2021 – 1 Tax Consulting
Outsourcing Reform bill approved
On April 23 of
this year, the Outsourcing Reform Decree was published in the evening edition
of the Official Gazette of the Federation, contemplating a general entry into
force as of April 24th, 2021, with the exception of certain
provisions, such as tax provisions, which will enter into force on August 1st,
2021.
As a result of the
amendments to the Federal Labor Law, the provisions that currently govern work
carried out under a labor subcontracting regime, also known as outsourcing, are
repealed, and the concept of "intermediary" and other provisions
related to this concept are eliminated.
Below you will find
a summary of what we consider the most relevant aspects of the outsourcing reform.
Labor Law
Prohibition of
outsourcing schemes
The reform
prohibits the outsourcing of personnel, defined as cases where an individual or
legal entity provides or makes available its own employees for the benefit of
another individual or legal entity.
However, it is
emphasized that employment agencies that intervene in the hiring process of
personnel may participate in the recruitment, selection and training, but they
will not be considered as employers, since such capacity is held by the
individual/entity who benefits from the services provided.
Exception for
specialized and similar services
The outsourcing of
specialized services or execution of specialized works that are not part of the
corporate purpose or the main economic activity of the beneficiary is allowed
as an exception, provided that the contractor is registered in the public
registry indicated below.
Complementary or
shared services or works provided by companies belonging to the same business
group will be considered as specialized, taking into consideration the concept
of business group as established in the Stock Market Law.
The contracting
party of specialized services or for the execution of specialized works will be
jointly and severally liable for any failure to comply with labor obligations
by the contractor, in connection with the workers used to provide services
under such contracts.
Contractor´s
registration before the Ministry of Labor and Social Welfare
Those who provide outsourced
specialized services or execution of specialized works must be registered with
the Ministry of Labor and Social Welfare (STPS per its acronym in Spanish), for
which they must prove that they are up to date with their tax and social
security obligations. The registration must be renewed every three years.
Within 30 calendar
days following the entry into force of the reform, the SPTS must issue the
general rules applicable in order to obtain said registration. Once such rules are
issued, those who provide outsourcing services must obtain their registration
within 90 calendar days. It is also provided that The STPS may deny or cancel,
at any time, the registration granted for those that do not comply with the
requirements set forth in the Federal Labor Law (FLL).
Concept of
employer substitution
The reform
contemplates as a new requirement for employer substitutions to take effect, which
consists in the assets of the company or establishment that carries out such
process being transferred to the substitute employer.
Notwithstanding
the above, by means of a transitory provision, the reform establishes that
during a period of 90 calendar days after the entry into force of these
amendments, such requirement will not be applicable in the case of companies
operating under an outsourcing regime, provided that, within such period, the
contractor transfers the workers to the beneficiary, and to the extent that
their labor rights are recognized, including their seniority generated as a
result of the original employment relationship.
Employee Statutory
Profit Sharing
A new rule is
established regarding the distribution of profits to employees. The amount of
profit sharing will be capped to three months of the employee's salary, or the
average of the profit sharing received in the last three years, whichever
amount is more favorable to the employee.
Inspection and
surveillance
In the event that
the employer does not allow the inspection and surveillance ordered by the
labor authorities, it will be notified by means of an instruction to appear in
order to exhibit all the required information, being informed that, in case of
not complying with such instruction, it will be presumed that the employer does
not maintain such information, regardless of the applicable fine of 250 to 5000
times the Current Measurement and Updating Unit (UMA per its acronym in
Spanish).
Penalties for non-compliance
Whoever carries
out prohibited outsourcing of personnel or outsourcing services without having obtained
the corresponding registration, will be fined with 2,000 to 50,000 times the value
of the UMA, without prejudice of any other obligations that may arise, in which
case the STPS will report the facts to the competent authorities.
The same sanction
will be applicable to those who benefit from outsourcing in contravention of
the provisions of the new rules on this matter.
Social Security
Mexican Social
Security Institute (IMSS per its acronym in Spanish)
In line with the
amendments to the FLL, the provisions referring to labor intermediation and
outsourcing are modified, establishing that the contracting of specialized services
or the execution of specialized works must comply with the conditions and
requirements established in the FLL.
Likewise, it is
provided that those contracting the provision of services or the execution of
works with another individual or legal entity that fails to comply with any social
security obligation will be jointly liable for any unpaid contribution for the
workers involved in the execution of such services.
In addition,
whoever provides specialized services or executes specialized works must
provide no later than days 17th of the months of January, May and September, a
simple copy of the registration issued by the STPS for the provision of such
services, as well as several information of the contracts entered into in the
four-month period of reference. Information regarding the list of workers or
other parties that will render the specialized services or perform the
specialized works in favor of the beneficiary must be provided, indicating
their name, Unique Population Registry Code (CURP per its acronym in Spanish),
Social Security Number and contribution base salary, as well as the name and
Federal Taxpayers Registry (RFC per its acronym in Spanish) of the beneficiary
of the services for each one of the contract. The IMSS will inform the STPS of
noncompliance with the above requirements.
In turn, the IMSS
and the STPS must enter into collaboration agreements for the exchange of
information and the performance of joint verification actions, within their
respective areas of competence.
By means of a
transitory provision, the reform establishes that the obligation to provide the
aforementioned information, as previously described, will commence within 90
calendar days as of the entry into force of these amendments, except for the
registration in the STPS contractors' registry, which must be submitted once
the STPS reveals the mechanism to obtain such document.
In case of failing
to provide the aforementioned information or when provided after the legal
term, a fine equivalent to the amount of 500 to 2,000 times the value of the
UMA will be applicable.
Disappearance of
National Registry by Class
As a result of the
aforementioned amendments, the benefit applicable for purposes of the
classification in the work hazard insurance and the registration of workers at
a national level, in the case of employers that were under the labor
subcontracting regime, consisting in the possibility of having a national
employer registry for each of the classes of law, instead of several registries
per municipality, is eliminated.
For such purpose,
by means of a transitory provision, it is established that the beneficiaries of
such national registry by class will have a term of 90 calendar days as of the
entry into force of the aforementioned reform to cancel such registries and to
request the granting of one or various regular employer registries, as
applicable.
Once said term has
expired, employer registrations per class that have not been cancelled will be
cancelled by the IMSS.
Temporary Benefit
in Work Hazard Insurance
A transitory
provision establishes that, during the 90 calendar days following the entry
into force of the reform, the migration of workers from companies that operated
under the labor subcontracting regime will be considered as employer
substitution, as long as the company to which the workers are transferred
recognizes their labor rights, including their seniority and the terminated work
risks before the corresponding legal authorities.
In such case,
beneficial rules will be applied for purposes of determining the class,
fraction and premium of the Work Hazard Insurance. The company that receives the
workers must classify itself in accordance with the Social Security Law (SSL),
and must keep the premium with which the company that had the workers
registered with the IMSS had been contributing, provided that such company has
been correctly classified in accordance with the risks inherent to the activity
of the business in question and the applicable regulatory provisions. Otherwise,
it will have to pay the contributions in accordance with the average premium of
the corresponding class.
In the case of a
company that receives the workers from another or other companies, with the
same or different classes, and that, as a consequence, must adjust its
classification to the new activities to be carried out, the class and fraction
will be determined according to the risks inherent to the activity of the business
in question and the premium will be obtained by applying a process that will
result in a weighted premium based on the contribution base salaries and the
premiums assigned to the companies involved.
The above, provided
that the companies have been correctly classified in accordance with the risks
inherent to the activity of the business or businesses in question and the
applicable regulatory provisions; since, otherwise, they will have to pay these
contributions at the average premium of the corresponding class.
In addition to the
foregoing, it is established that companies that have, as of the entry into
force of the amendments, a Medical Services Subrogation Agreement with
Reversion of Fees in force, and that in terms of these provisions carry out an
employer substitution, will not be subject to modification of the conditions
agreed therein, but once the term of 90 calendar days has expired, the provisions
of the law will apply.
National Workers'
Housing Fund Institute (INFONAVIT per its acronym in Spanish)
The period of
joint liability to which the substituted employer and the substitute employer
are subject in the event of employer substitution is reduced from two years to
three months.
On the other hand,
as in the case of the IMSS and in line with the modifications to the FLL
regarding outsourcing, it is established that the persons who are registered in
the list of contractors of the STPS must periodically provide, no later than days
17th of January, May and September, the services agreements and related information,
such as the amounts of the contributions and amortizations, information about
the employees, determination of the contribution base salary, and a simple copy
of the registration issued by the STPS.
Within 60 calendar
days after the entry into force of the reform, the INFONAVIT must issue the
rules establishing the procedures to comply with such requirements, as well as
the filing dates before such Institute.
The individual or
legal entity that contracts the provision of services or the execution of works
with a company that fails to comply with the obligations contained in the INFONAVIT
Law will be jointly and severally liable in relation to the employees involved
in the execution of such services.
For the
verification of compliance with the obligations set forth in the FLL and
INFONAVIT Law, the STPS and INFONAVIT must enter into collaboration agreements
for the exchange of information and the performance of joint verification
actions, within their respective areas of competence. The INFONAVIT will inform
the STPS of non-compliance with the aforementioned requirements.
Individuals or
legal entities rendering specialized services or executing specialized works
must begin to provide the aforementioned information once the STPS discloses
the mechanism for obtaining the referred document.
Federal Taxes
In the Federal taxes
area, the reform includes the following changes, which will enter into force on
August 1st, 2021:
Federal Tax Code
(FTC)
The reform
included an article that provides for the rejection of the deduction of
expenses, as well as any credit associated with them, when deriving from the
subcontracting of personnel, when activities related to the corporate purpose
and the main activity of the contracting party are performed, as well as regarding
services in which personnel is provided or made available to the contracting
party and: (a) personnel has been transferred from the contracting party to the
contractor; or (b) the services involve the preponderant activities of the
contracting party.
For these
purposes, the deduction and the respective crediting of expenses related to the
subcontracting of specialized services will be allowed, provided that: (a) they
do not form part of the corporate purpose or preponderant activity of the
contracting party; (b) the contractor is registered before the STPS; and (c)
the requirements set forth in the Income Tax Law (ITL) and Value Added Tax Law (VATL)
are met.
Likewise, the
possibility of contracting complementary or shared services between companies
of the same group is provided, also considered as specialized services, when
the services are not part of the corporate purpose or preponderant activity of
the contracting party.
In the matter of
joint liability, the FTC provides that the contracting party of subcontracting
services will be jointly liable for any unpaid contributions associated with the
workers involved in the service received.
Claiming the deduction
of expenses associated with personnel subcontracting services or claiming any
credit deriving from such expenses is included as an aggravating factor for the
imposition of fines. Also, a fine of $150,000 to $300,000 pesos is added for
each omission of the contractor to deliver to the contracting party the
information referred to in the ITL and VATL, as mentioned below.
The use of
simulated schemes of services or execution of specialized works, and the
subcontracting of personnel is incorporated as a crime of qualified tax fraud.
However, it is established that criminal conducts committed prior to the entry
into force of the reform will be punished in accordance with the regulations in
force at the time of the commission of the acts.
Income Tax Law
(ITL)
The following
requirements are added to allow the deduction of expenses associated with the
rendering of specialized services or execution of specialized works:
-
When making the payment, the taxpayer must verify that the contractor has
obtained the specialized-service provider registration referred to in the labor
legislation.
-
A copy of several documentation related to the employees involved in the
services rendered must be obtained from the contractor, such as a copy of the
corresponding payroll tax receipts, bank payment receipts for the withholding
of taxes from such employees, payment of IMSS contributions and INFONAVIT
contributions.
Providers of
specialized services or work must provide to the beneficiary of said services
the information referred to in the aforementioned paragraph.
In accordance with
the modifications made to the FTC, payments for the concept of labor
subcontracting will be considered as a non-deductible expenses when activities
linked with the corporate purpose or preponderant activity of the contracting
party are carried out. Likewise, payments for services involving the provision
of personnel to the contracting party will also be considered as non-deductible
expenses, when (a) such personnel has been transferred from the contracting
party to the contractor, or (b) the services involve activities that are part
of the preponderant activities of the contracting party.
Value Added Tax
Law (VATL)
The obligation to
withhold a 6% VAT on any consideration paid by taxpayers receiving services
under agreements through which personal is made available to them or to any
related party, is repealed.
The reform
establishes that the VAT transferred for labor subcontracting services will not
be creditable, when activities linked with the corporate purpose or preponderant
activity of the contracting party are carried out, as well as payments for
services involving the provision of personnel to the contracting party when (a)
such personnel has been transferred from the contracting party to the
contractor, or (b) the services encompass preponderant activities of the
contracting party.
The following
requirements are established in order to be able to claim a credit for the VAT
shifted to the taxpayer in connection with the provision of specialized
services or the execution of specialized works:
-
When carrying out the payment for the services, it must be verified that
the contractor has obtained the specialized-provider registry referred to in
the labor legislation.
-
No later than the last day of the month following that during which the
contracting party made the payment for the services, the latter must obtain
from the contractor a copy of its VAT monthly tax return and evidence of
payment, for the period corresponding to that during which the contracting
party made a payment for the services.
-
In case the contracting party does not obtain the aforementioned
documentation within the applicable period, an amended tax return must be
filed, reducing any amounts that were credited in connection with such concept.
Also, the reform
establishes the obligation for contractors that provide specialized services or
execute specialized works to provide to the contracting party the
aforementioned documentation.
* *
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Mexico City
April 2021
This News Flash contains information of a general nature, and thus it does not address any particular case or facts. The information contained herein is accurate as of the date of issuance; however, we make no representation as to the fact that such information be accurate in the future. Accordingly, we recommend that specific advice addressing your particular circumstances be requested.
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