Experts from Hogan Lovells Mexico Explain the Impact on Small and Medium Enterprises (SMEs)
Starting in 2026, new tax authority powers aimed at combating tax evasion will increase operational costs for Mexican small and medium-sized enterprises (SMEs), potentially discouraging formality, according to Arturo Tiburcio, a partner at Hogan Lovells Mexico.
Who is Arturo Tiburcio?
Arturo Tiburcio is a prominent lawyer and partner at Hogan Lovells Mexico, a leading international law firm with offices in major cities worldwide. His expertise lies in tax, corporate, and regulatory matters. Tiburcio’s insights are highly regarded in Mexico’s legal and business communities.
Why are these changes relevant?
These changes are significant because they affect not only large corporations but also SMEs. The new tax regulations aim to ensure that issued invoices accurately reflect genuine business operations. Failure to comply with these requirements could result in penalties, including the revocation of digital tax seals and potential criminal charges.
What are the new tax authority powers?
- Invoice Verification: Starting in 2026, all issued invoices must genuinely represent existing business operations. Otherwise, they will be considered “false invoices.”
- Audit and Penalties: If tax authorities suspect false invoices, they can cancel digital tax seals and conduct express on-site audits using video cameras or audio recorders to document evidence.
- Corrective Measures: Contributors who have benefited from false invoices (e.g., tax deductions or VAT accreditation) must correct their situation within 30 days by filing complementary declarations.
- Criminal Charges: Deliberate involvement in the creation, receipt, sale, or purchase of false invoices may lead to preventive detention and up to nine years in prison.
Impact on SMEs
Tiburcio explained that SMEs typically lack the sophistication and controls found in large multinational corporations. As a result, they may need to hire additional personnel to meet the new compliance requirements, increasing their costs and potentially discouraging formality.
Recommendations for SMEs
- Consistency: Ensure consistency in income, expenses, account statements, and tax declarations.
- Vendor Due Diligence: Identify reliable vendors with a strong tax compliance record. If an SME receives a invoice from a “facturera” (a company known for issuing false invoices), the tax authority may penalize the SME if it does not correct its situation within 30 days.
- Regular Compliance Checks: Request regular tax compliance certifications from vendors to protect against potential penalties.
Key Questions and Answers
- Q: What are the new tax authority powers? A: These powers include stricter invoice verification, express audits, corrective measures for benefited parties, and criminal charges for deliberate involvement in false invoice activities.
- Q: How will these changes affect SMEs? A: SMEs may face increased costs due to new compliance requirements, potentially discouraging formality.
- Q: What should SMEs do to adapt? A: Focus on consistency in financial records, identify reliable vendors, and regularly check tax compliance.
