The preamble of the tax reform for fiscal year 2020 suggests “providing that legal entities will be required to submit a notice to the Federal Taxpayers’ Registry (RFC) when their partners or shareholders change, in consideration of the need to combat the creation of companies incorporated solely for the purpose of issuing invoices or deducting non-existent transactions…”
The 2020 fiscal year reform provides that legal entities that pay taxes are required (“Obligation“) to submit the “Partners or Shareholders Update Notice” (“Notice“), provided under Article 27, paragraph A, section III and paragraph B, section VI of the Federal Tax Code (“CFF“), in connection with Rule 2.4.19. of the 2020 Tax Law Amendments (“Tax Law“).
In accordance with the Tax Law, within 30 (thirty) days of any change in the partners or shareholders of a legal entity, either due to withdrawal, exclusion or incorporation, legal entities must comply with the Obligation by submitting the Notice to the Federal Taxpayers Registry (“RFC“) indicating the name and tax ID of each of the legal entity’s current partners or shareholders.
If a legal entity has failed to maintain updated information on its partners or shareholders with the RFC as of the effective date of the Obligation, the Tax Law provided a one-time only extension that concluded on June 30, 2020 (the “Regularization Term“) to submit the Notice. If a legal entity has not undergone any changes in its capital holding structure, the filing of the Notice is unnecessary.
If a legal entity wishes to confirm the information it has registered with the Tax Administration Service (“SAT“), including information in the RFC, it must request a clarification to validate such records. Such requests generally take a while to be resolved, even without considering the current global health contingency caused by the SARS-CoV2 virus (COVID-19), which causes further delay in responses from the authorities.
Due to the foregoing, we recommend to our customers and friends to consider submitting the Notice as soon as possible, either to update the information previously submitted or to confirm it, even after the Regularization Term has expired, as this option constitutes a spontaneous and voluntary act that could prevent the application of fines for delayed compliance with the Obligation, if it is filed prior to a visitation or request from the authorities.
We wish to point out that because associations and professional entities (sociedades civiles) are legal entities, they are also subject to the Obligation to file the Notice with regard to their associates and partners.
Compliance with the Obligation is of vital importance for non-profit organizations that operate with an authorization (“Authorization“) to receive tax-deductible donations (“Authorized Donees“), since filing the Notice regarding its associates is contemplated under the regulatory conditions required to obtain and conserve the Authorization.
To properly comply with the Obligation, it is necessary to observe the requirements provided under the Tax Law. The Notice must include a scanned copy of the “notarized document containing the modifications, as well as the incorporation of partners or shareholders.” In this regard, SAT published on its webpage a document with “frequently asked questions relating to the obligation to provide information on legal entities’ partners and shareholders” that the general public can consult.
Failure to comply with the Obligation gives rise to the following penalties:
- Fines between $4,200.00 and $8,390.00 Mexican pesos.
- Temporary restriction of the use of digital stamp certificates to issue online digital invoices (“CFDI“). Under the CFF, certificates could be rendered void if the non-compliance is left uncured.
- Limitations to or loss of registration as an Authorized Donee.
- Delay in the renewal of the legal representative’s e-signature.
- Delay in the execution of interbank transactions.
Undoubtedly, the purpose of the Obligation is to provide to SAT, through the existing modern technology, detailed information that will allow it to correlate and verify the information of legal entities regarding their transactions and members, with the information each of them individually submit, thereby becoming an effective tool to identify false or inconsistent information that could be indicative of companies that invoice or deduct non-existent transactions, as well as to identify and combat tax evasion in general.
JÁUREGUI Y DEL VALLE, S.C., offers its clients personalized solutions to tackle the problems they face, allowing them to fully comply with their obligations in general in the best possible terms for each client.