The tax authority no longer reviews only whether an invoice exists.
Today, the real focus is on proving that transactions actually took place.
Following the 2014 tax reform and the incorporation of Article 69-B into the Código Fiscal de la Federación, the authority gained the power to presume the nonexistence of transactions when taxpayers fail to demonstrate that they had the assets, personnel, or infrastructure necessary to carry them out.
In this context, the “substance” of transactions has become one of the most important elements in any tax audit or review.
Although the term is not expressly defined in the Código Fiscal de la Federación, legal doctrine and criteria issued by the Suprema Corte de Justicia de la Nación define it as the existence of reliable evidence demonstrating that a transaction actually occurred.
In practical terms:
Having a valid CFDI is not enough.
Taxpayers must be able to demonstrate that the service was actually provided or that the goods were genuinely delivered.
When a taxpayer becomes subject to verification powers —such as field audits, desk reviews, tax refund reviews, or information cross-checks— the authority does not review only the formal validity of documentation.
It also evaluates:
If the actual execution of the transactions cannot be proven, the authority may determine that the supporting documents lack evidentiary value and may assess tax differences, reassessments, or contingencies.
The substance of transactions is demonstrated through strong evidence in three fundamental areas:
Demonstrating that the company has:
Maintaining evidence that proves the transaction was actually performed:
Ensuring documentary consistency through:
Today, accounting serves as the language through which the substance of transactions is explained to the tax authority.
To achieve this, it must meet three essential elements:
Simply presenting invoices or accounting records no longer guarantees deductions or tax credits if the authenticity of the transaction is challenged.
Even when a CFDI complies with formal requirements, this alone does not guarantee tax effects if the transaction is questioned regarding its substance.
In these cases, the taxpayer bears the burden of rebutting any presumption that the transaction did not exist.
The substance of tax transactions has become the essential evidentiary standard within today’s tax system.
The difference between a valid transaction and a significant tax contingency no longer lies in paperwork, but in the ability to support the transaction with real, consistent, and traceable evidence.
Companies that understand this do not operate merely to justify.
They operate to support.
