The Mexican Supreme Court of Justice (Suprema Corte de Justicia de la Nación or SCJN) upheld the authority of the Tax Administration Service (Servicio de Administración Tributaria or SAT) to require compliance with certain requirements for the cancellation of the Federal Taxpayer Registry (Registro Federal de Contribuyentes or RFC) in cases of corporate mergers. It further held that RFC cancellation will be denied if any of the parties involved appear on the SAT's lists of taxpayers deemed to have engaged in simulated transactions.
With respect to value-added tax (VAT), the SCJN ruled that denials of VAT refund requests become final if not challenged, thereby preventing taxpayers from submitting "corrected" applications. Accordingly, any rejection must be timely contested in order to safeguard the taxpayer's rights.
Requirements in Corporate Mergers and Liquidations
SCJN confirmed the constitutionality of the requirements for filing the notice of cancellation in the RFC in cases of liquidation or corporate mergers, holding that the provision does not infringe the constitutional principle of legislative reasonableness. In this regard, the circuit court had previously granted relief, finding the requirements of Form 316/CFF of the 2022 Miscellaneous Tax Resolution disproportionate; however, the SCJN overturned that determination.
In its analysis, the SCJN emphasized that Article 27, Section D, Clause IX of the Federal Tax Code (Código Fiscal de la Federación or CFF) pursues a constitutionally legitimate objective: preventing tax evasion, avoidance, fraud and other unlawful conduct in tax matters while strengthening legal certainty for taxpayers and providing a sound legal basis for the actions of the tax authority. The court held that the requirements established in the provision are suitable, necessary and proportionate to ensure legality and tax compliance in merger processes.
Consequently, an RFC cancellation notice will not proceed unless all procedural requirements and supporting documentation set forth in the CFF and Miscellaneous Tax Resolution are fully satisfied. Companies undergoing merger or liquidation processes must anticipate strict oversight by the SAT regarding compliance with these requirements, as well as maintain sufficient and robust evidence of the transaction to support the RFC cancellation request and avoid administrative or tax-related delays and contingencies.
In addition, the SCJN confirmed that RFC cancellation will be denied if either the merging or merged entity is linked to taxpayers included on the SAT's lists of simulated or non-existent transactions.
VAT Refund Requests
The SCJN held that when the tax authority denies a refund of a balance in favor on formal grounds and such resolution is not challenged, it will not be possible to refile the request by correcting the errors or submitting additional documentation. If the denial is not legally contested, the resolution becomes final.
Accordingly, it is essential to 1) ensure that the initial refund request is as airtight as possible, verifying that all documentation and formal requirements are in order from the outset, 2) challenge any denial in a timely manner, even if it relates only to formal aspects, and 3) thoroughly substantiate the balance in favor so that the file does not depend on subsequent corrections.
For taxpayers, this new standard requires raising the level of care in preparing refund requests and having a clear defense strategy ready in case of rejection by the tax authority.
