Lectures > Joint and Several Liability in Mexico: Tax Risks for Partners and Directors.

Today, tax risk no longer stays within the company.

In the current tax environment, compliance with tax obligations may extend beyond the taxpayer itself to third parties directly involved in its operations.

Joint and several liability, provided in Article 26 of the Código Fiscal de la Federación, has become a key enforcement tool for the SAT to ensure the collection of unpaid taxes, particularly in cases where companies are non-compliant or lack sufficient assets.

What does joint and several liability imply?

Joint and several liability allows the tax authority to require payment of unpaid taxes from individuals other than the primary taxpayer, provided that the legal conditions established in the law are met.

In practice, this means:

• Tax obligations may extend beyond the legal entity of the company.
• Tax risk may directly impact personal assets.
• Administrative management carries a higher level of responsibility.

Partners and shareholders: scope of liability

Article 26 establishes that partners or shareholders may be jointly liable when the company fails to comply with its tax obligations.

Key considerations:

• Liability is generally limited to the amount of their capital contribution.
• It is determined based on their equity participation.
• It applies to taxes generated during the period in which they held such participation.

It is important to note that this liability is not automatic. The authority must demonstrate that the legal conditions are met.

Directors and legal representatives: a higher level of risk

Unlike partners, directors and legal representatives may face broader liability due to their role in management and control.

The most relevant scenarios include:

• Failure to comply with tax obligations.
• Failure to file tax returns.
• Improper maintenance of accounting records.
• Failure to register with the RFC.
• Change of tax domicile without notice.
• Acts or omissions leading to non-compliance.

This type of liability is often a key focus in tax audits, as it is directly linked to operational decision-making.

When does this risk arise in practice?

In practice, the tax authority tends to exercise these powers in situations such as:

• Companies with significant tax liabilities.
• Entities lacking the financial capacity to cover tax debts.
• Repeated non-compliance with formal obligations.
• Weak internal tax controls.

In these cases, joint and several liability becomes a mechanism to secure tax collection.

Key recommendations to mitigate risks

Given its scope, a preventive approach is essential:

• Actively monitor the company’s tax compliance.
• Maintain accounting records updated and aligned with the CFF.
• Ensure timely filing of tax returns and proper payment of taxes.
• Properly document corporate decisions and relevant transactions.
• Establish formal processes for changes in management or ownership structure.
• Conduct periodic tax reviews or audits.

Implementing these measures not only strengthens compliance, but also helps protect the personal assets of those involved in the company’s operation and management.

If you would like to assess your exposure or strengthen your internal controls, Guerrero & Santana is available to assist.