ARTICLE 197: OBLIGATION OF TAX ADVISORS TO REVEAL REPORTABLE SCHEMES

Tax advisors are obliged to reveal the generalized and personalized reportable schemes referred to in this Chapter to the Service Tax Administration (Servicio de Administración Tributaria).

Tax advisor means any individual or legal entity who, in the ordinary course of their activity, performs tax advisory activities, and is responsible or is involved in the design, commercialization, organization, implementation, or administration of all a reportable scheme or who makes available the whole reportable scheme for its implementation by a third party.

The tax advisors obligated under this Chapter are those that are considered residents in Mexico or residents abroad who have a permanent establishment in the national territory in accordance with the Law on Income Tax (Ley del Impuesto sobre la Renta), provided that the activities attributable to said permanent establishment are those made by a tax advisor. When a tax advisor resident abroad has a permanent establishment or a related party in Mexico, it is presumed, unless proven otherwise, that the tax advice was provided by the latter. This presumption will also be applicable when a third party that is a resident in Mexico or a permanent establishment of a resident abroad under the terms of the Law on Income Tax (Ley del Impuesto sobre la Renta), performs tax consulting activities under the same brand or trade name as the tax advisor resident abroad. To dispute this presumption, it will not be sufficient to present a contract that states that the tax advice service was provided directly by said resident abroad. In this case, the permanent establishment, the related party or the third party will have the obligation to reveal the reportable scheme.

There is an obligation to reveal a reportable scheme in accordance with this article, regardless of the taxpayer's tax residence, provided it obtains a tax benefit in Mexico.

If several tax advisors are obliged to reveal the same reportable scheme, it will be considered that they have complied with the obligation indicated in this article, if one of them reveals said scheme in the name and on behalf of all of them. When a tax advisor, who is an individual, provides tax advice services through a legal entity, it will not be obliged to reveal in accordance with the provisions of this Chapter, provided that said legal entities to reveal the reportable scheme for being considered a tax advisor.

In the cases provided for in the preceding paragraph, the tax advisor who reveals said scheme must comply with the provisions of article 200 (CFF: Art. 200) of this Code. Additionally, said advisor must issue a certificate, in the terms of the general provisions issued by the Service Tax Administration (Servicio de Administración Tributaria), to the other tax advisors who are released from the obligation contained in this article, indicating that they have revealed the scheme reportable, to which a copy of the informative declaration through which the reportable scheme was revealed, as well as a copy of the acknowledgment of receipt of said declaration and the certificate where the identification number of the scheme is assigned, must be attached. If any of the tax advisors does not receive the aforementioned evidence or does not agree with the content of the informative declaration presented, they will continue to be required to reveal the reportable scheme in the terms provided in the third paragraph of article 201 (CFF: Art. 201) of this Code. In case they do not agree with the content of the informative declaration presented or wish to provide more information, shall submit a complementary informative declaration that will only have effects for the tax advisor that has submitted it, which must be submitted within 20 days following the date on which said certificate was received.

In the event that a scheme generates tax benefits in Mexico but is not reportable in accordance with article 199 (CFF: Art. 199) of this Code or there is a legal impediment to its revelation by the tax advisor, the latter must issue a certificate, in the terms of the general provisions issued by the Service Tax Administration (Servicio de Administración Tributaria), to the taxpayer in which it justifies and motivate the reasons why it is considered non-reportable or there is an impediment to reveal, which must be delivered within five days following the day the reportable scheme is made available to the taxpayer or the first fact or legal act is carried out that is part of the scheme, whichever comes first. The revelation of reportable schemes in accordance with this Chapter shall not constitute a violation of the obligation to keep a known secret under the protection of any profession.

The tax advisors must submit an informative declaration, in the terms of the general provisions issued for this purpose by the Service Tax Administration (Servicio de Administración Tributaria), in the month of February of each year, containing a list with the names, denominations, or social reasons of the taxpayers, as well as their code in the federal taxpayer registration, to which they provided tax advice regarding reportable schemes. In the event that the taxpayer is a resident abroad without a permanent establishment in the country or, if it has one, the scheme is not related to said establishment, the country or jurisdiction of residence of said taxpayer must be included, as well as his / her tax identification number, fiscal address, or any data for its location.

The Service Tax Administration (Servicio de Administración Tributaria) will issue the general rules for the application of this article.