The 2013 Federal Law for the Prevention and Identification of Operations with Resources of Illicit Origin (LFPIORPI – Anti-Money Laundering Law) and the Federal Tax Code (FTC) as of January 1st, 2022, set forth the obligation to identify and submit information about the Controlling Beneficiary to the Mexican Tax Authority, which is defined similarly in both laws, as the person or group of persons who:
- Gets the benefit and is the one who exercises the rights of use, enjoyment or disposition of a good or service.
- Control the company.
It is understood in both laws that a person or group of persons controls a company when they:
- Impose decisions at the Board or appoint or dismiss the majority of directors or administrators.
- Exercise the vote with respect to more than 50% of the capital stock in the case of LFPIORPI and more than 15% of the capital stock in the case of the FTC.
- Rule the administration or main policies of the entity.
The obligation of the LFPIORPI (article 18, section III) applies only to those that, in their capacity as client or user, carry out acts or operations with those that perform Vulnerable Activities, and consists of requesting the client who participates in vulnerable activities information about whether they are aware of the existence of the beneficial owner (defined as the beneficiary controller, in accordance with the Regulations of the LPIORPI) and, where appropriate, submit official documentation that allows identification of the beneficial owner, or declaring that it does not have it. The Registration is submitted to the Mexican Tax Authority.
The obligation of the FTC for legal entities (all, not only those that carry out vulnerable activities), trusts, and other legal figures, consists of identifying the controlling beneficiaries, as a measure to prevent tax evasion. The Tax Authority can now request information on the controlling beneficiary from entities at any time, so it is important the permanent review of the controlling beneficiary support files. Failure to comply is sanctioned with fines of up to $100,000 US (approximately) for each controlling beneficiary.
The FTC sets forth that when there are changes in the identity or participation of the controlling beneficiaries, companies, trustees, as well as the contracting parties in the case of any other legal figure, they must update said information (within 15 calendar days following the modification).
Failure to comply with these obligations, in addition to the fines, the Mexican Tax Authority is entitled to issue a negative opinion to the company, trust, or agreement, with regard to its tax compliance obligations; it also delays transactions before public notaries.
As part of the Compliance services, we can support your company to:
– Identify and prepare the support file of the controlling beneficiary(ies) through the review of the entity structure.
– Prepare an internal control procedure to identify and update the information of the controlling beneficiary when there are changes in the corporate structure.
If you need additional information regarding the contents of this document or if you need legal advisory, please contact the following person:
Jorge Ortega González – Of Counsel
Email: jorge.ortega@s-l.mx
Phone Number: +52 55 50015452