Volume 6, Number 7, Page 5
Recent Developments
Antitrust/Antidumping
Mexico
Judgement Changes Antidumping Investigation
A judgement issued by the Fiscal Tribunal has resulted in changes on an antidumping case on ceramic covers for walls imported from Brazil. On September 5, 1991 the Department of Commerce and Industrial Development (SECOFI) imposed antidumping duties of US$ 0.232 per kilogram imported into Mexico. An appeal was presented to the Fiscal Tribunal who ordered SECOFI to revise its decision and issue a new one. After a legal battle involving amparos and appeals, SECOFI was finally ordered to nullify its decision. For such reasons, SECOFI revoked the antidumping duties assessed on the Brazilian imports. Diario Oficial, 3/29/99.
Banking & Credit
Brazil
Central Bank to approve representation of financial institutions headquartered abroad
The Central Bank of Brazil (BACEN) has issued Ordinance No. 2.592 which provides for the representation in Brazil of the financial institutions headquartered abroad. Such representation in Brazil of depends on prior authorization of the BACEN. The representation can only be exercised by natural person(s) domiciled in Brazil performing the realization of commercial contracts and the transmission of information of the head office or branches abroad. BACEN shall have unrestricted access to documents, reports, data and information referencing activities practiced by the representative in Brazil.
BACEN has issued Ordinance n.º 2.865 which establishes procedures for obtaining authorization for the representation of financial institutions in Brazil headquartered abroad. The ordinance enumerates a list of documents of obligatory presentation to the BACEN’s Regional Office with jurisdiction over the domicile(s) of the nominated representative(s). Documents originating abroad must be notarized at Brazilian Consulate of the country of origin of the represented institution, the original and respective translations by a public translator sworn and registered in the competent Registry of Titles and Documents. The institution can name up to 06 representatives including associates.
Ecuador
Ecuador Facing Bank Crisis as Eighth Bank Closes Doors
Banco del Progreso closed its doors March 22 in Quayaquil, in the face of serious liquidity problems and financial. Ecuador's second largest bank was the eighth of 39 national banks to either shut down or appeal for federal bailout since mid-1998, leaving its 720,000 clients with partially frozen accounts. The bank has begun a capitalization process allowing clients the option of only withdrawing funds necessary to sustain basic needs, or to convert their investment into bank shareholder accounts.
This decision follows a March 11 Presidential decree that partially froze the nation's bank deposits, including all dollar savings accounts of more than US$ 500, for one year. The Finance Ministry reconfirmed that all accounts are fully secured by Federal Deposit Guarantee Law.
Audits of Banco del Progreso have also begun in order to determine whether formal intervention by the government will be necessary, with completion anticipated in early May. Ecuador has already spent over US$ 1 Billion in bailouts to support their banking system. If formal intervention occurs, Ecuador's five largest banks will be controlled in the highland capital of Quito, which would further escalate civil tensions between Quayaquil in the coastal region and Quito. El Universo, 3/30/99 and The Miami Herald, 3/23/99.
Mexico
Reserve Rules for Financial Institutions Amended
The Department of the Treasury (SHCP) has amended the reserve rules of financial institutions operating in Mexico. Specifically, the SHCP amended rule number 8 applicable to bonding institutions. Also amended was rule number 9 related to reserve rules for insurance companies. Diario Oficial, 3/18/99.
Capital Requirements Set
The SHCP has announced the minimum paid capital for different financial entities. In other documents, it has established requirements for currency exchange houses, bond institutions, insurance companies and other auxiliary institutions. Diario Oficial, 3/31/99.
Peru
Banking and Securities Regulation Modified
With 73 of the 89 legislators present voting in favor, the Peruvian Congress approved a resolution to modify the Law of Financial Systems and Securities as well as the bylaws of the Commission (Superintendencia) of Banking and Securities.
The resolution, which has been presented to the Department of the Economy to be revised, received the support of diverse members of Parliament as well as various Peruvian financial organizations, including the Banking Association and the Central Reserve Bank.
The new standard grants the status of judicial person in the Deposits and Securities Fund and establishes limits to that organization’s involvement in financial bailouts. El Comercio of Peru, 3/26/99.
Customs
Brazil
Simplified Import/Export Declarations Instituted
The Secretary of Federal Revenue has issued a Normative Instruction No. 14, which regulates the custom clearance of goods subject to the requirements of the Ministry of Foreign Affairs. The new customs regulation determines the necessity of custom clearance of goods including automobiles imported or exported by diplomatic missions, consular representatives of a permanent nature, representatives of international organizations of which Brazil is a member and by experts and technicians that enter Brazil to exercise activities resulting from international acts signed by Brazil. The Normative Instruction also establishes that imported goods are free from Federal taxes (applying the reciprocity principal) and that the Simplified Import Declaration will be used.
The Secretary of Federal Revenue has issued Normative Instruction No. 13 regulating the Simplified Import and Export Declaration. The Instruction establishes situations in which the use of the Simplified Import and Export Simplified Declaration is permitted. The registry is conditioned on approval before the competent agency when subject to sanitary, environmental or security control. The Instruction modifies article 65 of IN/SRF No. 28/94 and revokes several legal dispositions. Full text published in the Federal
Official Gazette of 26 February 1999.
Mexico
Forms Approved
Several forms used by different entities such as SECOFI, the Consumer Protection Attorneys Office and others were approved by SECOFI. Among the forms approved are the following:
- Request for authorization to operate as a maquiladora
- Request for duty drawback
- Generalized system of preferences certificate of origin
- Certificate of origin (textile products)
- Certificate of authenticity tobacco
A copy of all the forms are included in sections two and three of the Diario Oficial of 3/22/99.
Quotas Exceeded
Since the import quotas for several products have been exceeded under NAFTA, SECOFI has announced it will assess duties on the importation of such goods. Among these goods are potatoes imported from Canada under tariff categories 2004.10.01 and 2005.20.01 and also potatoes form the U.S. imported under the first tariff category. The import duties will be of 20 percent. Diario Oficial, 3/23/99.
Import/Export Rules Amended
The Department of the Environment, Natural Resources and Fisheries (SEMARNAP) published different amendments to a manual setting up procedures for importing and exporting several kinds of flowers and plants. The rules also apply to the importation of forestry products subject to regulation by the SHCP. Diario Oficial, 3/26/99.
New Tax Rules Applicable to Foreign Trade Published
The tax rules applicable to foreign trade for 1999 were published by the SHCP. The new rules tend to support the procedures for the verification and control of customs procedures.
These rules are published all years and establish specific rules for the application of different statutes including the customs law. Among the issues covered by the rules are those that establish certain operational requirements for maquiladoras. Diario Oficial, 3/31/99.
Environment
Mexico
Technical Standards Extended
The application of two technical standards has been extended according to two different announcements published by the SEMARNAP. One of the standards, NOM-EM-ECOL-1998, sets specifications for environmental protection and prohibits the use of CFC’s in refrigerators and other electronic devices. The other standard, NOM-EM-128-ECOL-1998 establishes limits on the maximum permissible amount of emissions from automobiles and buses of non-burned hydrocarbons, carbon monoxide and other chemical compounds.
Both standards will be applicable for another six months as of March 23. Diario Oficial, 3/25/99.
Insurance
Mexico
Rules for Reserves Set
The SHCP announced the rules that insurance companies must follow to evaluate, create and increase their capital reserves. The rules specifically analyze the reserve value for those insurance companies in the field of earthquakes and volcano explosions. Diario Oficial, 3/25/99.
Labor
Mexico
Bargaining Agreement for Sugar, Alcohol Industries Amended
The Department of Labor and Social Services (STyPS) announced amendments to the bargaining agreement setting up minimum working standards for the sugar and alcohol industries. The agreement sets up an 18 percent increment in minimum wages paid at the industry. The new wage will be retroactive to November 16, 1998. Diario Oficial, 3/24/99.
Taxes
Belize
Belize Enacts 8% Sales Tax, Eliminates VAT
The newly elected administration in Belize has repealed the previous administration's fifteen percent (15%) Value Added Tax (VAT) on selected goods and initiated an eight percent (8%) sales tax. Merchants will pay the non-refundable sales tax in addition to customs duties at the point of entry for their imported goods. Producers, who include professional persons (e.g., doctors, consultants and accountants), are exempt from paying the tax on import materials when they will be used in production. Producers will pay the sales tax when selling their finished products, whether produced in Belize or abroad. Banks will pay the tax on all banking services, but not on interest charged on loans or paid on savings.
Most Belizean goods and services will now cost less due to the reduced tax rate, as well as resulting in a lower cost of living. However, food will now cost on the average 11 percent more, including locally produced foodstuffs that had been previously untaxed. While this provides an opportunity for imported food products to seize a larger market share, the Government will earn more revenue while easing tax administration costs.
The Reporter, 3/31/99.
Brazil
Modified Tax Treatment of Monetary Variations
Brazil's Secretary of Federal Revenue (SRF) set new regulations that govern the tax treatment of monetary variations, where they are used to calculate income tax and the Social Contribution on Profit in cases of purchase and sale, real estate development, incorporation and real estate construction. If taxation is based on taxable income, revenues and expenses will be calculated according to SRF Normative Instructions No. 84/79, 23/83 and 67/88; however, if taxation is based on assumed profit, the revenues must be added to the taxable income through the competence or cashier regime. Those who practice the mentioned activities will not have the option of assumed profit until the real estate operations are concluded. Normative Instruction n.º 25, 2/25/99; Federal Official Gazette, 3/1/99; www.nornhaadvogados.com.br/inf0203i.htm
Declaration of Federal Debits & Credits Program Initiated
New regulations set forth by the Secretary of Federal Revenue (SRF) require companies in Brazil to make a Declaration of Federal Tributary Debits and Credits (DCTF) before dissolution, incorporation, merger or split. The DCTF shall be delivered to the SRF office within that company's jurisdiction, on the last working day subsequent to the particular event, and shall include relative data regarding tributes and contributions whose taxable events occurred in the period between 1 January 1999 and the date of the event. Normative Instruction n.º 15, 2/12/99; Federal Official Gazette, 2/24/99;
Mexico
Tax Annexes Published, Rules Amended
The SHCP has published different tax annexes to the tax rules for 1999. Published were annexes 9 through 13. These annexes include a list of the code numbers, for tax purposes, used in different products. Also included is a list of the different states and municipalities that have entered into tax collaboration agreements with the SHCP. On different dates, the SHCP published annexes 14 and 15.
The SHCP also published the first set of amendments to the tax rules for 1999. Usually during the year, the tax rules are amended, so further on we will inform of any amendments.
Diario Oficial, 3/18/99, 3/26/99 and 3/29/99.
Sales Tax Regulations Amended
Amendments to the Regulations of the Sales Tax (value added tax) have been announced by the SHCP. Articles 13, 45-A and 45-B were repealed while Article 15 was amended. The amendments to this article deal with the payment of sales taxes by brokerage houses. Diario Oficial, 3/19/99.
Asset Tax Payment Exonerated
The SHCP announced a special exoneration from the payment of the asset tax to small and medium companies. According to the decree published by the SHCP, those companies that during the 1998 tax year had a taxable income according to the income tax law of less than $12 million will be exempt from the payment of the asset tax during 1999. Diario Oficial, 3/19/99.
Transportation
Mexico
Railroad Lines to be Privatized
Several railroad lines will be privatized as announced by the Department of Communications and Transportation (SCT). As part of a program that gives concessions to private investors to use and exploit railroad lines, several new short lines will shortly be privatized. Among the lines to be privatized are the Tijuana-Tecate; the Chiapas-Mayab; Nacozari and Oaxaca.
Parties interested in the privatization should present several forms available at Ixe Banco, S.A., Periférico Sur 314, Col. San Angel Tlacopac, C.P. 01049, México, DF, Tel. (52) 5174-2231 and Fax (52) 5174-2239. Limit to present the forms is April 28, 1999. Diario Oficial, 3/24/99.
Regional
Brazil, Venezuela promulgate highway transportation agreement
Venezuela and Brazil have begun enforcement of their Agreement on International Passenger and Cargo Highway Transportation, reached in 1995. Approved by Brazilian Legislative Decree No. 100, 10/23/96, the agreement establishes definitions, jurisdictions and means for controversy resolution, as well as detailing organizational and operational aspects, customs rates, rights, identification tags, and other areas of customs concern between the two nations. Decree n.º 2.975, 3/1/99, Federal Official Gazette 3/2/99
