On November 12 and December 27, 2021, the "Decree amending, adding and repealing several provisions of the Income Tax Law, the Value Added Tax Law, the Special Tax on Production and Services Law, the Federal Tax on New Automobiles Law, the Federal Tax Code and other regulations" and the "Miscellaneous Tax Resolution for the fiscal year 2022 and its Annex 19" were released in the Official Gazette of the Federation, by means of which new obligations were introduced in the Federal Tax Code for companies, fiduciaries, trustors or trustees, financial institutions, members of the financial system, notary publics, among others (hereinafter, "obligated parties"), as well as consequences in the event of noncompliance by the regulated parties.
In this regard, among the various amendments made to the tax regulatory framework, Articles 32-B Ter, 32-B Quater, 32-B Quinquies, 32-D, section IX, 42, sections XII and XIII, 49, section I, 84-M and 84-N of the Federal Tax Code were added in connection with Rules 2.1.37, paragraph 12, 18.104.22.168, 22.214.171.124, 126.96.36.199 and 188.8.131.52 of the Miscellaneous Tax Resolution for 2022, which establish the legal regime for the identification of the individual or group of individuals who qualify as "Controlling Beneficiary" by the obligated parties, as well as the obligations to inform the Tax Administration Service of their existence.
In addition, by means of such regulations, the tax authorities were authorized to request from the taxpayers the information related to the "Controlling Beneficiary", in an audit procedure which entitles them to verify the adequate compliance of the obligations of identification and truthfulness of the information of the "Controlling Beneficiary", as well as to impose sanctions when they fail to identify the “Controlling Beneficiary”.
However, as will be explained, we consider that this new requirement contains certain aspects that prevent them from effectively complying with it on a daily basis, mainly because they collide with existing provisions in other laws that regulate similar matters, they do not address the real economic and administrative situation of the obligated parties thus, compliance with these new obligations will be complicated.
Definition of Controlling Beneficiary
Briefly, the aforementioned provisions regulate the legal regime applicable to the obligated parties including the obligation to provide the Tax Administration Service (Servicio de Administración Tributaria) with the information related to the individual or group of individuals who qualify as "Controlling Beneficiary". Failing to comply could result in fines.
According to Article 32-B Ter of the Federal Tax Code, it is considered that an individual is a "Controlling Beneficiary" in the following cases:
a) If directly or through others or through any legal act, obtains the benefit derived from its participation in a company, a trust or any other legal entity, the rights of use, enjoyment, or disposal of an asset or service or on whose behalf a transaction is carried out, even if it does so or they do so on a contingent basis.
b) If directly, indirectly, or contingently, exercises control over the company, trust or any other legal entity.
Control is understood as when it allows them to:
i) To impose, directly or indirectly, decisions in the general stockholders’ meetings, partners or equivalent bodies, or appoint or dismiss the majority of the board members, managers or their equivalents.
ii) To maintain the ownership of the rights that allow them, directly or indirectly, to exercise voting rights for more than 15% of the capital stock, or.
iii) To manage, directly or indirectly, the administration, strategy or main policies of the company, trust, or any other legal entity.
iv) In the case of “fideicomisos”, the trustor or trustors, the truste, the trustee or trustees, as well as any other person involved and who ultimately exercises effective control in the agreement, even on a contingent basis, will be considered controlling beneficiaries.
As it can be noticed from the legislation recently incorporated into the Federal Tax Code, it provides two different definitions of what we can understand as Controlling Beneficiary: first, the one who receives a benefit; second, the one who exercises control.
In order to apply these two definitions, Rule 184.108.40.206 of the Miscellaneous Tax Resolution for 2022 was added, whereby the obligated entities must successively identify the Controlling Beneficiary, thereby, first meet the content of section I of article 32-B Ter of the Federal Tax Code is considered (Beneficiary) and, in the event that is not possible to identify such person, section II of said article is applied (control).
Documentation to be identified and provided
On the other hand, according to the content of Rules 220.127.116.11, 18.104.22.168 and 22.214.171.124 of the Miscellaneous Tax Resolution for 2022, the obligated entities (without considering the financial entities and the other entities that are part of the financial system since they do it with a different method) must implement their own methods for the identification of the Controlling Beneficiary or those who they consider to have the same quality. These methods must be reasonable and necessary since they will be considered part of the accounting and must be kept for a period of five years. The following documentation should be included:
I. The full name and surnames, which must correspond with the official document that certify the identity.
II. The aliases
III. The date of birth. When applicable, date of death.
IV. The gender
V. The country of birth and nationality. In case of several nationalities, identify all of them.
VI. The CURP (a unique code which identifies all Mexican citizens and residents) or its equivalent, in the case of other countries or jurisdictions.
VII. The country or jurisdiction of residence for tax purposes.
VIII. The type and number or code of official identification.
IX. The RFC code or tax identification number, or its equivalent, in case of being a non-Mexican resident for tax purposes.
X. The marital status, with identification of the spouse and patrimonial regime, or identification of the concubine or concubinary, if applicable.
XI. The contact information: e-mail and telephone numbers.
XII. The home address and tax domicile.
It should be noted that we consider the aforementioned documentation is excessive, and in some cases, impossible to obtain, as well as unnecessary, since none of it is related to compliance with tax obligations and, in addition, the documentation and information required from subjects that are not relevant.