The debacle that is the Mexican tax audit and boat impoundments continues. Original post by Latitude 38.
January 27, 2014 – San Diego Boat Show
Alas, the pig still looks like a pig.
Before continuing, we want to remind everyone that Latitude loves Mexico and the people of Mexico, and far more than anyone else for the last 30 years has championed Mexico as one of the top three cruising grounds in the world. Furthermore, Latitude believes that once Mexico learns from the current auditing debacle, it will resume being among the top cruising grounds in the world.
No matter if your boat has been impounded or not, life in Mexico has otherwise been excellent. The people are friendly beyond belief, much of the countryside is stunning, and the cost of living is low. Plus it’s warm and the surf, as has been the case all along the west coast, has been killer. In this photo a sailor/surfer drops in on what will be a 100+ yard steaming ride at the Stinky’s break at Punta Mita. He’s not wearing a wetsuit because the water is about 80 degrees and the air temp is about 85.
Photo Latitude / richard
© 2014 Latitude 38 Publishing, LLC
That said, the Mexican government missed what would have been an excellent opportunity to allay the growing fears of foreign boat owners in Mexico and foreign boat owners who are/were planning on taking their boats to Mexico. The opportunity was last weekend’s San Diego Boat Show at Sunroad Marina, where Mexican officials and harbormasters from six Mexican marinas were supposedly going to make an announcement regarding the continued impoundment of approximately 300 foreign owned boats in Mexico.
According to Ralph Lewis of Laelia, who has now abandoned plans to cruise Mexico prior to sailing to the South Pacific, the proposed announcement was botched from the get go: “I showed up at Sunroad Marina at little before 7 pm, the announced time for the announcement about the situation in Mexico. I got there just in time to hear the closing remarks of some gringo in a suit who was reassuring people that the problems foreign boat owners in Mexico were having would be resolved and that we should all be careful to have the correct paperwork. I saw nothing in the handout that gave me a warm feeling that it would be OK for me to take my boat to Mexico. Among other things, it mentioned a second HIN (hull identification number) boats needed to have on the inside of the boat to match the HIN on the outside of the boat. I have been crawling all my 1978 Pearson 365 for the last two years getting her ready to go cruising, and have yet to see a second HIN. If it exists, it’s in a really inconspicuous location. [Editor’s note: Boats prior to 1986 didn’t have a second HIN number on the inside of the boat, something that Mexican auditors, who know nothing about boats, know nothing about.]
“I am signed up for the Pacific Puddle Jump,” Lewis continues, “but was hoping to cruise the Sea of Cortez on the way to Puerto Vallarta and the Pacific Puddle Jump party. I have decided to skip Mexico — as have my boat neighbors who are also doing the Puddle Jump. I understand there are others here in San Diego who are now also planning to skip Mexico, and was wondering if Latitude could have a Pacific Puddle Jump Party in San Diego in addition to the one in Puerto Vallarta.” [Editor’s note: We are going to poll everyone signed up to do the Puddle Jump, and if there is much interest at all, we will indeed have a Puddle Jump presentation by Andy ‘Mr Puddle Jump’ Turpin in San Diego.]
Also disappointed in the presentation was Jerald King of Sunroad Marina.
“The meeting was a fiasco. I got to the Sunroad pavilion at 6:55 pm, five minutes before the announced start of the presentation, just in time to hear some American tell the crowd to contact the Coast Guard if they wanted to get their HIN number changed. Then, “Thanks for being here.” That was three minutes before the meeting was supposed to have started. When I asked a Sunroad Marina official why they decided to start early, he said, “There were so many people here at 6:25 pm that we decided to start early.” I have no idea what was said, but I don’t believe anybody was trying to hide anything by starting early, as there were so many people there. When I entered the pavilion, the closest I could get was three rows back. But I think the early start was typical of the whole situation in Mexico, as the officials involved are just improvising as they go along. They just don’t seem to realize how many people are concerned or affected, and they sure don’t realize how upsetting it has been to most of us.”
We think King hit the nail on the head with his last two sentences.
Capt. Pat Raines of Pt. Loma Publishing tells Latitude that the music had started playing and the wine started flowing, so there was indeed no formal announcement as had been hoped for. But she managed to speak with several individuals, including Mexico’s Federal Chief of Tourism Lic. Alejandro Santander Habif. Despite apologizing for what was described as an “inconvenience” to foreign boat owners — Rains reports Santander said that “all branches of the Mexican government are very aware and likewise very upset [with the abrupt manner with which AGACE conducted the audits]” — he did not have much in the way of good or comforting news. Consider the following things he is reported to have said:
1) He expected that the currently embargoed boats will be “liberated” in the next month. Well that’s just wonderful. Close to 300 boats, almost all of them in full compliance with Mexican law, which have been held in embargo through no fault of the owners since late November, may have to wait yet another 30 days to freely move their boats about. Another bullet into Mexico’s already nearly shot off foot, as owners of embargoed boats don’t want apologies, they want action.
2) The audit was performed by SAT (the Mexican IRS) in order to establish a database of foreign boats in Mexico, and to find stolen boats in Mexico, and thus SAT is likely to do this annually. Annual boat audits? There’s a thought unlikely to instill confidence in the minds of foreign boat owners thinking about coming to Mexico. But, Santander told Rains, such audits would not be done as “aggressively” or “abruptly” as were the ones in November. Until it’s defined how such audits might be conducted in the future, and how the rights of foreign boat owners are to be respected, foreign boat owners are likely to stay away in droves.
3) That only “a very small number” of boats being held in ‘precautionary embargo’ “might turn out to be in serious violation of U.S. and Mexican law, and not just missing a HIN number or have an expired TIP (Temporary Import Permit.)
[By making such a statement, Santander seemed to be implying that there is something wrong with the paperwork of most of the boats that have been held in embargo for nearly two months now, which is one of the two Big Myths of this entire debacle. For what AGACE is finding is that virtually all embargoed boats are indeed in full compliance with U.S. and Mexican law. Yet they inexplicably still haven’t “liberated” them. For example, we’re told that 48 of the 53 ’embargoed’ boats at the Riviera Nayarit Marina in La Cruz have no problems with their paperwork. Similar numbers are believed to be true for the other marinas.]
[The second Big Myth is no matter how many times certain people may want to loudly make claims to the contrary, embargoed boats in marinas that have refused to become depositarias — which is about half of the eight marinas where boats were inspected — CANNOT legally leave the dock. Our source is a member of the AGACE team, who we met a week ago Thursday at 3 p.m. at the Cruz’in Restaurant at Riviera Nayarit Marina. “Yes,” the AGACE agent told Dona de Mallorca, “there is nothing wrong with Profligate’s paperwork. Unfortunately, your boat [like all the rest of the embargoed boats in the marina] is not yet released from embargo. So I’m sorry, until that happens — hopefully in a few days — she may not leave the dock.” This is not to say that boats have not been breaking this law or that anybody in Mexican government has been enforcing this law, but it is a violation of federal law. And given Mexico’s tendency to suddenly enforce laws that were never enforced before, we’re not taking any chances. The thing that we think everybody would agree with — although some seem like they don’t want to mention it — is that embargoed boat owners absolutely cannot take their boat from one port captain’s district to another port captain’s district. For example, that means a boat in La Cruz cannot make a seven-mile trip to Nuevo Vallarta. That requires clearing out with one port captain and checking in with another port captain. As port captains have lists of embargoed boats, such a boat would not be given permission to leave or check in.]
[The third myth is that apologists for AGACE’s actions keep claiming that the boats aren’t really ‘impounded,’ but are merely in ‘precautionary embargo.’ We think this is a major fallacious quibble over definitions and languages. As far as we’re concerned — and we think most boat owners would agree — if you can’t legally leave the dock with your boat without the permission of someone else, it makes no difference if you can live on her, she’s ‘impounded.’ Besides, if the boats aren’t ‘impounded,’ why would Mexican officials talk of them eventually being “liberated?” Boats that are free don’t required ‘liberation,’ do they?]
Here’s the announcement that Mexico President Pena Nieto should have had Tourism and SAT officials make at the boat show in San Diego — an announcement that needs to be made as soon as possible to prevent future damage to west coast marine businesses:
“Dear foreign boat owners. In an attempt to make sure everyone complies with Mexico’s tax laws, and to make sure Mexico doesn’t become a haven for stolen boats, a division of Mexico’s IRS conducted an auditing process at eight of Mexico’s 30-plus marinas in late November. Due to poor planning, a poor understanding of what was involved, inadequately trained auditors who were accompanied by marines with machine guns, and a total lack of communication with our valued nautical tourists, the audits proved to be unnecessarily frightening. Even worse, they resulted in 338 boats being held against their owners’ wills for more than two months — despite the fact that almost all of these boats complied with all Mexican law. In retrospect, we could have accomplished exactly what we needed to accomplish in a much shorter time by using the same process that we use with foreign owned vehicles and aircraft. We realize that this has been a tremendous inconvenience to our esteemed nautical visitors, and in many cases, not only destroyed plans that had been many years in the making, but caused many to suffer considerable unnecessary expense. Recognizing these facts, and knowing that several important regattas to Mexico are scheduled to start in the next couple of months, I have ordered all embargoed boats to immediately be liberated, except for those very few with obvious paperwork problems. Furthermore, in the next few days we will be releasing a free booklet, in English, making clear all the requirements for bringing a foreign-owned boat to Mexico, as well as all the pertinent procedures that need to be followed. We realize that our not having done this before has caused many unnecessary problems. Once again, our apologies to those hundreds of foreign boat owners, and to the marine businesses in the United States and Mexico who have suffered as a result. You have my promise that Mexico will learn from its mistakes.”
So what’s it like cruising in Mexico now? It’s a bit surreal. For on the one hand, you have 300 foreign boat owners who aren’t very happy, as their boats remain impounded after two months. Yet on the other hand, hundreds of others are happily cruising Mexico as they always have, worried to varying degrees that their boats also might soon be audited by people who have no idea what they are doing and may be impounded. The least worried are people who anchor out, as so far AGACE has only audited boats in marinas, although the marinas do seem quite full. Fortunately, most insiders don’t expect any more audits until the program has been drastically revamped.
By the way, a few people have claimed that Latitude’s coverage of the situation in Mexico has merely been “whining” on our part because there is something wrong with Profligate’s paperwork and we are doing everything we can to get her free. Here’s three reasons why that is rubbish: 1) An AGACE official has already confirmed that Profligate’s paperwork is in order. If anyone has any doubts, we challenge them to take our ‘Kiss Our HIN’ challenge, details of which can be found in the February issue of Latitude. 2) Profligate wouldn’t be leaving the dock for the next three months anyway, because the Wanderer will be in the Caribbean sailing aboard ‘ti Profligate, La Gamelle, and Ppalu. More than anyone we can think of, the embargo has been mostly a mere inconvenience to us. And, 3) It would hardly be ethical for the publishers of the most popular sailing magazine on the west coast to ignore the fate of the owners of 337 others whose boats have been impounded, despite most of them having the correct paperwork.
We’re confident that this fiasco is going to end before too long. But it’s a terrible shame that it ever had to happen, and that it’s been allowed to fester for so long.
– latitude / richard