Close
An analysis by Mijares, Angoitia, Cortés y Fuentes, Taxand Mexico
Mexico’s Federal Court of Administrative Justice recently published two key precedents clarifying the tax treatment of capital contributions and dividends, focusing on what constitutes valid payment under the Mexican Income Tax Law.
The Court ruled that capital contributions cannot be added to the Capital Contribution Account unless they are effectively paid, confirming that assigning collection rights does not qualify, as the obligation is not extinguished until payment is received. A second precedent clarified that dividends must be paid either through a non-negotiable check issued in favour of the shareholder or through a wire transfer to the shareholder’s bank account. While non-binding, both rulings signal stricter scrutiny and should be factored into transaction structuring.
Our Mexican member firm, Mijares, Angoitia, Cortés y Fuentes provides further details about the ruling, which you can read below:
RECENT TFJA CRITERIA REGARDING CAPITAL CONTRIBUTIONS AND DIVIDEND DISTRIBUTIONS
On May 28, 2026, two precedents issued by the Plenary of the Superior Chamber of the Federal Court of Administrative Justice (Tribunal Federal de Justicia Administrativa or “TFJA”) were published in the Court’s official journal. These precedents address the tax treatment of capital contributions and dividend distributions.
The first precedent, entitled “CAPITAL CONTRIBUTION ACCOUNT (CUCA). AN INCREASE THEREOF IS NOT PERMISSIBLE WHEN A CAPITAL CONTRIBUTION IS INTENDED TO BE PAID THROUGH THE ASSIGNMENT OR TRANSFER OF COLLECTION RIGHTS DERIVED FROM NEGOTIABLE INSTRUMENTS,” analyzes the scope of Article 78 of the Mexican Income Tax Law (“MITL”), pursuant to which capital contributions may only be added to the Capital Contribution Account (Cuenta de Capital de Aportación or “CUCA”) once such contributions have been effectively paid.
Through this precedent, the Court held that the assignment or transfer of collection rights derived from a promissory note does not, in itself, constitute a valid form of payment for purposes of complying with such a requirement. According to the Court, a promissory note merely represents an unconditional promise to pay, and its transfer does not result in the immediate extinguishment of the underlying obligation, which remains outstanding until the instrument is actually collected. Consequently, the Court concluded that a capital contribution intended to be paid through the assignment or transfer of rights derived from a promissory note cannot be deemed effectively paid for purposes of increasing the CUCA balance.
Additionally, the same decision gave rise to a second precedent entitled “DIVIDENDS. ARGUMENTS SEEKING TO DEMONSTRATE PAYMENT THROUGH MEANS OTHER THAN THOSE EXPRESSLY PROVIDED IN THE INCOME TAX LAW ARE LEGALLY INEFFECTIVE.”
In this precedent, the Court held that arguments seeking to demonstrate that dividends may be paid through mechanisms other than those expressly provided under Article 76, Section XI, of the MITL are based on a premise that contradicts such provision. The Court reasoned that the relevant provision expressly establishes that dividends must be paid either through a non-negotiable check issued in favor of the shareholder or through a wire transfer to the shareholder’s bank account.
The Court further noted that these payment mechanisms are directly linked to the tax control system associated with the determination, composition, and reduction of the Net After-Tax Profit Account (Cuenta de Utilidad Fiscal Neta or “CUFIN”). Accordingly, permitting alternative payment methods would hinder the objective verification of dividend distributions and their corresponding tax effects.
Although both precedents are isolated decisions and therefore not binding, we consider it advisable to take them into account when documenting capital contributions and dividend distributions, particularly where mechanisms other than those expressly contemplated under Mexican tax law are intended to be used.
Our Firm’s Tax Practice is well-equipped to assist clients with any matters related to the criteria described above and their potential impact on corporate transactions. Should you have any questions or comments, please do not hesitate to reach out to us.
For similar content to our Global Guide, subscribe to our mailing list and keep up to date.