From what date should I identify the controlling beneficiary and what legal provisions regulate it?
As of January 1, 2022, the Tax Administration Service established the obligation to identify the controlling beneficiary to comply with the international standards implemented by the Financial Action Task Force and the Global Forum on Transparency and Exchange of Information for Tax Purposes organized by the OECD. To this end, it added articles 32-B Ter, 32-B Quáter, 32-B Quinquies, 84-M, and 84-N to the Federal Tax Code (CFF), as well as the rules of the Miscellaneous Fiscal Resolution (RMF) for 2024: 2.8.1.20, 2.8.1.21, 2.8.1.22, and 2.8.1.23.
Who is required to comply with these provisions?
• Corporations, trusts (in the case of trustees, settlors, or beneficiaries); as well as contracting parties or members of any legal entity.
• Notaries, brokers, and any other person involved in the formation or execution of contracts or legal acts that lead to the creation of such persons or the establishment of trusts or any other legal entity.
How do I identify the controlling beneficiaries?
The controlling beneficiary is considered to be the individual or group of individuals (resident in Mexico or abroad) who directly, indirectly, or contingently intervene in a corporation, trust, or any other legal entity in the following:
I. Obtain benefits from their participation or ultimately exercise the rights of use, enjoyment, benefit, or disposal of a good or service or on whose behalf a transaction is carried out; II. Exercise control through ownership of securities, by contract, or by any other legal act, being able to: a) Directly or indirectly impose decisions in general assemblies of shareholders, partners, or equivalent bodies, or appoint or dismiss the majority of directors, administrators, or their equivalents; b) Maintain ownership of rights that allow, directly or indirectly, to exercise the vote regarding more than 15% of the social capital or property; c) Direct, directly or indirectly, the management, strategy, or main policies of the corporation, trust, or any other legal entity.
In the case of trusts, the controlling beneficiaries are considered to be the settlors, trustees, beneficiaries, or any other person involved and ultimately exercising effective control in the contract, even contingently.
What criteria should I implement to determine the condition of controlling beneficiary in corporations?
According to miscellaneous rule 2.8.1.20 for 2024, in identifying controlling beneficiaries, corporations must apply what is established in the previous section and successively fractions I and II, subsections a), b), and c) as criteria for determination. That is, when the controlling beneficiary has been identified based on the benefit derived from their participation in a legal entity or property, or in the exercise of the rights indicated in fraction I but has not resulted in the identification of the controlling beneficiary, fraction II, subsections a), b), and c) mentioned above should be applied.
Corporations must identify, verify, and validate information about the controlling beneficiaries, indicating the percentages of participation in the corporation's capital, including information regarding the ownership chain, in cases where the controlling beneficiary is indirectly so. Ownership chain refers to the assumption in which indirect ownership is held through other corporations. Corporations must also identify, verify, and validate information regarding the control chain, in cases where the controlling beneficiary is by means other than ownership. Control chain refers to the assumption in which control is held indirectly, through other corporations, trusts, or any other legal entity.
What mechanisms should I implement to identify, obtain, and maintain updated information about the controlling beneficiary?
Obligated parties must implement properly documented internal control procedures, in accordance with miscellaneous rule 2.8.1.21 in force for 2024. These procedures will be all those that are reasonable and necessary to obtain and maintain information about the identification of controlling beneficiaries and will be considered part of the accounting that the SAT may require, at least: I. Identify, verify, and validate the controlling beneficiary properly, requiring what is indicated in article 32-B Quáter of the CFF, to reveal their identity, and provide the information detailed in rule 2.8.1.22. II. Obtain, maintain, and keep available reliable, complete, adequate, accurate, and updated information about the identity of the controlling beneficiary and other data established in rule 2.8.1.22., requesting that they provide updated information about their condition and inform them of any change in it. III. Maintain information on the controlling beneficiary, the ownership chain, and the control chain, the documentation that serves as support for it, as well as the evidentiary documentation of the internal control procedures referred to in the first paragraph of this rule, for the period indicated in article 30 of the CFF (at least 5 years). IV. Provide and allow timely access by tax authorities and grant them all facilities to access information, records, data, and documents related to controlling beneficiaries.
What economic sanctions arise from non-compliance with these legal provisions?
In accordance with articles 84-M and 84-N of the CFF, sanctions range from $500,000 to $2,000,000 for each controlling beneficiary who is part of the corporation, trust, or legal entity in question.
Final recommendations:
• Properly document the internal control procedures that led to the identification of the controlling beneficiary(s). • Integrate, maintain, and keep updated the information and documentation of the controlling beneficiary, as it may be requested by the authority at any time, as part of its verification powers. • Consider that there are 15 business days to provide this documentation in case of any requirement, so it is crucial to have this information complete and available from the 2022 fiscal year onwards.
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