Obligations of Authorized Donee Organizations in Mexico.

Authorized donee organizations in Mexico are civil organizations or trusts authorized by the Tax Administration Service (SAT) to receive tax-deductible donations under the Income Tax Law (LISR). To maintain this authorization and operate in compliance with the law, they must fulfill various tax and administrative obligations primarily established in the LISR and provisions issued by the SAT. Below are their main obligations, including those related to their annual tax return:

Obligations of Authorized Donee Organizations

1. Maintain valid authorization:

   • They must comply with the requirements established by the SAT to retain their authorization as donee organizations, which includes submitting periodic reports and updating information with the SAT.

2. Issue Digital Tax Receipts (CFDI):

   • For each donation received, whether in cash or in-kind, they must issue a CFDI that meets the requirements outlined in Articles 29 and 29-A of the Federal Tax Code (CFF) and the general provisions issued by the SAT.

3. Use funds exclusively for authorized purposes:

   • Donations must be used solely for the purposes established in their bylaws, as stipulated in Article 82, Section IV of the LISR.

4. Publish information on the use of donations:

   • By March 31 of each year, they must publish on the SAT portal or their own website the details of how donations were used and whether their objectives were met, in accordance with Article 82, Section V of the LISR.

5. Submit the Annual Transparency Report:

   • By March 31, they must file the Annual Transparency Report with the SAT, which includes detailed information on resource usage, activities performed, and donations received.

6. Report cash donations exceeding $100,000:

   • They must report to the SAT, no later than the 17th day of the following month, any cash donations received, whether in national or foreign currency, as well as donations in gold or silver pieces, exceeding $100,000.

7. File monthly informational returns:

   • By the 17th day of each month, they must report transactions conducted in the previous month with related parties, as well as services received or goods acquired from individuals who provided deductible donations.

8. Maintain accounting records and documentation:

   • They must maintain accounting systems and keep supporting documentation for their income and expenditures, making them available to tax authorities for the legally established period.

9. Register in the Federal Registry of Civil Society Organizations:

   • Depending on the type of donee organization, they may also need to register and update their information in this registry.

Annual Tax Return for Authorized Donee Organizations

Authorized donee organizations must file their annual tax return no later than February 15 of the year following the corresponding fiscal year. This return is submitted through the Declarations and Payments Service (DyP) on the SAT portal.

Contents of the Annual Tax Return

The tax return must include the following:

1. Income received:

   • A breakdown of income from donations, as well as any other permitted income received.

2. Expenditures incurred:

   • Details of expenses incurred, ensuring they are related to the authorized purposes.

3. Statement of activities:

   • A financial statement reflecting income and expenses, prepared in accordance with the Financial Reporting Standards (NIF).

4. Unapplied donation amounts:

   • A declaration of donations received in previous years that have not yet been applied.

5. Information on international donations:

   • A report on donations received or made internationally.

Consequences of Non-Compliance

Failure to comply with these obligations may result in penalties such as:

• Loss of authorization to receive tax-deductible donations.

• Fines for non-compliance with tax provisions.

• Removal from the SAT’s official list of authorized donee organizations.

We Are Here to Help

It is essential for authorized donee organizations to comply with all their tax and administrative obligations to maintain their authorization and continue operating legally and transparently in Mexico. At Tax Art, we have bilingual professionals specializing in bilingual tax services and tax consultancy to assist you in meeting these requirements. We are here to resolve any questions you may have and guide you through the process.