On April 23rd, 2021 relevant amendments to the Federal Labor Law (“FLL”), the Social Security Law (“SSL”), the Institute of the National Fund for Employees ́ Housing Law (“INFONAVIT LAW”), the Federal Tax Code (“FTC“), the Income Tax Law (“ITL“) and the Value Added Tax Law (“VAT“) were published in the Official FederalGazette.
FLL
The amendment to the FLL consists mainly in the following:
1. Prohibition of the outsourcing of personnel, consisting in the legal structure where an individual or legal entity provides or makes available its own workers for the benefit of another. This will also apply to government agencies and institutions.
2. Regulation of the intervention of employment agencies or intermediaries that intervene in the recruitment, selection, training and qualification process. Such agencies shall not be considered employers.
3. The outsourcing of services and specialized works that are not part of the corporate purpose or the main economic activity of the person or entity requesting the same is allowed and regulated Those services may be provided through companies of its own corporate group or through third parties.
4. Complementary or shared services or works rendered between companies of the same group will also be considered as specialized as long as such works are not comprised within the corporate purpose or the main activity of the company that receives them.
Individuals or legal entities that provide specialized services through outsourcing must be registered before the Ministry of Labor and Social Welfare. Such registration must be renewed every three years and they must prove that they are up to date with their tax and social security obligations.
Joint and several liability by the contractor with respect to the workers shall exist in the event of noncompliance with labor obligations.
Maximum limit of 3 months of salary per employee for profit sharing or the average of the profits received in the last three years, whichever is more convenient for the employee.
SSL / INFONAVIT LAW
Companies rendering specialized services will have to submit every four months a report to the Mexican Social Security Institute and to the National Workers’ Housing Institute, containing the data of the contracts entered into with other companies, the information of the employees assigned to render the service and the determination of their base salary.
FTC / ITL / VAT
Payments or considerations made for outsourcing of personnel to perform activities related to the corporate purpose and the main economic activity of the contracting party will not have tax effects of deduction or crediting.
Neither will tax effects of deduction or crediting be given to the services in which personnel is provided or placed at the disposal of the contractor when: (i) the workers that the contractor provides or makes available to the contracting party, were originally workers of the latter and have been transferred to the contractor, through any legal figure; and (ii) the workers provided or made available by the contractor cover the preponderant activities of the contracting party.
3. Intheeventthatthedeductionorcrediting referred to in the preceding paragraphs is made, it will be considered as an aggravating factor in the commission of an infraction.
4. Tax effects of deduction or crediting may be given to payments or considerations for outsourcing of specialized services or the execution of specialized works, which do not form part of the corporate purpose or of the main economic activity of the beneficiary of such services, provided that the contractor is registered with the Ministry of Labor and Social Welfare and complies with the provisions of the tax laws.
5. Individuals or legal entities that receive services or contract works described in the preceding paragraphs will be jointly and severally liable for the taxes attributable to the workers with actually providing the service.
DEADLINES FOR COMPLIANCE
1.The Decree entered in force on April 24, 2021, except for the provisions of Articles Four, Five and Six of the Decree, which correspond to tax matters, which will enter into effect on August 1, 2021 and the provisions of Articles Seven and Eight of the Decree will enter into effect in fiscal year 2022.
2.The Ministry of Labor and Social Welfare must issue the general provisions regulating outsourcing within 30 calendar days as from April 24, 2021 (the “Regulations”).
3.Within 90 calendar days as from the date the Regulations are published, individuals or legal entities that provide outsourcing services must obtain the registration before the Ministry of Labor and Social Welfare provided for in Article 15 of the FLL.
4.In the case of companies that operate under an outsourcing regime, it will not be required to transfer the assets of the company or establishment during the period of 90 calendar days from the entry into force of the Decree, provided that the contractor transfers the workers to the beneficiary within such period.
5.There will be 90 calendar days for the updating of employer registrations before the Mexican Social Security Institute and for the obligation to provide information of the outsourcing contracts to such Institution.
6.There will be 60 calendar days for the issuance of rules by the National Workers’ Housing Fund Institute to submit quarterly information.