AEO certification crisis. Significant decrease in the number of authorized applications.
The Authorized Economic Operator has become an indispensable tool to compete for customers seeking highly reliable trading partners. Since the adoption of this program by Mexico in 2005, as a result of the implementation of the SAFE framework of the World Customs Organization (WTO), the Tax Administration Service (SAT) has taken the reins of this process.
Notwithstanding the above, it was not until 2012, when the Mexican legislation adapts the referred regulatory system through the creation of the so-called "New Scheme of Certified Companies" (NEEC), a figure that addressed the characteristics and functions of the so-called Authorized Economic Operator.
The NEEC figure, was in force until the entry into force of the Integral Certification on June 20, 2016, becoming Authorized Economic Operator (AEO), a figure that as is well known, is divided into Authorized Economic Operator, Importer/Exporter and Certified Trading Partner, in different figures of logistics operation[1].
It is important to mention that obtaining the AEO certification is subject to its processing before the SAT, whose procedure is contemplated in Title 7 of the General Foreign Trade Rules in force, which contemplates administrative, tax and supply chain security requirements.
An issue that has been gaining relevance in recent years among the various logistics operators that have submitted applications to obtain the aforementioned certification, is the level of demand in compliance with the various requirements related to the aforementioned certification, which results in a reduced number of authorized procedures.
In order to clarify the above, it is of vital importance to follow up on the number of applications that have been filed before the SAT and how many of these have been authorized.
As an example, the number of authorizations obtained from 2013 to 2017, during the life of the NEEC program, is shown.
"Obtaining the AEO certification is subject to its processing before the SAT, whose procedure is contemplated in Title 7 of the General Rules of Foreign Trade, in force, which contemplates administrative, tax and security requirements in the supply chain".
The above shows an average annual increase of 14.37 percent, which translates into an average increase of 55 companies per year.
As of the modification in rules and the change of name to AEO in 2017, the requirements to obtain this certification began to tighten. In response to these changes, there was a noticeable decrease in the number of companies that obtained certification; the figures for importers/exporters are shown below:
YEAR | 2020 | 2021 | 2022 | 2023 |
Applications submitted | 51 | 38 | 87 | 69 |
Authorized applications | 24 | 15 | 17 | 10 |
In process | 0 | 0 | 4 | 27 |
Source: Information Request to AGACE, through the National Transparency Platform folio 330027724001596, dated June 05, 2024.
The above shows a significant decrease in the number of authorized applications, which corresponds to an average of minus 22 percent in the number of authorizations per year.
In order to go deeper into the above, the following are the main reasons why the authority has decided to deny the previously mentioned applications, so we undertook the task of analyzing the main reasons for denial of applications for certification, for this purpose, we took a representative sample of fifty companies whose applications were filed in 2022, finding the following:
Reasons for refusal | Number of procedures |
The initial request was not complied with within 15 working days | 8 |
Non-Compliance with Company Profile Standards (*) | 18 |
Withdrawal | 7 |
The legal use or enjoyment of the property was not evidenced. | 3 |
Failure to file electronic accounting | 3 |
Non-compliance with tax and company profile requirements (*) | 11 |
Source: Information Request to AGACE, through the National Transparency Platform on June 05, 2024.
(*) Note: The Company Profile Standards with the highest number of non-compliances are 1, 4, 7 and 8.
In view of the above figures, 58 percent of the refusals analyzed were due to non-compliance with the security requirements set forth in the Company Profile, which shows that the authority has significantly raised the level of compliance with these requirements.
This downward trend is not exclusive to the figure of the Importer/Exporter, but permeates for the Certified Trading Partners, particularly for the following categories: Ground Transportation, Customs Broker and Bonded Warehouse, as shown below:
Año | 2020 | 2021 | 2022 | 2023 |
Autotransportista Terrestre | ||||
Solicitudes Presentadas | 51 | 38 | 87 | 69 |
Solicitudes Autorizadas | 24 | 15 | 17 | 10 |
En trámite | 0 | 0 | 4 | 27 |
Agente Aduanal | ||||
Solicitudes Presentadas | 44 | 34 | 36 | 39 |
Solicitudes Autorizadas | 22 | 14 | 11 | 10 |
En Trámite | 0 | 0 | 7 | 8 |
Recinto Fiscalizado | ||||
Solicitudes Presentadas | 3 | 3 | 4 | 5 |
Solicitudes Autorizadas | 2 | 1 | 1 | 1 |
En Trámite | 0 | 0 | 1 | 2 |
Source: Information Request to AGACE, through the National Transparency Platform folio 330027724001596, dated June 05, 2024.
In addition to the increasingly strict criteria applied by the SAT in the substantiation of each of the certification requests submitted for its consideration, on July 25 and August 1, both of 2023, the Third Resolution of Modification to the General Foreign Trade Rules for 2023 and its Annex 1 were published, These instruments added new requirements to the Company Profile and to all those related to Certified Trading Partners, such as Agricultural Security, Trading Partners, as well as Information Technology security, among others.
As mentioned, the benefits of becoming an AEO certified company translate into being highly reliable companies for their business partners, however, we must not forget that this instrument must be translated into a tool in which the SAT works hand in hand with the companies, as established in the latest amendments to the security profiles, through the assignment of a specialist to guide companies and ensure proper compliance with the requirements for certification.
Undoubtedly, the AEO certification, today more than ever is a mark of security for those who can prove compliance with one hundred percent of the requirements in tax and supply chain security required by the SAT for authorization, so it becomes an urgent need to have highly specialized consultants to provide comprehensive advice to the applicant companies, to prove compliance with each of the requirements requested and obtain such a long-awaited and necessary certification.
[1] Rule 7.1.5 of the RGCE for 2024, contemplates the following categories; Motor Carrier, Customs Broker, Railroad Transportation, Industrial Park, Bonded Warehouse, Courier and Parcels, and General Warehouse.
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