On April 23, 2021, a Decree was published in the Official Gazette of the Federation (“DOF”) amending, adding and repealing several provisions of the Federal Labor Law; the Social Security Law; the Law of the National Workers’ Housing Fund Institute; the Federal Tax Code (“CFF”); of the Income Tax Law (“LISR”); of the Value Added Tax Law (“LIVA”); 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 (the “Decree”).
The transitory articles of the Decree state that the amendments to the various tax laws will become effective until August 1, 2020. Among the main changes to the tax laws are the following:
1. Federal Fiscal Code
1.- Deduction and crediting. The provisions of the CFF established several limitations so that tax receipts arising from the payment of personnel subcontracting services (with respect to activities related to the corporate purpose and economic activity of the contractor) may not be deducted or credited.
Payments or considerations for services in which personnel are placed at the disposal of the contractor may not be deducted or credited. This, only in the event that: (i) the workers placed at the contractor’s disposal were originally employed by the contractor, and (ii) when the workers made available carry out activities that are predominant for the contractor (in relation to its corporate purpose).
The exception to the general rules applies only in the event that the subcontracted service is for specialized services or for the execution of specialized works, provided that they are activities other than the corporate purpose and predominant economic activity of the party contracting the services. However, the application of such exception is conditioned to the person providing the outsourcing services carrying out the following: (i) is registered with the Secretaría del Trabajo y Previsión Social (“STPS”), and (ii) complies with the provisions of articles 27, section V of the Income Tax Law and 5, section II, second paragraph of the Value Added Tax Law.
2.- Sanctions. In the event that any of the aforementioned points are not complied with, the CFF provides for the following penalties:
a) Deducting or crediting the payment for subcontracting services without complying with the provisions of articles 27, section V of the LISR and 5, section II, second paragraph of the LIVA, will be considered as an aggravating factor in the commission of infractions. In addition, a fine of MXN$150,000.00 to MXN$300,000.00 will be applied for each failure to comply with the provisions of the aforementioned articles.
b) In the event that a taxpayer simulates schemes for the rendering of specialized services, the execution of specialized works or keeps its personnel subcontracted, it will be equated to the crime of qualified tax fraud.
2. Income Tax Law
1.- Requirements for deductions. Regarding payments for the rendering of specialized services or the execution of specialized works, the person contracting shall comply with the following: (i) verify that at the time of payment the service provider is registered with the STPS, and (ii) request from the service provider a copy of the following:
The tax vouchers covering the payment of workers’ salaries.
The receipt of payment of the declaration of payment of the withholding taxes made to the workers.
Payment of labor-management contributions.
Payment of INFONAVIT contributions.
3. Value Added Tax Law
A) 6% withholding. Pursuant to the Decree, the six percent (6%) withholding established in Article 1-A, Section IV of the LIVA for cases in which a person benefits from subcontracting services was repealed; therefore, as of August 1, 2021, the withholding will no longer be required.
B) Requirements for crediting. Now, in order for the value added tax to be creditable, in the case of subcontracting activities of specialized services or the execution of specialized works, at the time the payment of the consideration is made, the person contracting must comply with the following: i) verifying that the service provider is registered with the STPS; and ii) request from the service provider a copy of the value added tax return and acknowledgement of receipt of payment corresponding to the period in which the payment of the consideration was made.
In the event that such information is not collected, the person contracting the services must file a supplementary declaration in which he/she reduces the amounts credited for such services.
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