The crime of tax fraud is defined as a conduct aimed to omit, totally or partially, the payment of taxes or to obtain an undue tax benefit in detriment of the Mexican Tax Authorities.
Rather than the amount of the tax adjustment itself, it is the conduct performed what triggers the criminal offense (i.e., conduct aimed to omit, totally or partially, the payment of taxes or to obtain an undue tax benefit in detriment of the Mexican Tax Authorities.
Criminal proceedings in Mexico are not based on the amount of tax penalties; they are triggered upon the performance of a conduct that is punishable from a criminal perspective in terms of the several hypotheses set forth in the Federal Tax Code i.e., tax fraud; issuance/use of invoices that supports simulated transactions, smuggling, etc.
A mere negligence of avoiding the payment of taxes could cause the basis of a criminal offence. However, intention is needed, and this will be a matter of evidence.
The criminal proceeding is an independent process. However, the full payment of the omitted taxes plus inflationary adjustments and surcharges (and in some cases penalties) could reduce the risk for the triggering of criminal procedures, and if initiated, they may serve as the basis to request the tax authorities to withdraw their criminal action. It is common that tax authorities use the excuse of criminal actions as a means to exert pressure on taxpayers with the objective to receive payment of a tax assessment.
The tax fraud is a crime that needs to be brought to the attention of the prosecutor directly by the Tax Authorities though the filing of a complaint ("querella") showing the tax offense in questions and the harm inflicted to the Mexican Tax Authorities.
The statute of limitation for taxes is five years, and it may run up to 10 years in some instances. However, when dealing with tax crimes, the statue varies depending on the minimum and maximum of years of imprisonment.
The statute of limitation period starts running as of the date the tax authorities are aware of a criminal action and the subject that committed the crime. In no case the statute period of limitation will be less than five years.
Could range from three months to nine years of imprisonment depending on the amount of the tax fraud. The sentence could be increased in a half if the tax fraud is considered as a qualified crime (i.e., use of false documents, do not have accounting systems/registries, false statement to pursue tax refunds or offsetting, omitted the payment of withholding taxes, declare false tax loses, use a simulated structure to avoid the new subcontracting regime, receive a tax benefit transgressing anti-corruption laws.)
Yes; according to Mexican criminal law, if during a criminal investigation a company proves that it has designed and implemented a tax crime prevention program within the organization (criminal compliance program) prior to the date on which the tax crime under investigation was committed, this could help mitigate or exclude corporate criminal liability.
Mexican criminal law recognizes that a tax crime prevention program must include at least the following elements: (i) an internal tax crime prevention policy; (ii) a criminal risk assessment that includes the identification of internal controls to reduce the risk to which the company is exposed; and (iii) the designation of a criminal compliance officer or an internal committee in charge of the implementation of the tax crime prevention program.
Please note that this only applies to criminal investigations related to tax crimes committed after 17 June 2016.
There is no a self-disclosure program per se in Mexico. However, taxpayers are statutorily entitled to self-correct their tax situation.
No first-time offender rule exists in Mexico. See comments in Question 5.
No impact; prosecuting a tax offence does not suspend the statute of limitation of five years for tax purposes.
Yes, it is possible that Tax Authorities assess and collect underpaid taxes even if the case becomes criminal. As mentioned, the criminal proceeding is an independent process. See comments in Question 5 for further details.
Yes, it is possible to reach a tax/criminal settlement, if the tax differences are paid, as adjusted for inflation, plus surcharges and penalties. It is common that the Tax Authorities avoid the filing of a criminal complaint when the tax differences are paid.
Both individuals/directors and companies. Please note that companies could be criminal liable in Mexico.
Yes, foreign employees / directors could be prosecuted in case they perform the criminal action listed in the Law. However, it is common that the members of the board of directors are the one prosecuted.
Companies are jointly and severally liable of the tax differences, provided that a criminal liability is assessed to the legal entity.
Yes, we have seen an important increase in criminal prosecution for tax offenses over the last years for tax fraud and money laundry. Tax Authorities are using the excuse of criminal actions as a means to exert pressure on taxpayers with collection purposes. This strategy has been successful for the authorities to increase considerably the collection of taxes.