Amendments to the federal tax code requirement to the legal entities and trusts to keep a registry of controlling beneficiaries

A Decree was recently published in the Official Gazette of the Federation adding, amending and repealing several articles of the Federal Tax Code (Código Fiscal de la Federación) (“CFF”), which aimed, among other issues, to strengthen measures for the prevention of money laundering and the detection of simulated transactions. These provisions were complemented by the publication of the corresponding rules of conduct in the Miscellaneous Tax Resolution for 2022 (Resolución Miscelánea Fiscal 2022).

Articles 32-B Ter, 32-B Quáter and 32-B Quinquies were added to the CFF, which provide new obligations for certain taxpayers (the “Obligated Person“), including all Mexican legal entities, obligation that consists in identifying, obtaining, preserving and eventually making available to the Tax Administration Service (Servicio de Administración Tributaria) (“SAT“), upon request, certain information regarding their controlling beneficiaries.

For the purposes of the foregoing, it is appropriate to emphasize the following three issues:

A. Obligated Persons:

Pursuant to article 32-B Ter of the CFF, the obligated persons to comply with the aforementioned obligation, are:

a. Legal entities;

b. Trustees, settlors and beneficiaries, in case of trusts;

c. Contracting or participant parties, in case of any other legal form;

d. Notaries, brokers and any other person involved in the formation or execution of agreements or legal acts that may give rise to the incorporation or execution of the legal forms referred to in items a., b. and c. above;

e. Financial institutions and members of the financial system.

B. Controlling Beneficiary:

Pursuant to article 32-B Quáter, a controlling beneficiary is understood to be the individual or group of individuals who:

a. Directly or through others or through any legal act, obtain a benefit resulting from their participation in a legal entity, as well as from any other legal act, or who ultimately exercise the rights of use, enjoyment or disposal of a good or service or on whose behalf a transaction is carried out, even if they do so on a sporadic basis.

b. Directly, indirectly or on a contingent basis, exercise control over the legal entity, trust or any other legal form.

c. In case of trusts, settlors, trustees, beneficiaries, as well as any other person involved and ultimately exercising effective control in said trusts, even on an occasional basis.

C. Information subject to the obligation:

The information to be identified, obtained, kept and, if applicable, provided, varies depending on the Obligated Person, therefore it will be necessary to consider the provisions of rules 2.8.1.20 to 2.8.1.23 of the Miscellaneous Tax Resolution for 2022 (Resolución Miscelánea Fiscal 2022), which establishes the corresponding criteria and procedures. Among the information of the controlling beneficiary, the following must be kept:

• Personal data;
• Relationship or capacity held with the Obligated Person;
• Degree of involvement with the Obligated Person;
• Description of the form of ownership or control;
• Number of shares, equity participations, participations or rights or equivalents; series, class and their nominal value, in the capital stock of the Obligated Person, as applicable; and
• Place where the shares, equity participations, participations or other equivalent rights are deposited or held in custody.

It is worth mentioning that the SAT may require the Obligated Persons to provide information of their controlling beneficiaries at any time, which implies that it will be convenient for the Obligated Persons to be prepared to comply with the corresponding requirement in a timely manner, otherwise they could be forced to pay fines ranging from $500,000.00 to $2,000,000.00 Mexican pesos for each controlling beneficiary.

Please note that, although the CFF does not provide a deadline for complying with the obligation to identify, obtain and keep the information of the controlling beneficiary, once the SAT has made a request to make this information available, the deadline to comply with it will be 15 working days from the date of the request, term that could be significantly short to gather the necessary information, especially when the Obligated Person is a legal entity whose shareholders or partners are foreign legal entities or have complex structures or chains of control. Therefore, we suggest organizing the necessary files in a timely manner.

If you would like more information in this regard, please do not hesitate to contact any of our partners or associates.

Yours sincerely,

Cannizzo