As we had already announced in our newsletter “REFORMS IN SUBCONTRACTING MATTERS” https://nra.com.mx/en/amendments-in-subcontracting-matters/ as of April 23rd, a series of reforms were made with the intention of terminating the subcontracting scheme as it had been carried out in previous years, the amendments were made to the following laws.
o Federal Labor Law
o Social Security Law
o Law of the National Workers’ Housing Fund Institute
(Instituto del Fondo Nacional de la Vivienda para los Trabajadores).
o Federal Tax Code
o Income Tax Law
o Value Added Tax Law
o Federal Law of Workers in the Service of the State
As a result of this reform, as of August 1, 2021, taxpayers will be obliged to comply with several obligations, the most representative of which are the following:
- Subcontracting shall only be allowed if it is considered specialized, it being understood as specialized when the services do not form part of the corporate purpose or of the predominant economic activity. Therefore, subcontracting of personnel is prohibited.
- Those who provide specialized services must be registered with the Secretary of Labor and Social Welfare.
- A period ending on August 1 was granted to transfer the employees of the service provider to the company paying for such services, without the need for a transfer of assets.
- Payments made for specialized subcontracted services may not be deductible, nor may VAT be credited, if the service provider is not registered in the list of specialized service providers.
- Additional requirements were established to deduct payments made for specialized subcontracting services.
- Verify that the contractor has the registration established in the Federal Labor Law
- Obtain from the contractor the tax receipts for the payment of salaries of the workers who have rendered services
- Receipt of payment issued by the banking institution for
- Employee income tax withholdings
- IMSS fees
- INFONAVIT fees
- Additional requirements to credit VAT paid for specialized subcontracting services.
- Comply with the requirements for the deduction of the payments made
- Obtain a copy of the VAT return and the acknowledgement of receipt of the payment of the Value Added Tax by the supplier of specialized services.
Finally, it was also established that, as of August 1, 2021, the obligation to withhold 6% for subcontracted labor would disappear.
EXTENSION IN SUBCONTRACTING REFORM
As a result of some adversities faced by taxpayers, a couple of amendment proposals were presented to some of the laws contemplated in this tax reform seeking to extend the effective date of some of the changes of the outsourcing reform.
On Friday, July 31, 2021, the decree amending the first, third, fourth, fifth, sixth and seventh transitory articles of the “Decree amending, adding and repealing several provisions of the Federal Labor Law; of the Social Security Law; of the Law of the Institute of the National Housing Fund for Workers; of the Federal Tax Code; of the Income Tax Law; of the Value Added Tax Law; of the Federal Tax Code; of the Income Tax Law; of the Value Added Tax Law; of the Federal Law of Workers in the Service of the State, Regulatory of Section B) of Article 123 of the Constitution; of the Regulatory Law of Section XIII Bis of Section B, of Article 123 of the Political Constitution of the United Mexican States, regarding Labor Outsourcing, published on April 23, 2021, which entered into force on August 1, 2021, whereby the entry into force of several legal provisions is extended until September 1.
During the month of August
- It will be possible to obtain registration before the Secretary of Labor and Social Welfare as a specialized service provider.
- VAT paid for subcontracting services will continue to be deductible and creditable during the month of August.
- The obligation to withhold 6% VAT on payments for subcontracting services continues.
- Employees may be transferred via employer substitution, without the need to transfer the assets of the company that provides specialized services.
In the following link you can access the publication of this extension in the Federal Official Gazette https://www.dof.gob.mx/nota_detalle.php?codigo=5625445&fecha=31/07/2021 (This information is only available in Spanish).
We also share the Agreement of the Technical Council of the IMSS published on July 30 https://www.dof.gob.mx/nota_detalle.php?codigo=5625350&fecha=30/07/2021 in which the extension for compliance with the obligations mentioned in this bulletin was foreseen (This information is only available in Spanish).
At Nuñez Rosas y Asociados, we understand the importance of this extension, and at the same time we are aware that this extension may be insufficient for many taxpayers to comply with these legal obligations, so we offer our services to review together with your labor lawyers, the current situation of each company, seeking at all times that they are complying with the tax provisions that have been amended and mentioned in this newsletter.
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