Substance in Foreign Trade Operations: A Key Requirement Under Article 59, Section IX of the Federal Fiscal Code.

Substance and Traceability: Key Pillars of Tax Compliance.

In Mexico’s current tax framework, the substance (materiality) of foreign trade operations has become a matter of increasing importance. Article 59, Section IX of the Federal Fiscal Code (CFF) empowers tax authorities to presume that goods declared as exported were in fact sold within Mexican territory, unless the taxpayer can present sufficient documentation proving otherwise.

This has become a critical issue for companies engaged in manufacturing, exports, maquila operations, and international trade services.

This provision allows tax authorities to make presumptions against the taxpayer unless they can provide evidence to the contrary. Specifically, companies must prove:

1. 1. 1. The material existence of the acquisition and/or production of the goods, including documentation related to raw materials and installed capacity used to manufacture or transform the exported items.
      2. The storage process or, alternatively, justification for the absence of warehousing.
      3. Transportation and delivery evidence, including the means of transport used, delivery terms, and identification of the foreign recipient.

Notably, even if the taxpayer holds the valid customs export declaration (pedimento), this does not, on its own, fulfill the requirement of materiality under this article.

To meet this requirement, companies should maintain and be able to produce the following documents as part of their tax and audit compliance:

• • • Supplier invoices related to the exported goods
    • Proof of payment (e.g., wire transfers or bank confirmations)
    • Customs export declaration (pedimento de exportación)
    • Bill of lading or carrier documentation (Carta Porte)
    • Packing lists and inventory entry/exit logs
    • Proof of receipt by the customer abroad or delivery acceptance documents

All documentation must be internally consistent and support the traceability and authenticity of the foreign trade operation.

Given the level of scrutiny and potential tax consequences, it is highly recommended that companies:

• • • Implement robust internal control systems for foreign trade documentation
    • Conduct regular internal audits to ensure proper filing and support documentation
    • Train personnel involved in logistics, compliance, and finance on the latest customs and tax requirements
    • Engage specialized tax and trade advisors to proactively assess legal exposure and prepare for possible audits

🔗 Original Spanish Article – ST. STRATEGO

The substance of foreign trade operations is a critical aspect for tax compliance in Mexico. Companies must be prepared to demonstrate the traceability, economic substance, and operational capacity behind their transactions in order to prove to tax authorities that such operations were carried out in reality.

Given the growing focus of tax authorities on the substance of foreign trade operations, it is essential for companies to adopt a preventive approach. Regular implementation of self-assessment processes enables the identification and correction of inconsistencies that may pose tax or customs-related risks and contingencies.

At ST STRATEGO, our Preventive Audit Service in Foreign Trade Matters is designed to provide an objective and specialized evaluation of operations, identify risk areas, and prevent penalties that could affect our clients’ compliance and operational integrity.

If you are looking to strengthen your company’s tax and customs compliance, contact us for expert advice aligned with current audit and regulatory expectations.

This document does not constitute a particular consultation, and therefore, ST Stratego, is not responsible for the interpretation or application given to it. The total or partial reproduction of this publication, by any means or procedure, is prohibited without the prior, express and written authorization of the author. Any form of unauthorized use will be prosecuted in accordance with the provisions of the Federal Copyright Law. We are at your service to answer your questions or comments, for more information on this subject and our services, please contact us at: info@stratego-st.com