MEXICO Law and Practice Contributed by: Carlos Fernando Portilla Robertson and Ricardo Valdivia González, Portilla Ruy-Diaz y Aguilar
tors. Although there is no definition of “control” with- in the gaming legal framework, permit holders are obliged to notify the authority of any change in share- holders up to the ultimate beneficiary owner in their corporate structure, as well as of any modification to their authorised operators. 10.2 Change of Corporate Control Triggers A notice obligation is triggered whenever: • a share purchase (or partnership interest) agree- ment is executed; or • any modification is made to the percentage of par- ticipation of its partners or shareholders. Such provision is applicable to any change in the shareholding composition of the permit holder, or in the shareholders or partners thereof, whether it is carried out through capitalisations, reduction of capi- tal, spin-offs, mergers or other corporate practices in which other companies mediate between the permit holder, shareholders, partners and ultimate benefi- ciary owner. The only exception is operations carried out through the stock exchange, in which the transac- tion does not imply a change of control in the permit holder and/or authorised operator. 10.3 Passive Investor Requirements The Gaming Regulations do not provide any special rules in relation to passive investors in acquisitions or changes of control; the general rule mentioned in 10.2 Change of Corporate Control Triggers is also applicable in this scenario. In cases where the regulatory authority deems the violations committed by permit holders or operators to be serious, it proceeds to revoke the granted per- mits and/or close down the establishments operating under those permits. For less serious violations, fines will be imposed. This process is conducted through the appropriate administrative sanctioning procedures, ensuring the right of defence for the parties involved. In instances 11. Enforcement 11.1 Powers
of serious violations of the law or illegal gambling, the regulatory authority refers the matter to criminal authorities for intervention. 11.2 Sanctions The authority carries out the execution of its resolu- tions, such as the closure of establishments, using public force. The establishments are sealed to prevent further activities. Fines are collected through collabo- ration agreements with various authorities. 11.3 Financial Penalties Financial penalties are enforced through the collec- tion procedures outlined in the law, allowing for the seizure of goods or bank accounts if the permit holder or operator refuses to pay the fine. The following federal taxes apply to gambling: • permit contributions – contributions payable by the permit holder to SEGOB that are set out in the permit (1% or 2%); • the special tax on products and services ( Impuesto Especial de Productos y Servicios , or IEPS) – for remote betting and gaming; and • federal player withholding tax – a tax to be withheld by the operator or the permit holder, in accordance with Mexican federal law, on the revenue of the prizes obtained by players through their use of the website. 12. Tax 12.1 Tax Rate by Sector The following local taxes may or may not apply to gambling, depending on the particular local regula- tion: • state operator tax – a tax to be paid by the permit holder or the operator in accordance with Mexican state law; and • state player withholding tax – a tax to be withheld by the operator or the permit holder, in accordance with Mexican state laws, on the revenue of the prizes obtained by players through their use of the website.
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