MEXICO Law and Practice Contributed by: Edgar Klee and Joel Gonzalez Lopez, Haynes and Boone, S.C.
results in a tax benefit for the taxpayer. In these cas - es, the authorities can attribute the tax effects that would have been expected had they been carried out to achieve a reasonable economic benefit to these transactions. For the application of the anti-avoidance rule, a “favourable opinion” of a committee (officials of the Ministry of Finance and Public Credit and the Tax Administration Service) must be issued. If the opin - ion is not issued within a two-month period, it will be considered a negative resolution. It is legally assumed, unless the taxpayer proves oth - erwise, that a transaction does not have a legitimate business purpose when: • the measurable economic benefit is a smaller amount than the tax benefit obtained; or • the reasonably expected economic benefit could have been achieved with fewer transactions, result - ing in a higher tax effect (referred to as the frag - mentation of operations). Any reduction, elimination or temporary deferral is considered a tax benefit. Tax authorities in Mexico are investing heavily in tech - nological solutions to improve their ability to automati - cally access taxpayers’ information and gain a better understanding of their transactions. Among the technological measures that have allowed for greater oversight of taxpayers are: (i) the obligation of taxpayers to maintain electronic accounting, which is uploaded monthly to the tax authority’s portal; (ii) the use of the Taxpayer Mailbox for efficient commu - nication; and (iii) the mandatory issuance of electronic invoices (CFDI). Utilising this advanced data analysis, tax authori - ties can efficiently detect inconsistencies within the electronic systems, prompting the issuance of “invi - tations” for further clarification. These “invitations” 8. Audit Cycles 8.1 Regular Routine Audit Cycle
are not formal audits but serve as initial inquiries to address potential irregularities. The Tax Administration Service has also identified specific sectors which are routinely audited (such as large taxpayers, retail, automotive, export-import activities, real estate, pharma and oil and gas). Additionally, for the 2026 fiscal year, a new “express” procedure was introduced to streamline processes related to the materiality of transactions covered by invoices with tax implications. These procedures must be completed within a maximum of 24 days. This accelerated procedure represents a significant development in Mexico’s efforts to combat simulated transactions and improper deductions. The express materiality procedure, introduced through the 2026 amendments to the Federal Tax Code, estab - lishes a fast-track mechanism allowing the Tax Admin - istration Service to challenge the economic substance of invoiced transactions where indicators of simulation are detected. The procedure may be triggered when a taxpayer appears on the EFOS list, when inconsist - encies arise from third-party information or database cross-checks, or when a supplier has been definitively listed as issuing simulated invoices. Upon notification, the taxpayer has ten business days to submit sup - porting evidence, and the SAT must issue a resolution within fourteen business days thereafter. If the taxpayer fails to rebut the presumption, the Tax Administration Service may definitively determine that the transactions lack materiality, resulting in the disal - lowance of income tax deductions, denial of related VAT credits, potential inclusion in the EFOS list, and possible criminal exposure in serious cases. Given the compressed timeline, taxpayers should maintain robust documentation evidencing the actual provision of goods or services, traceable payments, contrac - tual support, and a clear business rationale to mitigate exposure under this accelerated review framework.
342 CHAMBERS.COM
Powered by FlippingBook