As you are aware, on April 23, 2021, the Decree that amended, added and repealed various provisions on labor subcontracting was published in the Official Gazette of the Federation.

In general terms, this Decree prohibits labor subcontracting; that is, that one person provides or places their own workers for the benefit of another.

However, subcontracting of specialized services or the execution of specialized works is allowed, provided that they do not form part of the corporate purpose or the predominant activity of the person who benefits from them; including complementary or shared services or works rendered between companies of the same group.

For this, it will be necessary for the outsourcing of specialized services to be formalized in a written contract in which the purpose of the services to be rendered or the works to be executed is indicated, as well as the approximate number of the contractor workers who will intervene in the rendering of services.

Likewise, additional requirements are established for the deduction of income tax and the accreditation of the value added tax of specialized services, which will come into force as of August 1, 2021.

Requirements for Deduction in Income Tax.

In order for the amount paid for specialized services to be deductible for income tax purposes, in addition to the requirements previously established in article 27 of the Income Tax Law, those who receive them must comply with the following:

a) Verify that the specialized service contractors is duly registered in the Registry that is kept before the Ministry of Labor and Social Welfare for this purpose and that it is in force (contractors are required to renew their registration every three years).

b) Obtain from the contractor, a copy of the tax receipts for the payment of salaries of the workers with whom the service has been rendered or the corresponding work has been carried out.

c) Obtain from the contractor, a copy of the receipt of payment from the Banking Institution for withholding taxes, payment of worker-employer fees to the Mexican Institute of Social Security and to the Institute of the National Housing Fund for Workers.

Requirements for the Evidencing of the Value Added Tax.

Likewise, for the value added tax that the contractor transfers to the beneficiary to be to be evidenced, in addition to the requirements previously established in article 5 of the Value Added Tax Law, the following must be met:

a) That the contractor has a current registration before the Registry established for this purpose by the Ministry of Labor and Social Welfare.

b) Obtain from the contractor a copy of the value added tax statement and acknowledgment of receipt of the payment made by it, corresponding to the month in which the beneficiary made the payment of the consideration for the rendered services and of the transferred value added tax.

c) That said documentation is obtained no later than the last day of the month following that in which the payment of the consideration and the value added tax transferred to it was made; otherwise, it must file a supplementary statement in which the amount of the tax unduly evidenced is reduced.

Other Considerations in Tax Matters.

The deduction or evidence of incurred expenses related to the subcontracting of personnel will not proceed in the following cases:

a) When the activities carried out by the contractor are related to the corporate purpose or preponderant activity of the beneficiary (that is, they are not specialized services or works, or complementary or shared works between companies of the same group).

b) When the workers of the contractor rendering the services have been workers of the beneficiary and have been transferred to the contractors.

c) When the services rendered by the contractor include predominant activities of the beneficiary.

It is established that the beneficiary will be jointly and severally liable for the payment of contributions by the contractor’s workers who intervene in the rendering of the service.

It is established as an aggravating factor for the imposition of fines, the deduction or evidencing of personnel subcontracting services contrary to the provisions of the respective laws.

Likewise, an additional fine of $150,000.00 to $300,000.00 pesos is established for each time in which the beneficiary fails to deliver the necessary information to the contractor so that it can make the corresponding deduction or evidencing.

Finally, the conduct consisting of using schemes that simulate the rendering of specialized services or the execution of specialized works, or the subcontracting of personnel, is established as a tax crime.

If you have questions or require additional information regarding this communication, please contact Ricardo Ahumada (ricardo.ahumada@rapa.com).