Issue #
July–August 2021

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Economic Indicators

On August 30, 2021, updated financial indicators reflected:

Peso/Dollar Exchange Rate: $20.2293 pesos per Dollar.

Mexican Stock Exchange: The Mexican Stock Exchange (BMV) closed 52,602.07 points.

Interest Rates: The Average Interbank Rate (TIIE) for a 28-day period was at 4.7500%.

Mexico Repeals Rule 5.2.5. from 2020 General Foreign Trade Rules

August 12, 2021

The Fifth Resolution Amending Mexico’s 2020 General Foreign Trade Rules (the “Resolution”) was published in the Official Journal of the Federation on May 27, 2021.  Among other amendments, it repeals rule 5.2.5. Rule 5.2.5. allowed a sale of temporarily imported goods to be considered as a sale that occurred abroad between a foreign seller and a Mexican IMMEX entity buyer.  This meant that such sales would not be subject to the Value Added Tax Law. In essence, rule 5.2.5. established a legal fiction whereby such sales were considered to have occurred abroad, even if the subject goods were physically located within Mexican territory.

In accordance with the Resolution’s First Transitory Article, the repeal entered into force 30 days following publication of the Resolution.

Starting on July 8, 2021, transactions fitting the above description are now governed by the general regime established in articles 1-A section III (withholdings) and 10 (sales in Mexican territory), of the Value Added Tax Law. Therefore, beginning as of such date, IMMEX entities which acquire temporarily imported goods (or finished goods) from foreign sellers, must withhold corresponding value added tax arising from such transactions.

International Trade and Customs

Mexico Creates Introductory Program to Audit Specialized Services

August 6, 2021

A special tax resolution published in the Official Journal of the Federation on April 23, 2021, amends several current rules to establish that Mexican tax authorities will now disallow any credit or deductions for wages or other payments made for outsourced services that relate to the taxpayer company’s purpose and main economic activity. Once Mexico’s new Outsourcing Decree enters into force, such payments will be considered violations of the Decree. The Decree’s entry into force has been extended until September 1st, 2021.

The General Federal Tax Auditor’s Office of the Mexican Tax Administration Service (“SAT”) has created an Introductory Program to Audit Specialized Services (the “Program”), designed to identify taxpayers with inconsistencies which could harm Mexico’s federal treasury. Mexico’s Federal Attorney General and the SAT’s Financial Intelligence Unit will join the SAT’s efforts.

The SAT’s Central Office of Planning and Programming for Federal Tax Audits will identify taxpayers receiving specialized services and the work. Such department will then assign such matters to the Central Administration for Strategic Audits and the Decentralized Office of Tax Audits and will oversee a database containing information on the relationships between taxpayers and their service providers, including those classified as entities that issue invoices for simulated or fraudulent transactions (“EFOS” for its acronym in Spanish), and those not classified as such. The database will also include taxpayers the SAT has identified as previously having issued invoices for outsourcing services, and which have therefore paid 6% in VAT withholdings.

The Program will have three stages, (i) notice to the taxpayer, informing it of an irregularity or inconsistency in the Central Platform of Internet Digital Tax Receipts (“CFDI” for its acronym in Spanish); (ii) formal notice requesting taxpayers who received outsourcing services and who currently receive specialized services to file certain information, including information found on the CFDIs issued by their service providers, and (iii) a resulting audit of taxpayers who have not provided information to demonstrate the materiality of the services received, or who have submitted such information with inconsistencies. It is important to note that the Program involves an active and close administrative collaboration among the SAT, the Mexican Department of Labor, the Mexican Social Security Institute, and the National Fund Institute for Employee Housing. Finally, it is also important to note that tax authorities will not provide taxpayers with minutes or written statements as a result of their failure to respond to the process outlined above. A taxpayer’s failure to respond may result in the SAT cancelling the taxpayer’s certificates of digital tax seals, which will most likely result in severe economic consequences for the taxpayer.


General Recommendations for Specialized Services Providers in Mexico

July 23, 2021

Based on recently approved amendments to Mexican labor laws prohibiting the outsourcing of personnel (with the only exception being those providing specialized services), it is crucial for those companies that customarily engage specialized services to take certain actions to avoid any violations of Mexico’s new labor regulations. As such, companies with specialized service providers should consider carrying out the following actions:

  1. Prepare a detailed list of vendors to identify which vendors must be registered with the Providers of Specialized Services or Works Registry (REPSE per its acronym in Spanish) of the Mexico’s federal Department of Labor and Social Welfare.
  1. Carefully review the terms and conditions of any contracts and/or purchase orders executed with such providers.
  1. Notify service providers of the implications of the amendments described mentioned and request their compliance with each and all obligations set forth in the new regulations, including, including registration with the REPSE, and requesting specific documents to verify such compliance.
  1. Depending on the review of these contracts and/or purchase orders, determine if any amendments to such are needed, or if such agreements need to be terminated and replaced with newly executed contracts and/or purchase orders.
  1. Create an internal procedure that includes a detail of all the steps needed to verify, on an ongoing basis, full compliance of each service provider with its obligations under the new outsourcing rules.

Our firm is closely following the amendment process.  We have reviewed in detail the requirements of the new regulations. We are consulting with many clients on these major legal changes and are available to review specific issues or questions your company may have.

Labor and Employment