Mexico: Identification of ultimate beneficial owners

Information of the ultimate beneficial owners must be provided to tax authorities

Information of the ultimate beneficial owners must be provided to tax authorities

Legal entities, settlors, trustees, and beneficiaries of Mexican trusts—and other engagement parties concerning contracts—must comply as of 1 January 2022 with the obligation to identify, gather, and maintain, as part of their accounting records, information about their ultimate beneficial owners (UBOs).

Additionally, public notaries or any other person involved within the formation or execution of agreements related to the incorporation of legal entities or in the execution of Mexican trusts are also obliged to identify the UBOs and verify their identity.

The information of the UBO must be provided to the tax authorities when required, and internal measures to properly comply with these obligations must be implemented and documented. Any change of the identity or participation of UBO in a legal entity, trusts or agreements must be updated within 15 days. 

“Ultimate beneficial owners” are defined as the individual or group of individuals that:  

  • Directly or indirectly receives benefits of his or her participation in a legal entity or trust; or ultimately, exercises the rights of use, enjoyment or disposal of an asset or service
  • Directly or indirectly has control of a legal entity, trust, or legal vehicle

It is considered that an individual has control when, through the ownership of shares or titles, by contract or any other legal act, that person:

  • Can impose, directly or indirectly, decisions in the shareholders’ meetings (or equivalent bodies) or appoint or dismiss most of the directors (or their equivalents)
  • Maintains ownership of the rights that allow that person, directly or indirectly, to exercise the vote of more than 15% of the capital stock (or equivalent)
  • Manages, directly or indirectly, the administration, strategy, or main policies of the legal entity

Regarding Mexican trusts, the settlor, trustees, and beneficiaries, or any person involved in the contract that ultimately exercises effective control over the trust is considered a UBO.

To identify a UBO, among the information that must be gathered is the name, nationality, country of origin, residence for tax purposes, taxpayer ID number, contact information, address, e-mail, and phone number.

Failure to comply with these new obligations may result in economic penalties ranging between MXN 500,000 (U.S. $20,000) and up to MXN 2 million (U.S. $100,000) per UBO, in addition to other possible administrative sanctions.  

Read a February 2022 report (Spanish) prepared by the KPMG member firm in Mexico

 

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