Beneficial Owner: new obligation to identify and keep information
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Beneficial Owner: new obligation to identify and keep information
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As of Fiscal Year 2022, the Mexican Federal Tax Code established a new obligation for corporate taxpayers in Mexico to identify and collect personal information on their beneficial owners. This documentation will form part of the taxpayer’s accounting books in question and must be shared with the local Tax Authorities when requested.

Who are subject to this new provision?

  • Companies
  • Fiduciaries, trustors, and trustees
  • Parties or members of legal entities
  • Notaries public and third parties involved in the incorporation of companies
  • Financial entities (including financial system)

 

How to identify the beneficial owner?

A beneficial owner shall be understood as the individual or group of individuals who:

a) Directly or indirectly obtains benefits derived from its participation in a legal entity, a trust, or any other legal entity;

b) Ultimately exercises rights of enjoyment, use or disposition of an asset or service or on whose behalf a transaction is carried out; or

c) Directly, indirectly or contingently exercises control over a legal entity, trust, or any other legal figure.

Moreover, if it is not possible to identify the beneficial owner through the new provisions, per Tax Rule 2.8.1.20, such role will be assigned to the administrator of the company in question, or if applicable, to each board member director operating it.

How and when should the information be provided?

This new information must only be sent to the local Tax Authorities upon request via the tax mailbox, having a maximum of 15 business days to answer, with the facility of an extension of 10 additional business days. However, the information must always be kept and updated in the company’s accounting books, even when said authorities have not requested it.

What information should be collected?

By the list within Tax Rule 2.8.1.22, taxpayers subject to the obligation must collect information of each of their identified beneficial owners, including but not limited to the following:

  • Name
  • Date of birth
  • Country of origin and tax residence (including home address)
  • CURP (identification number) and RFC (taxpayer ID), or their equivalents
  • Marital status, with spouse identification and property regime
  • Key contact information
  • Relationship with the taxpayer and degree of participation in it
  • Number of shares and titles on the taxpayer’s capital
  • Date of the beginning of activities as controller


What happens if the beneficial owner is another company?

Barring a case-by-case analysis, in the event that the beneficial ownership is indirect, it should also be considered that Tax Rule 2.8.1.20 includes within the information to collect that of any of the undertakings that form the chain of ownership or control, including:

  • Name and corporate denomination
  • Jurisdiction of creation and residence (including tax domicile)
  • RFC (taxpayer ID) or equivalent


Is there a penalty for omitting this obligation?

Per articles 84-M and 84-N of the Mexican Federal Tax Code, due to non-compliance with these new obligations, the taxpayer may be subject to penalties for each omitted beneficial owner, as follows:

  • From 75,000 to 100,000 USD for failing to obtain, keep or submit such information.
  • From 40,000 to 50,000 USD for not keeping the information updated.
  • From 25,000 to 40,000 USD for submitting information that is incomplete, inaccurate, in error, or in a form different from that specified in the provisions.

Given the understanding that these provisions represent a new obligation for businesses looking to set up companies in Mexico, the identification of beneficial owners must be studied on a case-by-case basis. Therefore, do not hesitate to contact us at JA Del Río, where we will be pleased to evaluate your particular case and advise you on the steps to follow to comply with this new obligation fully.

If you require additional information in this regard, contact us, and we will gladly support you.

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