Mexico

9 Chapter Q&A

    • Q&A1

       Q.

      How different is “notarized translation” from “ordinary translation"? Our lawyer requested us to gather a few documents such as our shareholder’s registry and our article of incorporation for establishment of our business.

       

      A.

      The notarized translation is translated from the other languages into Spanish by the notarized translator registered by Supreme Court or High Court of Justice in Mexico. Before you submit the documents issued in the other country with its language to the competent authority and notary, you need to translate the content as Spanish. In this case, this document must be translated by the notarized translator who has the title of “Perito Traductor Oficial” regarded by High Court of Justice in one of federal states with his/her signature and seal.

    • Q&A1

       Q1. 

      Could you explain me of accounting items in Mexico? I’m in charge of accounting at the  headquarter in Japan. Before, I got an accounting data from our subsidiary of Mexico. Reviewing it carefully, I found the unfamiliar items whose names says "Complementaria" "Complemento" and “Comple" under the column of deposit, accounts receivable and payable. Moreover, these are written in dollars basis. What do these mean exactly?

       

      A1.

      “Complementaria” means “supplementary”, thus this item represents the amount converting from foreign currency basis to Mexican peso(MXN). Likewise, “Complemento”, and ”Comple” mean the same as this. You have to update all accounting items and these amount by change foreign currency basis into Mexican peso in your accounting document and register. Then, adding “Complementaria”, you can fix the number of amount. Please look at the following figure.

       

       

       

      e.g. Mexican subsidiary received 100,000 USD (1 USD = 19.00 MXN) as a capital.

       

      Debit

      Credit

      Bank DLLS

      ( deposit USD basis)

      100,000.00

      Capital

      1,900,000.00

      Bank Complementaria

      (deposit adjustment item)

      1,800,000.00

       

       

      Bank DLLS(deposit dollar basis) and Bank Complementtaria (Deposit Adjustment Item) are supplementary items of Bank (Deposit). Putting them together, the amount of Bank (deposit) is equal to the amount of capital by Mexican peso. First you need to calculate the amount of main item and later the amount of “Complementaria” by the difference from the amount of foreign currency.

         

      As mentioned above, all of accounts and registers must be elaborated in Mexican peso  basis, however, the amount of foreign currency must be described as well if you are involved in foreign exchange transactions. Therefore, as we examined above, there are both amounts of USD and MXN on the record. Although this time we show you the item of capital as a example, you can apply the same way to those following item such as amounts receivable and payable. 

    • Q&A2

       

      Q2.

      Could you tell me about a meaning of “temporary payment IVA” on balance sheet? On this sheet, there are items of “IVA pendent de pago” and “IVA acreditable pagado” relating to various kind of items. Since these look to be used for asset, I guess these probably mean “temporary payment IVA”. What do these mean on each items, exactly?

       

      A2.

      Each item means as below.

      IVA pendiente de pago…the name of VAT calculated as pending VAT

      →Unpaid VAT

      IVA acreditable pagado…the name of VAT calculated as creditable VAT

      →Paid VAT

       

      For instance, if you have the pending payment, you have to sum its VAT as “IVA pendent de pago” at the moment and later change it as “IVA accreditble pagodo”. 

       

      e.g. You purchase a product by 1,000.00 MXN excluding VAT and pay the cost at a later date

      ●Sum as arrears

      Debit

       Credit

      Price

      1,000.00

      Arrears

      1,160.00

      Pending VAT

      160.00

       

       

      ● After payment

       

      Debit

      Credit

      arrears

      1,160.00

      Cash and deposit

      1,160.00

      Paid VAT

      160.00

      Unpaid VAT

      160.00

      You should describe these two kinds of VTA(IVA) based on payment for tax reporting. As well, please fill out “IVA transladado facturado(invoiced VAT)” and “IVA trasladado cobrado(Charged VAT)” and report about sum of sales to the authority concerned monthly.

       

      e.g. We sum 1,000.00 MXN excluding VAT as sales and pay at the later date.

       

      ● Sum as account receivable.

       

      Debit

       Credit

      Account receivable

      1,160.00

      Sales

      1,000.00

      Invoiced VAT

      160.00

       

      ● Afrer Deposit

       Debit

      Credit

      Cash and Deposits

      1,160.00

      Account receivable

      1,160.00

      Invoiced VAT

      160.00

      Charged VAT

      160.00

    • Q&A3

       Q3.

      Could you tell me about currency of “Cent” in Mexico? Usually you can see the bill described the amount of fine cent in shop and restaurant, but actually these are no currencies which correspond to a unit of amount in real. It is possible to pay this fine cent by credit card, but what if I need to pay it by cash? I have no idea about this concept about payment method od cent because the unit is sometimes rounded up or down at the other time.

       

      A3.

      Cent: Centavo is a unit of amount less than peso. 100 cents is equivalent to 1 peso. Cent exists as a coin with the unit of 10, 20 and 50. However, because a cent is sometimes displayed to the last unit, you can not achieve a payment of just exact amount. For example, $180.89MXP is written as  Ciento ochenta nueve pesos 89/100 M.N.. Well, if you see the price like this, please just round up the tenth place in cent. It is common way. Well, in  the above example, the price will be 181.00MXP: Ciento ochenta y uno pesos 00/100 M.N.. But,  actually there is no rule of rounding up and down in laws and regulations.

       

      In the accounting task, as described above, you have to write down the number of the hundredth place of cent in detail. But, as you can imagine, there will be difference between the amount of actual payment and one of invoice:factura. Then, you can fix it by using miscellaneous income and outcome.

    • Q&A1

       Q.

       Could you tell me about taxation in Mexico? We confirmed to the accounting firm regarded to accounting method in order to perform a discount of our product by our customer’s request. But, The accounting firm commented to us that they would recalculate and update all in once at the end of year. We are afraid If we can’t update the amount of discount incurred on the monthly planned corporate income tax the amount of monthly levied tax obviously exceeds more than one of corporate income tax determined by yearly tax return. Isn’t it possible to make this discount updated per a month?

       

       A.

       According to Article 25 of Income Tax Law of Mexico, it refers that the item of discount must be described and reported only for annual tax return as a deducted item. In other words, likewise your accounting agency pointed, you have to follow their method. However, do not need to worry, because just in case that a total amount of planned monthly tax is higher than one of yearly tax return, you can offset it with the amount of levied tax of the following years.

    • Q&A1

       Q1.

      Could you tell me about the process of obtaining VISA? I have worked and lived in Mexico for six months and now got used to the life here. So, I would like to let my family come to Mexico and live together. When I applied for my VISA , I had an interview at Mexican embassy in Japan. Likewise, are my family also obligated to have the interview there? I have  an elementary school child. Does he also have to have an interview despite he is such a little? 

        

      A1.

      Your wife and child don’t need to be interviewed in Japan. Because you already obtained your VISA(precisely speaking, it is called as “TRT:temporary resident card”). They can enter into Mexico as a tourist, change their status and obtain their VISA. However, you have to verify that they are members of your family as a matter of course, thus you have to prepare for your family register certified with apostle seal and also translated by notarized translator. In addition to these materials, please prepare for their passports and tourist cards(FMM) distributed in the airplane to finish the process for obtaining their VISA effectively. 

    • Q&A2

       

      Q2.

      Could you explain me of the process of entry and departure of Mexico? I could obtain VISA(TRT) in Mexico finally. But, I got a question about entering and leaving Mexico after getting VISA. Before I entered into Mexico without VISA, I wrote down formula of FMM in the plane and passed it to the officer at the airport after arrival. Then, the officer gave me its copy as a return. However, for now, I already submitted this copy to the officer of INM: Instituto Nacional de Migración in Mexico to obtain TRT. In short, I do not have any document of FMM. Is it possible to skip some complicating procedures to enter and leave Mexico by presenting of my TRT? Or, beforehand do I have to prepare for anything else?

       

      A.

      Even though you are from Mexican nationality or have permanent VISA(TRP-Permanent Resident Card), you are obligated to submit FMM to the officer at the airport the same as those who enter Mexico without VISA.

      However, as you questioned above, you entered into the country to obtain your TRT, which means you already submitted the copy of FMM to Immigration Bureau in Mexico. This means you have no FMM document anymore while you are in Mexico. Therefore, you, the one who has valid TRT card, have to fill out FMM before your departure. I am going to explain you of the following process in regard to this matter. 

       

      ●Leaving Mexico

      1. Present your passport and TRT to the staff of airline company at counter and get FMM.

      2. Fill out FMM form.

      3. After finishing security check, go to the counter section of INM and request INM officer to put signature or seal.

      4. Pass this form to the staff of airline when you are getting on your board. 

      ※as long as your TRT is valid, the upper half of FMM may be returned to you. However, this part is unnecessary so that you can dispose of it.

       

      ●  Entering Mexico

      1. Fill out your formula of FMM given in the airplane and pass it to the officer concerned at the immigration inspection at the airport.

      2. Get its copy of FMM from this officer after your check.

      ※As long as your TRT is valid, this copy is unnecessary. You do not need to keep it.