In accordance with the provisions of Article 17-H Bis of the Federal Tax Code, the Tax Administration Service (“SAT”) has the power to temporarily restrict the digital seals used for issuing tax receipts by taxpayers when it detects that they have engaged in one or more of the various conducts set forth in that article, which include, among others, the following:
As a result of a verification visit to the tax domicile, it is determined that the domicile does not meet the requirements to be a tax domicile. We have identified that this issue arises especially when the address of accountants or other advisors is designated without the principal administration of the business actually being located there. Failing to file an annual return one month after the date on which they were obligated to do so, or two or more provisional or final returns. During a review, it is determined that the taxpayer cannot be located or has vacated its tax domicile without filing the corresponding change notice in the Federal Taxpayer Registry. Having given effect to tax receipts issued by taxpayers listed as Companies that Invoice Simulated Operations without having proven the materiality of the operations. It is determined that one or more infringing conducts were committed and the conduct was carried out by the taxpayer holding the digital seal certificate. Once the temporary restriction of digital seals is applied, taxpayers must pursue a specific procedure to obtain a resolution regarding their reinstatement or permanent cancellation, which is conducted before the same authority that determined the restriction. In recent months we have detected a considerable increase in verification visits carried out spontaneously by SAT personnel, in which compliance with the requirements of the tax domicile in general is reviewed, and specifically that the principal administration of the business is located at that domicile, meaning that the persons who make or execute the decisions of control, management, and administration of the entity and of the activities it carries out are present at that location. It is important to consider that, in addition to being the place where the principal administration of the business is carried out, the accounting records and, in general, all documentation evidencing compliance with tax obligations must be kept at the tax domicile. As a result of the foregoing, in numerous cases the SAT has determined that, since it was not proven that the principal administration of the business is located at the tax domicile, the domicile does not meet the requirements to be a tax domicile, proceeding to apply various consequences to the taxpayer, including (i) imposing a fine on the company and (ii) restricting the use of the company's digital seal certificates. In preparation for the foregoing, we would be pleased to provide you with assistance in verifying that the tax domiciles that have been designated comply with the tax requirements to qualify as such, or, if necessary, that such domicile be changed to one that duly complies, as well as preparing a manual or protocol to follow in the event of receiving a verification visit from the tax authorities and to prove compliance with your obligations, minimizing the risk of being subject to fines or the temporary restriction of the digital seals. For additional information, please contact: Alejandro Torres, Partner: +52 (55) 5258-1072 | ajtorres@vwys.com.mx Luis Enrique Torres, Counsel: +52 (55) 5258-1023 | ltorres@vwys.com.mx Eric Palacios, Counsel: +52 (55) 5258-1085 | epalacios@vwys.com.mx Alfonso Leñero, Associate: +52 (55) 5258-1008 | alenero@vwys.com.mx
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