The last reform to the Mexican Federal Tax Code (CFF for its acronym in Spanish) introduced some obligations for legal entities, trustees, settlors and beneficiaries, as well as the contracting parties or members, referring to their controlling beneficiaries. Among other obligations:
- To properly identify, verify, and validate the controlling beneficiary.
- Obtain and keep available reliable, complete, adequate, precise, and updated information about the identity data of the controlling beneficiary.
- Keep the information of the controlling beneficiary, the chain of ownership and the chain of control, the documentation that supports it, as well as the supporting documentation of the internal control procedures for a period of 5 years.
- Provide, allow the timely access, and grant of the tax authorities all the facilities to access the information, records, data, and documents related to the controlling beneficiaries.
In case of non-compliance with the aforementioned obligations, it is established that the penalty fee and/or administrative sanctions will be the following:
- Not obtaining, not keeping, nor submitting the information through the means or formats indicated by the SAT within the terms established in the tax provisions: From $1,500,000.00 to $2,000,000.00 MXN for each controlling beneficiary.
- Not keeping the information related to controlling beneficiaries updated: $800,000.00 to $1,000,000.00 MXN for each controlling beneficiary.
- To submit incomplete or inaccurate information, with mistakes or in a manner different from what is indicated in the applicable provisions: From $500,000.00 to $800,000.00 MXN for each controlling beneficiary.
Context
For the purposes of the CFF, the controlling beneficiary of a legal person, a trust, or any other legal entity, as well as any other legal act, shall be defined as the individual who:
- Directly or through other(s) obtains the benefit derived from his/her participation. It is the person who ultimately exercises the rights of use, benefit, enjoyment, use or disposal of a good or service or in whose name a transaction is carried out, even if it is done on a contingent basis.
- Directs, directly or indirectly, the administration, the strategy or the main policies.
- Who directly, indirectly, or contingently, exercises control, that is:
- Imposes decisions in the general meetings of shareholders, partners, or equivalent bodies, or can appoint or remove the majority of the directors, administrators or their equivalents.
- Maintains ownership of the rights that allow voting with respect to more than 15% of the share capital.
- In the case of trusts, it is the person who ultimately exercises effective control in the contract.
When no individual is identified under the aforementioned criteria, the controlling beneficiary will be considered to be the individual who occupies the position of sole administrator of the legal entity or equivalent. If the legal person has a board of directors or equivalent body, each member of said council will be considered as the controlling beneficiary of the legal person.
The Global Forum on Transparency and Exchange of Information for Tax Purposes (Global Forum) strengthened its rule of exchange of information on request, introducing in its evaluations the concept of controlling beneficiary.
The articles that are added to the CFF seek to comply with the measures implemented in the Global Forum, also attending to the call of the G20 that invites to join the reforms implemented by the Global Forum, since the availability of information on the controlling beneficiaries is a key element of international tax transparency standards.
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