Mexico’s ‘controlling beneficiary’ rules

Since 2022 and according to the Federal Fiscal Code (“FFC”) (Articles 32-B Ter, Quáter and Quinquies, as well as to the Miscellaneous Tax Resolution for 202) all taxpayers are obligated to obtain, keep and provide to the Mexican tax authorities when so requested, information of individuals who are considered to be the ‘controlling beneficiaries’ of legal entities. In order strengthen the collection powers of tax authorities, an obligation applicable to all Mexican legal entities, trustees or settlors, parties integrating or contracting through any other legal construct, notaries, brokers, and any other person intervening in the incorporation of legal entities or in trusts or in any other legal construct (the “Obligated Parties“), was added, for these subjects to obtain and preserve, as well as provide, at the request of the Tax Administration Service (“TAS“), the reliable, complete and updated information of their Controller Beneficiaries.

Under the FFC, the Controller Beneficiary is understood as the individual or group of individuals that:

1. Directly or through others or through any legal act, obtain the benefit derived from their participation in a legal entity, a trust or any other legal construct, as well as from any other legal act, or those who ultimately exercise the rights of use, benefit, enjoyment, use or disposal of a good or service or those on whose behalf a transaction is made, even if made contingently.
2. Directly, indirectly or contingently, exercise control of the legal entity, trust, or other legal construct.

All legal entities shall identify, verify, validate and update the information on their Controller Beneficiaries, indicating their participation percentages in the capital stock, taking into account the “Ownership and Control Chains”.

In case no individual is identified using the aforementioned criteria, the Administrative Organ shall be considered as Controller Beneficiary, whether the Sole Administrator or each of the members of the Board of Directors.

The information of the Controller Beneficiary that legal entities, trustees, settlors and integral or contracting parties of any other legal construct, must collect is the following:

• Full names and surnames, according to their official identification
• Aliases
• Date of birth or death, if applicable;
• Gender
• Country of origin and nationality(ies);
• CURP (Single Population Registration Code) or its equivalent in other countries or jurisdictions.
• Country or jurisdiction of residence for tax purposes.
• Type and number or code of the official identification.
• Federal registration as taxpayer (RFC) or, in case of foreigners, proof of the tax identification number.
• Marital status and property regime, as applicable, and identification of the spouse or concubine, as applicable.
• Email and telephone numbers
• Home address and domicile for tax purposes.
• Relationship with the legal entity or capacity in the trust or legal construct, as appropriate.
• Degree of participation in the legal entity or in the trust or legal construct, that allows the exercise of the rights of use, enjoyment, exploitation, or disposal of a good or service or carry out a transaction.
• Description of the form of participation or control (direct or indirect).
• Number of shares, partnership interests, participations or rights or their equivalents; series, class, and nominal value, in the capital of the legal entity.
• Place where the shares, partnership interests, participations, or other equivalent rights are deposited or in custody.
• Determined date in which the individual acquired the status of Controller Beneficiary of the legal entity, trust, or any other legal construct.
• If applicable, provide the data mentioned in the preceding paragraphs regarding the Sole Administrator or each of the members of the Board of Directors of the legal entity or equivalent.
• Date on which a change occurred in the participation or control in the legal entity, trust, or any other legal construct.
• Type of modification of the participation or control in the legal entity, trust, or another legal construct.
• Termination date of the participation or control in the legal entity, trust, or any other legal construt.

In the cases of Ownership or Control Chains, the following information shall also be available:

1. Name, designation, or corporate name of the legal entity or entities, trusts, or legal constructs participating or controlling the legal entity, trusts, or legal contructs.
2. Country or jurisdiction of creation, incorporation, or registration.
3. Country or jurisdiction of residence for tax purposes.
4. Federal taxpayer registration number (RFC) or tax identification number, or its equivalent, if resident abroad, for tax purposes.
5. Fiscal domicile.

In case of not obtaining, not maintaining, or not submitting reliable, complete, and updated information of each Controller Beneficiary that is part of the legal entity, trust, or legal construct in question, as required by the TAS; not keeping updated information or submitting information that is incomplete, inaccurate or with errors, fines __from $500,000.00 to $2,000,000.00 MXN __ shall be imposed, as appropriate (approximately USD 25,000.00 to $100,000.00). (Art. 84 M and 84 N of FFC)