VAT Certification: Alternatives to providing the tax identification number of foreign residents.

By – Lic. Leobardo Tenorio. 

As part of the Registration for the VAT Certification for Companies or the renewal of same, the Tax Administration Service (“SAT”) is requiring from the Federal Taxpayers registration numbers of the partners, managers, and members of the board of directors or managers.

For foreign tax residents, initially, the SAT accepted a “certification” in which the company, through its legal representative, stated that a certain member, sole administrator, general manager or member of the board of directors or manager, was a foreign tax resident, and this satisfied the requirements.

Recently, the SAT has requested applicants to provide the tax identification number of said individuals (the social security number for United States residents). In some events, it has requested a copy of the annual tax returns, or in the case of the United States, the IRS format 6166 issued by the Internal Revenue Service that is a certification of tax residence in the United States.

However, in most cases, the residents abroad are not willing to provide their tax identification numbers, nor their annual tax returns which puts the certification application at risk.

What can the company do in the event that residents abroad are not willing to provide their tax identification numbers or their annual returns? 

There are some options, for example:

  • Appointing a Mexican resident as sole administrator or sole manager with very limited authority. The Mexican resident may be:
    • An individual, or;
    • A Mexican entity (an affiliate or a third party control entity).
  • Appoint Mexican residents as members of the board of directors or managers with very limited authority.
  • Appoint a U.S. manager or entity that is organized for such purposes as sole administrator. The tax identification number of such entity would be provided to the SAT.

Please note that the above are only examples and each situation must be analyzed on a case-by-case basis.

In order to carry out any changes, it is necessary for the partners/shareholders to take certain corporate resolutions.

We would be pleased to answer questions that you may have relating to this matter or discussing the options that are available for your company.

Leobardo Tenorio-Malof   |
Héctor Torres-López   |
Alejandro Pedrín   |
Mauricio Tortolero   |
Daniel Gancz-Kahan   |


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