Final warning: Enforcement of Bill of Amendment for prohibition of outsourcing business models in Mexico

published on 6 July 2021 | reading time approx. 1 minute

We would like to remind you that on 24 April 2021 were published several amendments to the Mexican Labor, Tax and Social Security laws that prohibit outsourcing of personnel in different ways, which will be fully enforceable as of 1 August 2021.
  

The subcontracting of personnel is fully prohibited, understood whereby an individual or entity provides or makes available its own employees for the benefit of another, whenever such services are comprised to their corporate purpose.

The only exception to the prohibition refers to the approval for hiring of "specialized services", which refer to those services that does not comprise its corporate purpose or the predominant economic activity of the beneficiary of such services, which means that companies may hire services for the provision of certain activities that are not related thereof. The complementary or shared services or works rendered between companies of the same business group will also be considered as specialized as long as they do not comprise its corporate purpose or does not represent predominantly the economic activity of the company that receives thereof.

Companies that are categorized as "Specialized Services" should be registered in the Public Registry of Specialized Service Providers before 11 August 2021. Otherwise, the service provider of such Specialized Services and the hiring company, shall be subject to different legal consequences, starting as to monetary fines or even compared to the felonies as tax fraud.

Likewise, starting as of 1 August 2021, the V.A.T. of all invoices derived from outsourcing services shall no longer be deductible and 06 percent V.A.T. withholding rules will no longer apply as well.

We suggest to carry out an analysis of company's its internal and external business processes in order to determine if must comply with these new obligations and avoid any further consequences.

In Rödl & Partner, we may assist to identify and build up a strategy for mitigating potential risks, as well as to find tailor made solutions to each particular case.