TAX. Certification of Increases for Capitalization of Liabilities January 11, 2021
On January 1st, 2021, the fourth paragraph of article 30 of the Federal Tax Code (FTC) entered into force, which establishes a series of documents that every legal entity obliged to keep accounting must obtain and keep it at the disposal of the tax authorities in connection with the meeting minutes stating: (i) increases in share capital; (ii) increases due to capitalization of reserves or dividends; and (iii) increases due to capitalization of liabilities.
Regarding the meeting minutes in which the increases due to the capitalization of liabilities are recorded, additionally, the account statements issued by the financial institutions must be obtained and kept, in case the capitalized liabilities had been granted in cash, or, the corresponding appraisals, in the event that the capitalized liabilities had been granted in kind or due to a surplus of revaluation of fixed assets, as well as the corresponding accounting records and the document certifying the accounting existence of such liabilities and their value.
The rule 184.108.40.206. of the Miscellaneous Tax Resolution for 2021 (MTR) states that the aforementioned certification must be issued by a Registered Public Accountant (RPA) which must comply with several information and be kept at the disposal of the tax authorities, as well as provide it when required due the exercise of their powers.
We consider that the provisions set forth in article 52 of the FTC would be applicable to the foregoing by analogy, with the understanding that the facts stated through the RPA in the aforementioned certification will be presumed as true, unless proven otherwise (legal presumption of iuris tantum).
However, since the facts affirmed by the RPA admit evidence to the contrary, even when all the necessary information and documentation is available, as well as the aforementioned certification to prove the origin of an increase due to capitalization of liabilities, the tax authorities may question the operation through their powers of verification, observe a taxable income omitted for income tax purposes and issue the corresponding tax assessment.
The capital increase via capitalization of liabilities is a common operation that is usually questioned and observed by the tax authorities; therefore, not only it will be necessary to have the information, documentation and certification that proves its origin, but it will be also essential to review and analyze that it foresees aspects such as its “materiality”, “business reason”, “certain date”, among others.
If you have any questions regarding the foregoing, please do not hesitate to contact us.
Mexico City, January 11, 2021