More than one year ago, a Decree was published in the Federal Official Gazette, amending, adding, and repealing various legal provisions set forth in the Federal Fiscal Code ("Tax Reform for FY 2014"), which provided in Articles 17-K, 18, 28, Sections III and IV, the obligation of taxpayers to have a tax mailbox for their communication with the tax authorities, as well as the obligation of keeping their accounting records in electronic means and filing such electronic records through the website of the Tax Administration Service ("SAT") on a monthly basis. These obligations were further detailed for their compliance in various rules included in the Administrative Guidelines issued by the SAT for FY's 2014 and 2015.
As a consequence of such new obligations, an important number of companies filed an amparo action alleging that the legal provisions that include such obligations are unconstitutional. All these cases were concentrated for their analysis and resolution into two Auxiliary District Courts located in Mexico City as provided by the Plenary Federal Judicature Council.
Recently, the Second Auxiliary Court has issued a resolution that includes a complete analysis on the unconstitutionality of the obligation to provide electronic accounting records, stating as follows:
The Court decided to grant the amparo (constitutional action) against the legal provisions that obligates taxpayers to provide their accounting information through different electronic means.
The Court concluded that Rule 188.8.131.52. of the Administrative Guideline for FY 2015 and Appendix 24 transgress the principles of legislative reasonableness and legislative proportionality, and, therefore, the principle of legality set forth in Article 16 of the Mexican Constitution, due to the fact that these rules , violates taxpayers’ right to keep their accounting records using the tools, resources, recording and processing systems as better adapt to their business.
In addition, the Court stated that Articles 28, Section IV, 42, Section IX, and 53-B of the Federal Fiscal Code violates the principle of legal certainty due to the fact that such provisions do not contemplate the need to issue a written order to conduct an audit or review through electronic means.
The legal effect of the amparo ruling was issued to exempt taxpayer from the obligation of using the tax mailbox, as well as from submitting the accounting records periodically through the website of the SAT, which will also avoid any electronic audits.
Notwithstanding the foregoing, it is important to mention that the obligation of keeping electronic accounting records was not declared unconstitutional, so under these decision taxpayers still have the obligation to keep their accounting records in this manner.
On the other hand, the First Auxiliary Court issued an unfavorable resolution deeming that the legal provisions that (i) require taxpayers to have a tax mailbox and to keep their accounting records electronically; and (ii) to submit their accounting records through the website of the SAT on a monthly basis, are not unconstitutional.
It is important to mention that from the analysis of such ruling it may be noted that the defense arguments of this amparo claim were limited and unclear.
In this regard, we shall wait to know the sense of other resolutions of this Court in order to determine if this is their position or if we are dealing with a unique or particular case.
Finally, it is important to mention that the resolutions described above, are isolated precedents (not binding) for third parties, and also it is likely that such rulings will not be definitive since there are other instances available to claim their legality.