Recently, the Second Chamber of the Supreme Court of Justice of the Nation ruled that it is valid for the tax authorities to request information and/or documentation related to the compliance of the obligation of the so-called owner beneficiary(ies).
In view of this situation, and considering that it is very complicated for any taxpayer to obtain a favorable resolution, we share with you this document with the intention of properly complying with this obligation.
Compliance with this obligation
Legal entities, fiduciaries, trustors or trustees, as well as the contracting parties or members in the case of any other legal entity, are obliged to obtain and keep, as part of their accounting, reliable, complete and updated information related to the owner beneficiaries.
This information will only be submitted to the SAT (Tax Administration Service) at the request of the tax authority, for which it will have a term of 15 business days following the date of notification of the request. The term may be extended for an additional 10 days by means of a request for extension filed by the taxpayer.
When there are changes in the identity or participation of the owner beneficiaries, they will have a term of 15 calendar days from the modification to update the information.
Notaries, commercial notaries and any other person involved in the formation or execution of the contracts or legal acts that give rise to the incorporation of such persons or the execution of trusts or any other legal figure, will be obliged on the occasion of their intervention to obtain the information to identify the owner beneficiaries and to adopt reasonable measures to verify their identity, in order to provide it to the SAT when such authority so requires.
It is established that this information may be provided to foreign tax authorities, upon request and under the protection of an international treaty in force to which Mexico is a party, which contains provisions for the reciprocal exchange of information.
Owner beneficiary concept
Taking into consideration article 32-B-QUATER of the Federal Tax Code, a owner beneficiary is defined as an individual who:
I. Directly or by means of others, obtains the benefit derived from his or her participation in a legal entity, a trust or any other legal entity, or legal act, or is the person or persons who ultimately exercises the rights of use, enjoyment, benefit or disposition of a good or service or on whose behalf a transaction is carried out, even if he or they do it or do it on a contingent basis.
II. Directly, indirectly or contingently, exercise control of the legal entity, trust or any other legal entity.
It is understood that a natural person or group of natural persons exercises control, when through the ownership of the securities, they can:
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- Impose, directly or indirectly, decisions in the general meetings of shareholders, partners or equivalents.
- Directly or indirectly exercise voting rights in respect of more than 15% of the share capital or
- Directly or indirectly direct the administration, strategy or main policies of the legal entity, trust or any other legal means.
For the interpretation of the concept of Owner Beneficiary, the Recommendations issued by the Financial Action Task Force and the Global Forum on Transparency and Exchange for Tax Purposes organized by the Organization for Economic Cooperation and Development (OECD) will be applicable.
Through rule 2.8.1.20. of the Miscellaneous Tax Resolution since 2022, and reiterated in the miscellaneous resolution of 2023 and 2024, legal entities must identify, verify and validate the following information:
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- The percentages of participation in the capital of the legal entity, including the information related to the chain of ownership, in cases where the owner beneficiary is directly.
o Chain of ownership is understood as the case in which the indirect ownership is held through other legal entities.
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- The information of the chain of control in cases where the owner beneficiary is the owner beneficiary by means other than ownership.
o Chain of control is understood to be the case in which control is held indirectly, through other legal entities, trusts or any other legal figure.
In cases in which the individual is not identified, the owner beneficiary will be considered to be the individual who holds the position of sole administrator of the legal entity or equivalent. If the legal entity has a board of directors, each member of such board shall be considered as the owner beneficiary of the legal entity.
Data of the owner beneficiary
Through rule 2.8.1.21, of the Miscellaneous Tax Resolution from 2022, 2023 and 2024, mechanisms are established for the control of the updated information on the owner beneficiary which will be part of the accounting.
I. Identify the owner beneficiary and integrate its file.
II. Obtain and keep available updated and complete information through procedures that allow the owner beneficiaries to report any change in their status and provide such updated information.
III. Keep the information of the owner beneficiary, of the chain of title and of the chain of control, the documentation that serves as support for it, as well as the supporting documentation of the internal control procedures established in Article 30 of the CFF.
IV. Allow the tax authorities access to information, records, data and documents related to the owner beneficiaries.
The rules stipulate as data to be obtained from the owner beneficiaries, just to mention a few: full name and surnames, dates of birth, country of origin and nationality, tax residence, private and tax domicile, marital status, identification of spouse or common-law spouse, asset regime, among others.
Penalties for non-compliance
The penalties established for non-compliance with this obligation are as follows:
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- Failure to obtain, keep or submit the information of the owner beneficiaries: from $1’500,000.00 to $2’000,000.00 for each beneficiary that is part of the legal entity, trust or legal figure in question.
- Failure to keep updated the information related to the owner beneficiaries: from $800,000.00 to $1’000,000.00 for each beneficiary that is part of the legal person, trust or legal entity in question.
- Submitting the information of the owner beneficiaries incompletely, inaccurately, with errors or in a manner different from that indicated in the tax provisions: from $500,000.00 to $800,000.00 for each beneficiary that is part of the legal person, trust or legal entity in question.
As it can be observed, as with other recent new tax obligations, the tendency of the authorities is to establish penalties with high amounts for the correct non-compliance of such tax obligations.
In Núñez Rosas we are at your service to support you with your advisors or legal teams to review these issues in order for all companies to keep complete records, with updated information and without errors so as to avoid possible penalties for non-compliance or lack of information, as provided for in the tax provisions.
