a section of Mexican law or code that can be referenced? Thinking about it, everything I know is some sort of anecdotal description such as these threads - if there is a code that says "when X/Y/Z, no VAT shall be applied" or similar, would be great (the $300 threshold is very clearly written on all custom's documents).

I was with Mario/Niza Marine to do the 2-step with Otay Mesa Aduna for the generator, had the TIP with all requested copies etc. Was told repeatedly that there was no way around VAT - they didn't give a damn about the TIP with Generator listed. Mind you, as you say, there is no cash involved - these transactions are done by interbank transfer via Banjercito. Perhaps you have an agent you can recommend? To be honest, at the aduana office I was at, I can't really imagine how an old generator would be hauled in, but wouldn't put it out of the realm of possibility.

I agree with you that Mexican authorities are professional and courteous when checking in/out of the country, though have been shaken-down by police when driving in Mexico several times. First time was a bit unnerving. I now just smile, produce a color copy of my drivers license, and ask for the ticket. However, for import/export, clearly there is some grease in the background to get the VAT reduced by sizable percentages. And there was a fairly large 'fine' on top of the tax once when bad luck produced a red-light with inspection, though that too was paid via a legit bank transfer.

The above said, getting parts in/out of Ensenada is a breeze compared to locations deeper into Mexico due to proximity of San Diego and the strong marine suppliers there (gracias Downwind Marine!). Avoiding California Sales Tax, which is over 8.5%, is a good thing and lessens the bite of 16% Mexican VAT.

Definitely interested in hearing more about how tax has been legitimately deferred - I just didn't see any clue of that happening in my multiple interactions.

[KP44]

Originally Posted by mvweebles

Was told repeatedly that there was no way around VAT - they didn't give a damn about the TIP with Generator listed.
I can't really imagine how an old generator would be hauled in, but wouldn't put it out of the realm of possibility.

I think the VAT and its enforcement have more to do with imports than being a revenue source. The VAT must be enforced or there would be truckloads of items brought down and sold, undercutting the local merchants and businesses. Even an old, discarded Generator can be rebuilt and find its way onto the marketplace.
When we show the old item being taken out of the country and the replacement item is clearly a replacement, that seems to satisfy customs that we are not importing items for sale.
I have no code or law to quote. And we have never used an agent except to import the boat with our TIP.

Originally Posted by mvweebles

I agree with you that Mexican authorities are professional and courteous when checking in/out of the country, though have been shaken-down by police when driving in Mexico several times.

The police carry weapons that our Media says are dangerous or ugly. (Television and reality can be vastly different.) It is not unusual to be stopped a couple times by Customs, Police, Federal Police, the Army, or the Marines. They are doing their jobs and keeping everyone safer. I am always happy to see them.

[mvweebles]

There are many flavors of law enforcement in Mexico, at least the Yucatan where I live a chunk of the year. The local police are the ones who seem to favor a shake down. The Federales and Estatal officials are fine. Until recently, each town has an inspection station that only seemed to primarily stop rental cars traveling to the airport. I say "until recently" because there has been a sea change that coincides with election of new president AMLO. Checkpoints are randomly manned with military style enforcement who actually inspect vehicles, not just makeup minor traffic violations. I do detect BCN is a bit different, but am told police corruption is still a problem.

I'll ask about pictures as evidence. These repairs are legit replacements of old, tired worn out gear. That said, not many people could pull this off. Getting a generator from La Paz (for example) and out of the country 1000 miles north is a pretty big hurdle.

[KP44]

Originally Posted by mvweebles

I'll ask about pictures as evidence. These repairs are legit replacements of old, tired worn out gear. That said, not many people could pull this off. Getting a generator from La Paz (for example) and out of the country 1000 miles north is a pretty big hurdle.

We might be talking apples and oranges.
We are cruisers who transport our parts and come back with replacements. We are not usually hiring someone else to do this. We hire the local Capitaines or others to do the install, only if we need help.
I doubt a marina or business in Mexico can avoid the import fees when they import an item to sell it and install it. Even if it is an item specific to your yacht, it is still a business that is buying and importing the item.

[mvweebles]

Sounds like you're flying in/out, which would be a big difference - not doing a generator like that. Niza Marine is a tiny outfit and doesn't really pique anyone's radar. When we did the generator, Mario accompanied me more as a translator than anything. All transactions are done in my name. Frankly, they can't afford the float on some of the parts such as a generator or replacement stabilizers.

What type of parts are you bringing in? I've had no issues with electronics and other stuff that doesn't look expensive (stainless portlights for example) . It's the bulky high value stuff that raises eyebrows.

[alansmith]

Weebles, thanks for the write up. I too have a boat in SOC at San Carlos Sonora. I’ve had my headaches also. Believe it or not.. most of them centered around my truck. I was denied entry about a year ago because Nogales border crossing agents deemed it to be commercial truck. Needs a permit Senor! But I had entered twice before with no problem through the same border crossing.
Yes, mordida is still very much alive. I like your advise of “check your Americanism at the border”... it is sage advise.

I travel down in Jan again for a month. I would like to exchange my tohatsu OB 10 hp for my 2018 Suzuki 10 hp. Any ideas how to do that? I plan on bringing old one out And using it on my delta boat. I also have a Honda 2200 gen I want to take down. Makes me nervous. Rules seem to change weekly and different things at different border crossing.

Have you thought about entering through Lukesville or San Luis and driving over versus entering through Tijuana?
Yes

[Minggat]

[QUOTE=KP44;3023861]When sailors trade or barter, we offer the item "for coconuts" because we cannot sell it for pesos or dollars.) QUOTE]

Authorities in Mexico have been know to take offence to this. They are not stupid, and this is one way to tell them that you think otherwise.

[mvweebles]

Originally Posted by alansmith

I travel down in Jan again for a month. I would like to exchange my tohatsu OB 10 hp for my 2018 Suzuki 10 hp. Any ideas how to do that? I plan on bringing old one out And using it on my delta boat. I also have a Honda 2200 gen I want to take down. Makes me nervous. Rules seem to change weekly and different things at different border crossing.

Have you thought about entering through Lukesville or San Luis and driving over versus entering through Tijuana?
Yes

I have no guidance on border crossings in Arizona. When we worked with Aduana and an agent, logistically, Otay Mesa was preferred over San Ysidro.

As far as getting the stuff through, I'm not sure what I would do. A LOT of stuff has come across the border for the refit of my boat, the vast majority of it just came across without pause due to GREEN light. A driver did get a RED light and happened to have some pretty expensive stuff for me and was levied a pretty hefty fine. The driver, a local Ensenada resident, was pretty rattled by the threats to seize his auto. I don't remember what parts were in question, but in the end, there was a pretty hefty fine - 20,000 pesos or so ($1000 USD!!! Ouch!). I will note the goods, whatever they were, were new and in boxes, so no way to claim they were used. But the experience (and fine) are cauterized in my brain - I'm not quick to just blunder across the border these days.

What has worked for me well in getting a ton of stuff through Cancun airport (20+ trips and several dozen cardboard boxes) is making the stuff look as used as possible and coming up with some sort of low-value receipt that doesn't cross the absurd line. Now, non-Honda generators can be purchased for under $500, so claiming a used value of $200 is not absurd. The OB is a bit more complex. I might take the prop off, toss some grungy "MonsterDrink" decals on it, and get a used-purchase receipt of $375 or something (maybe with a "Core Charge" to be refunded once you bring the old one back). Would be low, but not impossible. The value of the two would be under $600 which, as long as I was traveling with my wife, would probably work fine - it's a plausible enough story that would avoid a fine. In the end, doing paper work for not a lot of money isn't the way any bureaucrat wants to spend his/her day. Hopefully, even if he/she doesn't believe you, they won't pursue further as there is little to be gained (unless you piss them off, then it gets personal).

I'd have my TIP and vessel documentation in order along with pictures. Maybe KK44 has a point about letting them know this is personal gear. I doubt there's an official code on this, but it couldn't hurt to reassure the aduana official that this is indeed personal gear.

In the end, there's no way to avoid a really difficult choice: voluntarily paying a pretty steep tax on the full value of the goods (which will take time); or playing Russian Roulette with Red/Green light and hope for the best and trying to keep your bowels and heart-rate from revolting. Personally, I'd opt for the latter, but have my paperwork lined-up. And plan to be delayed for several hours as it gets worked out.

If you think of it, please update the thread on how things went.

Peter
PS - I considered San Carlos for my refit. A good friend has had a Willard 40 up there for some time, and knows some decent workers. Nice area - I haven't been there in 30+ years.