By Carolina Rodriguez and Luis G. Reséndiz
Mexico’s 2020 tax reform introduced a new obligation for Mexican companies to file a notice with Mexico’s Tax Administration Service (SAT), reporting the name and Federal Taxpayer Registry (RFC) of their equity-holders every time there is a change in their ownership structure. When Mexican business entities have foreign investors, the notice may use generic RFCs (EXT990101NI1 for foreign entities and EXTF900101NI1 for foreign individuals).
The notice must be submitted through SAT’s electronic portal on form 295/CFF. The filer must attach copies of the deed of formation and the notarized documents reflecting the ownership changes. Mexico’s General Law of Business Entities does not require the formalization with a notary public of changes in the ownership structure of a business entity. However, to comply with this new tax filing obligation, companies must formalize documents containing any modification of their ownership structure.
This notice must be filed within 30 days from the date of the formation of a company and the date of a change of ownership in the entity. The deadline to comply with this obligation is June 30, 2020. All existing Mexican companies that have not filed such notice before must make this filing. The notice will be valid until an ownership structure modification occurs. It is unclear if companies that filed their annual foreign owners’ declaration (Form 96) have to file form 295/CFF; a preventive measure for all Mexican companies is to file this notice before June 30, 2020.
What happens if you fail to comply with this obligation?
- Imposition of a fine of between MXN 4,200 pesos and MXN 8,390 pesos.
- Imposition of a temporary restriction on the use of the digital tax seal for the issuance of electronic invoices (CFDI), and, if not rectified, the certificates could be cancelled. Businesses cannot issue invoices without the seal.
- There may be other tax consequences, including refusal by SAT to refund value added tax (VAT) alleging the tax payer is not in compliance with its tax obligations.