On December 31st, 2024, the Federal Government published in the Official Federal Gazette a decree amending Article 19 of the Mexican Constitution on mandatory remand in custody during a criminal trial, after its approval by the Federal Congress and by more than half of the State Legislatures.

This decree establishes “activities related with fake tax invoices” as a crime included in Article 19 of the Constitution that warrants mandatory remand in custody during a criminal trial.

As a result of this amendment, Federal and State Criminal Courts are constitutionally required to order the remand in custody of anyone accused by the Public Prosecutor’s Office of a crime related to fake tax invoices, which would last for the duration of the criminal trial.

Considering the seriousness of the consequences that would result from the initiation of a criminal proceeding for the commission of these activities, it is important to analyze which conducts could fall within the description of “activities related to fake tax invoices” referred to in the amendment to the Constitution, as well as the requirements that should be met prior to the initiation of a criminal investigation for the commission of these acts.

Crimes related to fake tax invoices

While tax legislation does not provide a definition of “fake tax invoices”, Article 113-Bis of the Federal Fiscal Code (“FFC”) establishes the crimes related to “tax invoices that support non-existent or false transactions or sham legal acts”.

Specifically, Article 113-Bis of the FFC punishes the commission of the following crimes related to this type of tax invoices: (i) their issuance or sale, (ii) their purchase or acquisition, and (iii) allowing or publishing, through any means, advertisements for their acquisition or sale; that is, whoever knowingly advertises the realization of the two previous assumptions. In all these cases, Article 113-Bis establishes a prison sentence ranging from two to nine years.

It should be noted that the scope of these offenses is limited to the issuance of tax invoices that cover this type of non-existent or sham transactions. Therefore, any error or omission contained in any other type of tax documents, such as tax returns or information forms, among others, should not fall under the scope of article 113-Bis of the FFC.

Please note that the applicability of the mandatory remand in custody is limited to the activities related to false tax invoices mentioned above, without extending it to other types of tax offenses, even though these could also result in an illegal failure to pay any taxes.

Conditions of applicability

The Public Prosecutor’s Office may only petition for commitment to trial before a Criminal Court for the commission of the crimes provided in article 113-Bis of the FFC, to the extent the Ministry of Finance (“SHCP”) previously files a formal complaint.

Although in the case of various tax crimes, the SHCP is legally prevented from filing a formal complaint in cases where a person self-corrects its tax situation and voluntarily pays any taxes due before tax authorities discover any omission, Article 113-Bis of the FFC does not establish this exception for crimes related to tax invoices that cover non-existent or false transactions or sham legal acts.

Therefore, even if a person who has committed any of the crimes set forth in Article 113-Bis of the FFC decides to correct his tax situation and pay any omitted taxes resulting from having used a tax invoice that covered a sham or non-existent transaction, the SHCP could still file a formal complaint in order to initiate a criminal proceeding against such person.

However, once a criminal proceeding has been initiated, the SHCP may request its dismissal if the party accused of having committed any of the offenses related to false tax invoices pays any taxes due. However, it is important to note that this is a discretionary power for the SHCP, so it is possible that the SHCP could determine not to exercise this prerogative and continue with the criminal trial, even if the individual has corrected any omission in the payment of taxes.

Based on the foregoing, and in view of the large volume of tax invoices that taxpayers in Mexico issue or receive as a result of their ordinary commercial transactions, it is important that they carry out periodic reviews of their invoiced transactions, and that they prepare a substantial defense file with all the documentary and material support of the goods or services covered by their invoices.

Otherwise, and in the absence of such supporting documentation, there is a risk that the tax authorities may conclude that a taxpayer issued or received fake tax invoices that do not support real transactions, which, due to the amendment to Article 19 of the Mexican Constitution, could result in a criminal proceeding in which the people involved in the commission of such actions are placed in custody for the duration of a criminal trial.

For additional information, please contact Óscar López Velarde [email protected], Santiago Llano [email protected], Juan José Paullada [email protected] or Alejandro Santoyo [email protected], leaders of Ritch Mueller's Tax practice.

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