TAX, CORPORATE and COMPLIANCE. Obligation to obtain and conserve in the accounting records the information of the Controlling Beneficiaries February 24, 2022
On January 1st, 2022, the addition of articles 32-B Ter, 32-B Quáter, 32-B Quinquies, 42, section XIII, 48-A, 84-M y 84-N of the Federal Tax Code entered into force, through which the obligation of legal entities, trustees, settlors, fiduciary and/or the contracting parties or members regarding any legal entity, to obtain and conserve the authentic, complete and up-to-date information related to their Controlling Beneficiaries (i.e. Beneficial Owners or CBs) as part of their accounting records and provide it to the Tax Administration Service (TAS) when required, as well as the penalties in case of non-compliance.
Pursuant to the new obligation, the tax authorities will have specific verification powers to require information regarding the BCs and the compelled taxpayers will have to provide it within the next 15 business-day-term once the request is duly notified. The referred term may be extended to 10 more days as long as the corresponding extension request is duly justified. Likewise, the TAS may require the aforementioned information to Notaries Public and financial institutions.
Regarding the information requests, the TAS may rely in the public registers located in Mexico City and in other states, in the Financial Intelligence Unit of the Ministry of the Treasury and Public Credit, in the National Banking and Securities Commission, in the National Commission for the Pension System or in the National Bonding and Insurance Commission, through the conclusion of collaboration agreements, information exchange or in any other form the applicable provisions authorize.
CBs shall be understood as the individual or group of individuals that:
- Directly or by means of other(s) individual(s) or of any legal act, obtain(s) the benefit that derives of their participation in a legal entity, a trust or any other legal figure or legal act, or those who ultimately exercise the rights for use, enjoyment, or disposal of a good or service or a transaction is performed on its behalf, even when the above is done contingently.
- Directly, indirectly, or contingently, exercise the control of the legal entity, trust, or any other legal figure. The exercise of control takes place when an individual or group of individuals, by means of shares’ ownership, an agreement, or any other legal act, may:
- Directly or indirectly impose decisions in the general shareholders meetings, partners, or equivalent corporate bodies, or appoint or dismiss the majority of the counselors, administrators, or its equivalents.
- Maintain the ownership of the rights that allow the voting of more than the 15% of the share capital or good, either directly or indirectly.
- Directly or indirectly lead the administration, strategy or principal policies of the legal entity, trust, or any other legal figure.
Regarding trusts, the settlor(s), fiduciary, trustee(s), and any other individual involved that ultimately exercise the effective control in the agreement, even when contingently performed, will be considered as CBs.
In case of committing an infringement deriving of the breach of the referred obligation, the penalties will vary from MXN $500,000.00 and MXN $2’000,000.00, as the case may be.
Finally, rules 220.127.116.11., 18.104.22.168. and 22.214.171.124. of the Miscellaneous Tax Resolution for 2022, states the criterion for the determination of the CB condition, as well as the mechanisms and parameters to identify, obtain and conserve the necessary information that must be included in the accounting records.
It is important to note that the incorporation of the CB figure for tax effects is the result from the Financial Action Task Force’s work and definition regarding the prevention of operations involving resources derived from illicit sources and terrorist funding. Consequently, such figure was introduced in the evaluations and agreements performed by the Global Forum on Transparency and Exchange of Information for Tax Purposes.
The several information that must be collected, conserved, and updated by the legal entities, trusts or any other legal figures in terms of this new obligation is too extensive; moreover, there will be complex cases where some type of legal secrecy could be arise. Consequently, this new obligation entails a considerable effort of corporate and legal control, and it will be essential for such legal entities, trusts and other legal figures to knows precisely their real and actual situation regarding the fulfillment of corporate obligations, and therefore its tax obligations.
It is of prime importance that all legal entities, trusts or other legal figures have the corporate and legal information that evidences their BCs, and such information is certain, complete, and up-to-date and within reach of the tax authorities through the implementation of the internal controls that result necessary in order to prevent and mitigate whichever contingency in tax matters.
Mexico City, February 24, 2022