Mexico City, April, 2021
On April 23, 2021, was released in the Federal Official Gazette the decree that amends, adds and repeals several provisions regarding personnel outsourcing within the Federal Labour Law, the Social Security Law, the National Workers’ Housing Fund Institute Law, the Federal Tax Code, the Income Tax Law and the Value Added Tax Law.
Here are the main aspects in Labour, Social Security and Tax matters from the approved decree:
Labour and Social Security:
- Outsourcing of personnel is generally prohibited, this being understood when a company/person offers their own employees for the benefit of another.
- The outsourcing of specialized services or the execution of specialized work that are not of corporate and main activity of the company that receives them is allowed when the contractor has the registry issued by the Ministry of Labour and Social Welfare (STPS). Such services must be formalized in a written agreement.Shared, complementary services or work provided among companies pertaining to the same business group will be considered specialized and therefore will be allowed if the services are not part of the corporate purpose or the preponderant activity of the company that receives them.
- Outsourcing services providers must be registered before the STPS. In order to obtain the registry, they must prove that they are up to date with their Tax and Social Security obligations. The STPS registration will be renewed every three years.
- Regarding profit sharing (PTU), two forms are established to carry out the payment: a maximum limit of three months’ worth from the employee’s salary or the last three years’ profit average, the amount that is more favourable to the employee must be used.
- It is added that for an employer substitution to take effect, the assets of the company must be transferred to the substitute employer. However, for companies with an outsourcing regime, the transfer of assets in the scope of employer substitution will not be required within a period of 90 calendar days from the effective date of the decree, provided that the employee transfer is carried out within such period.
- Any party that outsources personnel, and any person or legal entity that provide outsourcing services without the required registration will be subject to a fine ranging from 2,000 to 50,000 times the Unit of Measurement and Update, i.e. between $179,240.00 and $4,481,000.00 pesos. The same fine will be applied to persons or legal entities that benefit from outsourcing of personnel.
- Whoever provides specialized services or executes specialized work, must present to the Mexican Social Security Institute (IMSS) on a quarterly basis, no later than the 17th day of January, May and September of each year, the information of the executed contracts, attaching the registration issued by the STPS.
- New rules are established in the purpose of classifying companies with the occupational risk insurance premium;
- The Federal Tax Code is amended. Tax deduction or crediting effects will be allocated for payments when subcontracting specialized services or specialized work, as well as for shared services, always considering that they are not part of the corporate purpose or the preponderant activity of the beneficiary, and the contractor has the registration granted by the STPS.
- Tax evasion felony is applied with penalties that could be punished with prison for the use of simulated schemes for the provision of specialized services or execution of specialized work, as well as outsourcing personnel.
- Income Tax Act Amendments – For authorized deductions, the contracting party must verify when the payment for the received services is made and if the contractor has the registration granted by the STPS, which is something that companies providing outsourcing services must obtain.
- Amendments to the Value Added Tax Law are in connection to the crediting of the value added tax. It states that when the payment for the received services is made, the contracting party must verify if the contractor has the registration issued by the STPS.
- The amendments to the Labour and Social Security laws will become effective the day after its publication in the Federal Official Gazette, while the amendments to the Federal Tax Code, the Income Tax Law and the Value Added Tax Law will become effective on August 1st, 2021.
We keep at your disposal in the case of requiring further information or tailored advise according to your company’s needs.
*This article is authored by Fernando Martínez and Karla Almeyra and it may reflect their personal opinions independently from the law firm they work for. Shall you intend to apply any of the debated interpretations within the article, we highly recommend to formally consult Jáuregui y Del Valle, S.C. or any other qualified tax and labor advisor.
© 2020, Jáuregui y Del Valle, S.C.(JDV), All rights reserved. This information belongs to JDV and external distribution should be authorized. Printing and sharing are allowed.