CORPORATE / by Federico De Palacio Ruiz Cabañas
Impact on proceedings before the Tax Administration Service (SAT)
On May 13, 2025, a miscellaneous tax amendment for the 2025 fiscal year was enacted, introducing significant changes to the requirements for obtaining a Federal Taxpayer Registry (RFC) number. Among the most significant changes is the elimination of service contracts as valid proof of address before the Tax Administration Service (SAT). Far from simplifying the process, this change has considerably complicated the procedures necessary to ensure tax compliance.
Background and context
Service contracts, which included the use of a space to carry out business activities, had been a valid and widely used option for individuals and legal entities to prove their tax address to the SAT. This allowed for greater flexibility in meeting the requirements to obtain an RFC, simplifying the process especially for those who did not have a dedicated physical space such as an office or who were unable to provide utility bills (internet, electricity, water, etc.) or property deeds.
The proposed 2025 miscellaneous tax reform aims to strengthen tax enforcement and ensure greater certainty regarding taxpayers’ locations. However, the elimination of these contracts as proof of residence has created a serious problem for various economic sectors due to the complications involved in complying with the new requirements.
Key implications
- **Greater difficulty in obtaining an RFC:** The elimination of service contracts as proof of address means that taxpayers will have to rely on other documents, such as utility bills (electricity, water, or phone), property deeds, or lease agreements. This excludes many people who do not have access to these documents, especially those in the informal sector or those renting without a formal lease agreement.
- **Impact on new businesses:** For emerging companies, startups, and entrepreneurs, this change can pose a significant obstacle during the initial stages of formalization, affecting their ability to operate legally or access financial services.
- **Delays in commencing operations:** The alternatives provided by the SAT for verifying a business address could involve more cumbersome procedures, increasing the time and costs associated with tax compliance.
Outlook for the Future
The amendment to the 2025 miscellaneous tax provisions highlights the need to strike a balance between strengthening tax enforcement and ensuring accessibility for taxpayers. It is essential that the SAT consider alternative mechanisms that allow individuals and businesses to prove their address in a simple and legal manner, without hindering compliance with tax obligations.
In addition, additional regulations are expected to be issued in the near future that will provide taxpayers with options for verifying their tax domicile. In the meantime, newly formed companies will need to find solutions to ensure they can comply with the new provisions without compromising their operations.
In conclusion, the amendment to the 2025 Miscellaneous Tax Provisions published on May 13, 2025, poses a challenge for both taxpayers and the SAT. The elimination of service contracts as proof of residence underscores the importance of a balanced tax system that facilitates compliance and promotes economic inclusion. Tax authorities will need to work closely with the affected sectors to mitigate negative impacts and ensure that the transition is as smooth as possible.
