Anyone who has had to deal with Mexican authorities, either on a personal or business basis, will have had experience of how concerned they are with having paperwork in order. Hispanic countries seem to take documentation to whole new level, and Mexico is no different. Each “i” must be dotted, and each “t” crossed.
When you are about to export goods to Mexico, you should prepare for an administrative and logistics minefield. You will need to present comprehensive documentation to support the import of your goods, and the distribution within Mexico’s borders. Any discrepancies or deficiencies in the paperwork and your goods will be seized and held until the problem areas are resolved to the satisfaction of the Mexican Importation Laws, which are administered by the General Customs Administration.
Before your product crosses into Mexico, imported goods need to stop and be unloaded at a receiving warehouse on the US side. What I mean is, that your truck can not drive right across the border, deliver the product and drive back over the border. But it’s before even loading your goods onto the truck, or into the hold of a ship or plane, that the problems with importation could begin.
The top five reasons your goods might get stuck at the Mexican border range from the temporary to the almost indefinite.
1) Your Goods Are Mis-Classified
All of your goods will need to be classified for import duty payments. The documentation must conform to the Harmonized Tariff Schedule (HTS), and this includes identifying them as NAFTA or non NAFTA imports. Underneath this classification comes a sub-classification by industry. The goods to be imported must be annotated as to the industry for which they are being imported, as this, too, will have an impact on duties payable.
Once at customs for clearing, the professional customs expert cannot change the classification details. It is up to the exporter/ importer to ensure the classification paperwork is in order, and though this can often be done online, it is a lengthy process.
You will need to provide proof of the payment of any import duties and taxes payable. These might include IVA (VAT), customs processing fees, warehouse fees, and special taxes on production and services.
All goods must be marked with country of origin stamps or stickers, and be imported with a certificate or origin. Imports from NAFTA countries may be free from importation taxes.
2) Your Goods Are Mis-Valued
The valuation you place upon your goods on the importation documentation will determine the duties to be paid (if any). Of course, the country of origin will also impact these duties payable.
If, upon inspection of the paperwork or the goods themselves, the Customs officer believes that the goods have been undervalued (whether deliberately or mistakenly), then the goods will be held whilst checks are made. These checks may include internet searches for similar goods, and phoning the supplier to ensure price charged is the correct valuation.
This is not only on the exporter end, it is also a problem found with importers, where the importer needs to attach valuation paperwork and undervalues for avoidance of tax and duties.
Mexican and American authorities work closely together to ensure that there is a good knowledge of the origin of goods and valuation of goods being imported into Mexico, and have many years’ experience that helps them quickly identify mis-valued goods or those with the country of origin mis-stated.
3) Your Goods Have an Incomplete NAFTA Certificate
NAFTA goods are taxed differently to goods from other exporting countries. If the goods you are importing into Mexico are NAFTA originated, then they need the correct certification. The importer of records in Mexico must have the original document, and not a photocopy.
Commonly this documentation is supplied with incorrect importer and exporter details attached (for example a wrong address, or ZIP, even a mis-spelt company name or poorly numbered tax code). This certificate must also be produced with a detailed description of the goods to which it pertains. The NAFTA certificate must be supplied at the time of import: it cannot be given in retrospect for goods already imported into the country.
4) Your Goods Are Accompanied by Poor Documentation
All goods imported into Mexico must be accompanied by full and correct documentation, but all too often the necessary documentation is either poorly completed, or missing altogether. If Customs cannot read the commercial invoice, for example, your goods will be held for paperwork to be fully supplied. Other common mistakes with documentation include incomplete product descriptions – often only the part number is supplied – and late arrival of documentation.
Many of these problems could be avoided by advancing the documentation to the customs broker ahead of the goods. The goods may take several days to ship to the border, and if the customs broker has the paperwork in advance – perhaps at the same time it is sent to the importer – then he will be able to check and ensure it meets the required standard.
Both the packing list and the commercial invoice needs to be readable, with full product descriptions and parts numbers, as well as quantities and measurements clearly stated and defined. It needs to be translated into Spanish, and don’t forget the unit price and valuation.
The first and most fatal mistake made is for your client (the importer) to not be properly registered as an importer of goods to Mexico. Registration is by application to the Importers Roster at the Tax Administration Services, and to qualify they must have all documentation in order as to compliance with Mexico’s fiscal obligations. This includes having a Federal Tax ID Number (RFC), which needs to be applied for wherever they will be doing business in Mexico at the local Secretaria de Hacienda y Credito. The Hacienda, as it is commonly referred to, is the Mexican equivalent of the Internal Revenue Service in the United States.
5) Your Power of Attorney and Export Declaration Is Incorrect
Exports into Mexico must also be warranted by a Shipper Export Declaration. Often this will be executed by the exporter himself, but when goods are sent by a courier, for example, this responsibility falls upon the courier.
The professional customs expert needs a Power of Attorney (POA) to be able to complete the importation process. Without it, he is unable to gain release of goods from the warehouse to cross the border and forward to the importer.
As much as 50% of goods held up at the border are done so because there is no valid POA in place. The POA also allows the professional customs expert to file the proper Shipper Exportation documentation.
Here’s a Bonus Mistake that is often made:
Your Imported Packages Don’t Match the Paperwork
Part of the paperwork will be the Packaging List. This list will detail the number of packages, and must include metric weights, sizes and volumes of all the packages. Each package must be numbered and the Packaging List must a detailed list of all the merchandise held within each package: this includes parts numbers and detailed descriptions. A simple mistake in the packaging or paperwork will delay the import of your goods into Mexico. If your packages weights are stated as 1kg, they will be held for further inspection and delayed form importation if they weigh more or less than this.
Packaging, too, has to conform to certain standards. Pallets must be fumigated and officially stamped before crossing the border.
Make Sure You Follow All of the Rules
Because of the complexity of the laws and the pitfalls possible many exporters to Mexico will employ the services of a professional customs expert, who is permitted to prepare and present all the documentation on the behalf of the exporter. This will include providing the importer with copies of all paperwork needed to complete the exportation process.
A professional customs expert will understand all of the paperwork necessary, and work to high standards on your behalf. He will provide you with the following services:
• Processing of all permits and authorizations;
• Reviewing of all documentation and preparation of the import duties declaration;
• Review of shipments at the border, ensuring they correspond to invoices and packaging lists;
• Clearance of goods through customs;
• Provision of guidance on letters of credit, taxes, insurance, warehousing, etc.;
• Shipment of the import from point of entry to final destination.
How you work with your professional customs expert will also help your exportation process. There are some simple things that you can do to aid him and the smooth passage of your goods into Mexico:
• Know your client in Mexico;
• Ask your professional customs expert for confirmation of the HTS number;
• Send pictures, web links, etc. to the professional customs expert to aid with the classification process;
• Establish responsibilities between you and your client (e.g. who pays the freight, condition, INCOTERMS);
• Send the NAFTA certificate to the importer for validation;
• Ensure that your exports are accompanied by copy of all required documents;
• Send all the documentation to your professional customs expert before your products arrive at the border;
• Ensure all your packages are labeled correctly with NOM labeling requirements.
Using a professional customs expert will allow you to work safe in the knowledge that your importation will be managed professionally and in good time. Having goods held up at the border is not only time consuming and embarrassing, but derogatory to your business reputation. It could cause a loss of business, a hit on your profits, and a tax on your time.
The paperwork minefield is not easy to navigate, but with a professional customs expert at your side you’ll come out the other side unscathed, as will your importation.