There is in Mexico as in other countries, a long history on the permanent conflicts between the taxpayer and the fiscal authority. Conflicts which in general even today are long and therefore costly for all the involved.
The authority in its role of implacable collector, focused almost by policy in determining always the amount in charge of the taxpayer for all the revision made and, on its side, the taxpayer, in its eternal victim role pleading everything absolutely, up to the unimaginable in order to come out sound from the battle
This legal struggle usually revolves around two aspects, the aspects of form and the substantive aspects in terms of the action of the authority at the time of exercising its verification powers against the person, physical or legal, which is being audited.
Without attempting to enter into legal or accounting technicalities in tax matters, it could be summarized that the form aspects are aimed at establishing whether the authority at the time of the review or audit that has made the taxpayer during a certain period, adheres to due process and respected at all times the fundamental aspects that allow the reviewer to know that the authority acted in accordance with the law during the review process.
On the other hand, the background aspects refer to whether the authority at the time of validating the correct payment of contributions made by the taxpayer, followed the Law provisions to determine a possible omission in the payment.
In other words, the aspects of form refer to whether the authority followed the due process in the review carried out and the background to whether the authority determined, in accordance with the Law, the omissions found by the taxpayer.
Imagine a trial before the SAT that starts with a Revocation Appeal presented before the legal body of the same Tax Administration Service (www.sat.gob.mx) , follows later with a Claim of Nullity filed before an administrative court such as the Federal Court of Fiscal and Administrative Justice (www.tfjfa.gob.mx) and can reach the Amparo Trial which is already filed before a Judicial Court.
What is read in five lines in the preceding paragraph corresponds to a process that I have seen from experience that may take up to more than two years.
Imagine now the wear and tear of the parties involved in time and costs as well as having to constitute, on the taxpayer's part, a guarantee for the tax interest which, in general, they are requesting in 2 to 1, that is, twice as much as allegedly owed to the treasury.
This process is completely out of proportion especially when it comes to very small amounts where the collected is exceeded several times by the cost involved in such collection or, when at the end of the day rulings are obtained in favor of the authority and to make effective the guarantee of the fiscal interest leaving in many occasions the plaintiff party on the verge of bankruptcy.
The main problem is not for the large company that has the financial capacity to hire law firms defending their interests but for the rest of the companies, that is, for small and medium-sized Mexican companies that, in accordance with a Forbes article, published as of January 31, 2018 (https://www.forbes.com.mx/pymes-mexicanas-un-panorama-para-2018/)
“there are 4.2 millions of economic units in México. From that universe, 99.8% are considered Small and Medium Companies (SMC), which supply 42% of the Gross Domestic Product (PIB) and generate 78% of employment in the country.”
Thus, it is those companies, SMEs, which are left alone against acts of authority, whether founded or not, legal or not and that lack the economic capacity to defend their interests in an appropriate manner.
Faced with this problem and after several attempts, on September 4, 2006 the Attorney General for the Defense of the Taxpayer (PRODECON) arises through the publication of the decree that gives rise to the Official Gazette of the Federation.
In accordance with the publication on the page of this Fiscal Ombudsman, www.prodecon.gob.mx , The “Prodecon’s purpose is to protect the rights and guarantees of taxpayers through guidance, advice, legal representation and defense, conclusive agreements, complaints and issuance of recommendations on tax matters, as well as other important powers such as: identify and investigate the system endemic problems, propose corrective measures, interpret tax and customs regulations at the request of the SAT and propose modifications to its internal regulations, promote the tax culture, go before the Finance and Public Credit Commission of the Chamber of Deputies with proposals of modification to tax regulations; as well as holding periodic meetings with the federal fiscal authorities to which business and professional associations, syndics and organized taxpayers may turn.”
This is how every time the PRODECÓN through several efforts has taken on greater strength and does come to represent an exit that supports Mexican SMEs in their tax issues, either as a defender of the companies’ rights or as an intermediary in order to reach agreements and settle differences between authorities and individuals, thus addressing the problems discussed above in this article of long and costly litigation for both parties as well as tax assistance to the Mexican company whose resources are quite limited.
Being honest, personally I was very skeptical of both the independence and the commitment the PRODECON could have when litigating against an administrative authority and not only that, against the collecting authority of the Federal Government monies, nevertheless in more than one matter that really intervenes and gets to obtain benefits in favor of the companies without any charge for them and in full support for their interests.
Therefore, I personally do recommend that the Mexican company having some difference with the authority either in determination and payment of taxes or in application of the legislation at the time of determining their federal contributions, to consider going to the PRODECON of your locality in order to exhaust that instance to obtain a real and studied support for your problem in particular.