As a result of the tax reform in force as of January 1st, 2021, article 30 of the Federal Fiscal Code was amended to require taxpayers to permanently keep as part of their accounting records certain documentation and information in addition to that already required, particularly that related to certain corporate transactions, including capital increases and reductions, mergers or spin-offs of companies and dividends or profits distributions.
Regarding increases of capital, in addition to the general shareholders’ meeting minutes, the taxpayer shall keep the account statements issued by the financial institutions or the relevant appraisals, in cases where the increase of capital was made in kind or as a result of a surplus stemming from a revaluation of fixed assets.
In cases of increases of capital from capitalization of reserves or dividends, it shall be kept the shareholders’ meeting minutes through which the capitalization was approved, as well as the relevant accounting records. Regarding increases from debt capitalizations, it shall be kept the shareholders’ meeting minutes through which the capitalization was approved, as well as the document certifying the existence of the liability in the accounting and the value thereof.
In connection with minutes concerning reduction of capital through reimbursements to shareholders, it shall be kept the account statements issued by financial institutions, proving such situation. In cases of reduction of capital due to a release granted to a shareholder, it shall be kept the minutes concerning the capital subscription, release, and cancellation of shares.
In cases of mergers or spin-offs of companies, in addition to the meeting minutes stating the transaction, it shall be kept the financial position statement and the movements of the accounting capital, as well as the working papers regarding the determination of the net tax profits account (CUFIN per its Spanish acronym) and the capital contributions account (CUCA per its Spanish acronym) for the year prior and following the merger or the spin-off.
In cases of distribution of dividends or profits, it shall be kept the account statements issued by financial institutions proving the payment.
Also, in addition to the pre-existing obligations regarding net operating losses and loans, taxpayers shall maintain as part of the accounting records documentation and information supporting the original balance and the movements in the net tax profits account (CUFIN), the capital contributions account (CUCA) or any other tax or financial account involved in the distribution of dividends or profits, reduction of capital and reimbursement or remittance of capital.
Failure to comply with these obligations may result in fines that could be imposed by the tax authorities. Likewise, tax deficiencies could arise if the taxpayer fails to provide this information upon request from the tax authorities.
The tax and corporate practice groups of the Firm could assist you on the compliance of these new obligations and to answer any questions you may have in this regard.