On October 25, 2023, the Second Chamber of the Supreme Court of Justice of the Nation (“SCJN”), ruled the unconstitutionality of the fourth paragraph of article 29-A of the Mexican Federal Tax Code (“MFTC”) in Amparo number 683/2023; This establishes a time limit for the cancellation of online digital tax receipts (“CFDIs”) that allows taxpayers to cancel CFDIs in the year of issue, as long as the person in favor of whom they are issued accepts their cancellation.
Under rule 2.7.1.47. of the First Resolution of Amendments to the Tax Miscellaneous Resolution for 2022, CFDIs could be canceled no later than the filing month of the annual income tax return of the tax year in which the CFDIs were issued, thus favoring taxpayers by extending the legal term to cancel CFDIs.
In the explanatory statement of the 2022 Tax Reform, where the fourth paragraph was added, the reason to delimit a period to cancel issued CFDIs was clarified. The tax provisions were omissive in establishing a term for such cancellation, thus, the Tax Authorities did not have timely updated information to know the tax situation of the taxpayers since they canceled CFDIs years after their issuance, which led the Authorities to make observations or issue invitation letters for them to correct their tax situation.
The SCJN considers that, although the purpose of establishing a time limit to cancel CFDIs was to facilitate compliance with tax obligations and their supervision, the term set by the legislator is not consistent with the legal system of temporality for compliance with tax obligations, especially taking into consideration that the issuance of the CFDIs becomes relevant until the invoiced transactions have tax effects. This is the same situation that occurs when filing the respective tax returns and paying taxes determined to individuals and corporations, which does not necessarily occur within the tax year when they are issued.
It is also stated that even though rule 2.7.1.47. allows taxpayers to cancel CFDIs after the legal limit established in the analyzed legal provision, such administrative provisions cannot save the constitutionality of the challenged rule.
Among others, SCJN acknowledged that with such time limitation, there is a lack of knowledge of how the dynamism of commercial and economic operations of taxpayers works, as there may be an endless number of events that require the need to cancel a CFDI, such as errors in its issuance or even the early termination or breach of contracts, cancellation of services, etc.
In addition, the SCJN pointed out that the fourth paragraph of the previously mentioned article establishes that a condition to proceed with the cancellation of the CFDIs is the authorization of the person in favor of whom they were issued, which may cause a greater delay in their cancellation.
Finally, the SCJN ruled that, since the only exception to the CFDIs cancellation period is that the tax provisions establish a shorter term to cancel, this allows the Tax Authorities to impose a shorter time to cancel than the fiscal year in which the invoiced transaction occurs, resulting in legal uncertainty for taxpayers.
It is pointed out that the effects of granting the Amparo will mean that the limitation in question is not applicable if there is any other regulatory provision that establishes the period for canceling the CFDI beyond the fiscal year in which they are issued and must be complied with.
It is also important to point out that, in Tax matters, the principle of relativity of the sentence prevails, therefore, this ruling only benefits the complainant who promoted the Amparo trial, hence, the Tax Authorities may continue applying the provision contained in the fourth paragraph of article 29-A of the Federal Tax Code to other taxpayers.
If you have any questions regarding this Client Alert, please don’t hesitate to contact our Tax team.
*This Client Alert was drafted by Oscar Paz Suárez, Dulce María Hirota Infante and Samantha Serrano Hernández and may contain personal opinions independently of the law firm for which they work. In case you intend to apply any of the provisions or interpretations mentioned above, we recommend that you consult Jáuregui y Del Valle, S.C. or another qualified Tax Advisor in a formal manner before doing so.
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