Tax effects of the Outsourcing Reform
The Outsourcing reform approved on April 20 has not only legal but also tax implications for companies in Mexico. The changes, which affect the CFF, the LIVA and the LSR, will come into effect on August 1, 2021.
What will change at the tax level with the outsourcing reform?
- Payments or considerations made for the subcontracting of personnel to perform activities related to both the corporate purpose and the main economic activity of the contracting party will not be deductible for income tax purposes or credited for VAT purposes.
- Payments for subcontracting of services or execution of specialized works are deductible and creditable for VAT, as long as they are not part of the corporate purpose or the main economic activity of the contractor and the contractor is registered with the STPS and complies with the requirements set forth in the Income Tax Law and the Value Added Tax Law.
- Payments for complementary or shared services or works between companies of the same group will be deductible for income tax purposes and creditable for VAT purposes, as long as they are not part of the corporate purpose or the main activity of the company that receives them.
- Joint and several liability for legal entities or individuals that receive specialized services or complementary or shared works, for the contributions caused by the workers with whom the service is rendered.
- The deduction and crediting of payments for subcontracting and services in which personnel is provided or placed at the disposal of the contractor will be an aggravating factor in the commission of the infraction, the fine will be increased from 60% to 90% calculated on the amount of the omitted contributions or the undue benefit.
- It will be a crime of qualified tax fraud when it is originated by the use of simulated schemes of rendering specialized services or the execution of specialized works or the subcontracting of personnel or services in which personnel is provided or placed at the disposal of the contracting party, for which the penalty would be increased by one half.
Our lawyers and tax specialists will be pleased to answer any further questions you may have. Do not hesitate to contact us.
