On April 23, 2021, the Mexican government published a new Decree in the Official Journal of the Federation amending and supplementing numerous Mexican statutes, including the Federal Labor Law, the Social Security Law, the Institute for the National Housing Fund for Workers Law, the Federal Tax Code, the Federal Income Tax Law and others.
The main changes to the Mexican labor and tax laws are as follows:
i) The outsourcing of personnel, defined as when an individual or legal entity supplies employees for the benefit of another entity, is now prohibited;
ii) The outsourcing of personnel is allowed for specialized services, or to perform specialized work that is not within the principal purpose or economic activity of the entity receiving and benefitting from such services, as long as the following requirements are met: a) the activities are not included within the corporate purpose of the entity receiving and benefitting from such services; b) the contractor is registered in the public registry of the Department of Labor and Social Welfare (“STPS” for its acronym in Spanish) that will be created for such purpose; and c) a written contract is signed;
iii) Shared services provided among companies of the same business group will be considered specialized services, so long as: a) the services are not included within the corporate purpose or the principal economic activity of the entity benefitting from such services; b) the contractor is registered in the public registry of the STPS that will be created; and c) a written contract is executed;
iv) Employment agencies may only perform activities to recruit, select and train personnel and will not be considered as employers, but merely as intermediaries;
v) Individuals or companies that supply outsourcing services must register with the STPS and renew their registrations every three years. To obtain such registration, the individuals or companies must demonstrate they are up to date with all corresponding tax and social welfare obligations. Mexican labor authorities will issue general rules for the registry within thirty days after the Decree’s publication. If such rules are not issued, applicants may request registration, and if the authorities do not issue a response within the following three days, the registration will be considered as granted. As noted, such registration must be renewed every three years;
vi) An individual or company that receives and benefits from outsourcing for specialized services, or for the performance of specialized work, will be jointly and severally liable with an outsourcing supplier who does not comply with Mexican social welfare obligations before the Mexican Social Security Institute (“IMSS” for its acronym in Spanish) and with the Institute for the National Housing Fund for Workers (“INFONAVIT” for its acronym in Spanish);
vii) In regard to profit sharing payments to employees (PTU), the maximum amount payable will be the greater of an amount equivalent to three months of the employee’s wage or the average of the profit share received for the past three years;
viii) The outsourcing supplier must report to the IMSS and INFONAVIT every four months, by no later than the seventeenth day of January, May, and September, any contracts for specialized services executed within the preceding four month period. This includes information regarding the parties and the employees suppling the services. The outsourcing supplier must also provide the hiring entity with a copy of its registration with the STPS certifying that it is a specialized supplier of services;
ix) Monetary sanctions (fines) are established for employers that benefit from outsourcing and do not comply with the new rules as follows: a) the Federal Labor Law establishes fines from 250 to 50,000 times the Updated Unit of Measurement (UMA for its acronym in Spanish) to be imposed on employers that do not allow the performance of an inspection and oversight by the labor authorities at the employer´s facilities; b) from 2,000 to 50,000 times the UMA to anyone who participates in outsourcing personnel, supplies outsourcing services without securing a proper registry or benefits from outsourcing services without complying with the amended rules; c) the Social Welfare Law sets forth a fine from 500 to 2,000 times the UMA applicable to an outsourcing supplier who either fails to file or files late the required information on contracts for specialized services that must be reported every four months;
x) The amendment establishes in its transitional articles that: a) the Decree will enter into force the day following its publication; note, however, this does not apply to the tax and public service employee matters; b) once the general ruling for the STPS registry for specialized services suppliers is issued, outsourcing suppliers will have 90 days from the date of publication of such rule(s) to obtain their corresponding registration; and c) rules in regard to taxes will enter into force on August 1, 2021, notwithstanding the date of publication of the Decree; and
xi) For tax purposes, invoices issued in connection with unauthorized outsourcing of personnel will have no tax effect (the expense will not be deductible for purposes of Income Tax and will not be creditable for purposes of the Value Added Tax.) It is also important to note that an amendment of Article 29 of the Institute for the National Housing Fund for Workers Law establishes that if the employer is substituted by another, the substituted employer will be jointly and severally liable with the substitute employer for the obligations all incurred under such. This liability will include obligations arising before the substitution occurred, and up to three months thereafter. Once such period expires, all liability incurred will be borne by the new employer.
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