Tax Guarantees in Mexico

Herein, I will analyze which are the tax guarantees in terms of what is provided under the Tax Code of the Federation (Código Fiscal de la Federación), provided that, they should be analyzed in detail according to the applicable legal provisions.

In this respect, in accordance with the provisions of article 141 of the Tax Code of the Federation, taxpayers may guarantee the tax interest, in one of the following ways:

• Cash Deposit.

The guarantor will deposit a certain amount in cash in a tax interest guarantee account established by the Ministry of Finance and Public Credit (Secretaría de Hacienda y Crédito Público - SHCP).

• Letter of credit.

Document that a bank or another company issues in favor of a third party so that a certain amount of money is delivered to it. It must be issued by a credit institution registered with the Tax Administration Service (Servicio de Administración Tributario - SAT).

• Pledge.

Guarantee that falls on movable property and that carries with it the transfer or displacement of possession of the pledged item. It is constituted on personal property for 75% of its value, provided they are free of liens.

• Mortgage.

It is a contract whereby a property that usually constitutes a property is taken as a guarantee of a credit. It is constituted on immovable property for 75% of the appraised value or the cadastral value.

• Bail.

Contract by which a person agrees with the creditor to pay for the debtor if he does not do so. The bond must comply with the rules of the SAT and the policy will remain in power and custody of the authority to collect the tax credit.

• Solidarity obligation.

It occurs when in the relations with a common creditor each debtor is obliged to pay the integrity of the debt. It can be granted by individuals or corporations fulfilling the provisions of the applicable provisions.

• Administrative seizure.

The taxpayer offers in guarantee to the authority movable or immovable property of his property; which must be sufficient to guarantee the tax interest. The SAT requirements must be met.

• Securities value or loan portfolio.

Documents that express in their content, a literal and autonomous right, and that only possess that material support can be executed, without proving the facts that determined its issuance. The SAT will monitor that its acceptance and later will be sufficient and, if they are not, it will require its extension.

The taxpayer decides what guarantee to grant, which must be granted within a maximum period of 30 business days from the corresponding notification, fulfilling the request by the SAT for its granting and validity.

In terms of the provisions of the Regulation of the Tax Code of the Federation (Reglamento del Código Fiscal de la Federación - RCFF), the guarantee of the tax interest will be granted in favor of the Treasury of the Federation (Tesorería de la Federación); of the decentralized body that is competent to collect tax credits coactively, as well as of treasuries or dependencies of the states or municipalities that perform these functions, even when they have another name, as applicable.

When the guarantee of the tax interests consists of bond, letter of credit or deposit note, it will be granted in favor of the Treasury of the Federation or of the competent decentralized agency to collect tax credits coercively.

It is important to mention that the tax guarantees will subsist until their cancellation proceeds in terms of the provisions of the CFF and / or the RCFF.