On November 13, 2024, the Chamber of Deputies of the Congress of the Union approved the proposed constitutional reform to the second paragraph of Article 19 of the Political Constitution of the United Mexican States (CPEUM, as per its acronym in Spanish). Although it excludes the crimes of drug dealing and tax fraud that were originally contemplated, it expands the catalog of crimes that merit informal preventive detention, including “… any activity related to false tax receipts…”.
The wording of the corresponding paragraph is transcribed below, highlighting the additions approved by the Chamber of Deputies:
“Article 19. …
The Public Prosecutor’s Office may only request pretrial detention from the judge when other precautionary measures are not sufficient to guarantee the appearance of the accused at the trial, the development of the investigation, the protection of the victim, witnesses and the community, as well as when the accused is being prosecuted or has previously been sentenced for the commission of an intentional crime. The judge shall informally order pretrial detention, in cases of sexual abuse or violence against minors, organized crime, extortion, crimes provided for in the applicable laws committed for the illegal introduction and diversion, production, preparation, disposal, acquisition, import, export, transportation, storage and distribution of chemical precursors and essential chemical substances, synthetic drugs, fentanyl and derivatives, intentional homicide, femicide, rape, kidnapping, human trafficking, robbery of a house, use of social programs for electoral purposes, corruption in the case of the crimes of illicit enrichment and abusive exercise of functions, robbery of cargo transport in any of its modalities, crimes related to hydrocarbons, petroleum products or petrochemicals, crimes related to the forced disappearance of persons and disappearances committed by private individuals, crimes committed with violent means such as weapons and explosives, crimes related to firearms and explosives for the exclusive use of the Army, Navy and Air Force, as well as serious crimes determined by law against the security of the nation, health, the free development of personality, smuggling and any activity related to false tax receipts, in the terms established by law. For the interpretation and application of the law provided in this paragraph, the literal wording must be followed by state organs, and any analogous or extensive interpretation that seeks to disapply, suspend, modify or render null and void their terms or their validity, either totally or partially, shall be prohibited.
[…]”
(Emphasis and underlining added)
As a result of the pending reform, taxpayers may unknowingly engage in the commission of infractions or crimes, depending on the seriousness of the conduct or omission resulting from non-compliance with their tax obligations. Among the crimes provided for in the Federal Tax Code (CFF, as per its acronym in Spanish), Article 113-Bis, the first paragraph should be noted, which states that anyone who “issues, sells, buys or acquires tax receipts that cover non-existent, false operations or simulated legal transactions” commits a tax crime, as reproduced below:
“Article 113 bis.- A penalty of two to nine years imprisonment shall be imposed on anyone who, by himself or through an intermediary, issues, disposes, buys or acquires tax receipts that cover non-existent, false or simulated legal transactions.
[…]”
(Emphasis added)
This is directly related to the proposed constitutional reform to the second paragraph of Article 19 of the CPEUM. Therefore, if the proposal is approved, the judge presiding over these matters will automatically grant the precautionary measure of Preventive Detention for any taxpayer who buys or sells false invoices, derived from the commission of a crime in tax matters.
In regular practice, we have identified taxpayers who carried out operations with a service provider, which, in addition to the development of their regular activities, was dedicated to selling invoices.
In those cases, post-reform, the Tax Administration Service (SAT) would determine, through an audit, that those transactions entered with “Companies that Invoice Simulated Operations (EFOS, as per its acronym in Spanish)”, more commonly known as invoice sellers or invoicers, were false, since the operation did not actually exist and/or sale or provision of a service was not made. In the end, many taxpayers will unknowingly be facing tax proceedings, and in some cases, criminal tax proceedings, to prove that their operations were legitimate.
Furthermore, under the proposed reform to Article 19 of the Constitution on Informal Preventive Detention, these taxpayers accused of acquiring invoices will have to face their criminal proceedings in prison.
Considering that Preventive Detention is just around the corner, and without prejudice to the pending approval by the Honorable Chamber of Senators, we recommend the review of the support operations carried out with suppliers and service providers, since being related to these suppliers can have severe consequences for your company.
Our team of tax lawyers is available to offer the necessary advice and help companies adapt to recent proposals and legislative changes, do not hesitate to contact us.
If you have any questions regarding the contents of this Alert, please contact:
Alberto Díaz de León
Counsel
1 Based on data from the Housing Price Index of Sociedad Hipotecaria Federal and Banco de México.
