Tax requirements to be met when making payments to third parties

These kinds of operations are frequent in newly created companies that at the time of their creation have yet to open bank accounts as a result of the procedure. For that reason, these operations are carried out with their related parties or companies resident in Mexico who make payments on their behalf, to prevent the operation of the new companies to be restricted. On the other hand, in some cases, exercising their powers, authorities such as IMSS, INFONAVIT or the SAT resort to freezing bank accounts as a means to secure tax debts, which is why payments on behalf of third parties are also used as an alternative.

The Tax Authority has regulated this kind of operation through miscellaneous rules and other legal systems, so it is important to know the tax effects that must be considered in the event of choosing to make this type of payment, so that all the requirements are met and so that, in the event of an audit by the Tax Authority, it will not be presumed that these funds belong to the person who makes the payment on behalf of third parties.

General requirements

Based on the tax provisions in force, taxpayers can make disbursements through a third party as long as they comply with the following requirements:

• That checks be issued or transfers be made from accounts opened in credit institutions or brokerage houses in the name of the taxpayer who intends to make the deduction.
• Any payments made by the third party on behalf of the taxpayer who intends to make the deduction must have a CFDI in the taxpayer's name.

For its part, the Miscellaneous Tax Resolution in force for 2022 establishes two options for making this type of payment:

1. That the third parties make the disbursements and the amounts are subsequently reimbursed to them:
   • The third party must request the CFDI with the RFC of the taxpayer on behalf of whom the disbursement is being made.
   • Any disbursements made on behalf of taxpayers must be reimbursed by check to the third party or by wire transfer to their bank accounts or brokerage houses, without changing the amounts recorded in the CFDI issued by the suppliers, that is, for the total value including VAT that, where appropriate, would have been transferred.
2. The taxpayer, before the disbursements are made, must deliver with the money to cover them to the third party

• The taxpayer must deliver the money to the third party by check or by wire transfer to their bank accounts or brokerage houses.
• The third party must identify any amounts of money that are provided to them to make disbursements on behalf of the taxpayer in an independent account exclusively dedicated to this purpose.
• The third party must request the CFDI with the RFC of the taxpayer on behalf of whom it is making the disbursement.
• If there is any surplus of funds, the third party must reimburse it to the taxpayer, in the same way as the money was provided.
• Any amounts of money provided to the third party shall be used to make payments on behalf of the taxpayer or refunded to the taxpayer, no later than 31 December of the financial year in which the money was provided, except for the amounts provided in December which may be refunded no later than 31 March of the following financial year.

Regarding VAT, the regulation establishes that the right to declare it belongs to the person who makes the payment on behalf of third parties, and so the third party who makes the payments on behalf of the taxpayer will not be able to declare any amount of VAT transferred by the suppliers of goods and by service providers. 

CFDI requirements for third party payments

It is important to note that CFDIs must comply with the tax requirements established in the tax provision, and the vouchers must be issued in the name of the taxpayer who intends to make the deduction.

In addition, the CFDIs that cover disbursements made through a third party, must be accompanied by the complement called "Identification of resource and expense report on behalf of third parties (Identificación de recurso y minuta de gasto por cuenta de terceros)"  under version 4.0 of the CFDI, identifying the amounts of money received, those disbursed on behalf of the taxpayer, the vouchers that support said disbursements and the remainder effectively reimbursed to the taxpayer. It should be noted that this complement is not yet active, so if any transactions of this kind are carried out, it will be necessary to review them particularly in order to analyze how to support the operation until this complement is being used and published in order to comply with this requirement.

If taxpayers do not follow the guidelines established above, any amounts that are collected to make expenses on behalf of third parties could be considered as cumulative income.

In this sense, to avoid the funds delivered to the bank accounts of the third party from being considered as income, they must be supported by the CFDI in the name of the taxpayer to justify the increase in the bank accounts.

Likewise, it is important that the accounting treatment of the third party is carried out in balance sheet accounts without affecting the income statements, so that the Tax Authority cannot assume at any time that the deduction is being recognized. In addition, the VAT of the expenses and disbursements that it pays on behalf of the taxpayer must not be recorded in its accounting, since they do not correspond to activities corresponding of the third party, consequently, it will not have the right to declare the VAT for tax purposes, nor will it have the obligation to inform the tax authorities.

In this sense, it is important to carry out the corresponding analyses to comply with the established requirements, in order to prevent any fiscal contingency. At Mazars we are ready to assist you with any questions or concerns you may have.