A reform bill to amend the First Transitory Article regarding the entry into force of the Decree to amend different laws affecting the legality of outsourcing in Mexico published in the Official Gazette on April 23, 2021.
September 7, 2021
Senator Ricardo Monreal Ávila commented within his reform bill proposal, in general terms that, with the reform approved and already published in the Official Gazette of the Federation regarding outsourcing, the subcontracting of personnel is prohibited. Given that, employers must transfer and recognize as their own workers all those who carry out the main activities related to their corporate purpose and preponderant economic activity.
Monreal also mentioned that with the approved reform, it was established that the individual or legal entity that subcontracts workers for specialized services or the execution such work, with a contractor that does not comply with the labor relations with its workers, will be jointly and severally liable in said contracting.
Additionally, he added that to avoid simulation and tax fraud associated with labor subcontracting, various provisions of the Federal Tax Code, the Income Tax Law, and the Law of the Value Added Tax were modified in addition to the Federal Labor Law.
Monreal further commented that understanding the scope of the obligations that were imposed on employers in labor, social security, and fiscal matters in the aforementioned reform, and given that it entered into force the day after its publication, and that, the First Transitory Article refers to August 1, 2021 as a term to comply with the obligations contained in Articles Four, Five and Six of the reform itself, relative to the provisions of fiscal nature, have been subject of claim by various representatives of employer and business organizations, who have expressed the impossibility of fulfilling said obligations on the aforementioned date due to the deployment that implies carrying out the conferred, it is appropriate, given the said difficulty, to extend the entry into force of the reform, in order to allow the material possibility of compliance with the new obligations in terms of subcontracting.
He emphasized that in the first paragraph of Article 15 of the Federal Labor Law, it was established as an essential requirement to obtain registration in the Register of Presenters of Specialized Services or Specialized Works (REPSE), that natural and legal persons certify that they are up to date with their fiscal and social security obligations as already indicated above.
Monreal conveyed that the reform approved by article 15-D of the Federal Tax Code establishes in its third paragraph the possibility that tax effects of deduction or accreditation can be applied to payments or compensation for subcontracting specialized services or for the execution of specialized works, which are not part of the corporate purpose or the predominant economic activity of the beneficiary, with the condition that the contractor has the registration referred to in article 15 of the Federal Labor Law, as well as being up to date with the other requirements established for this purpose in the Income Tax Law and in the Value Added Tax Law, respectively.
As a consequence of the foregoing, the Monreal further advised that whoever has the need to obtain their registration must previously have the corresponding fiscal records. A considerable number of individuals and legal entities have had difficulties accessing the digital platforms of the SAT (Tax Authority), IMSS (Mexican Social Security Institute), and INFONAVIT (Institute of the National Housing Fund for Workers) to be able to generate the supporting documents that prove compliance. Therefore, it is necessary to have an additional period of thirty days to allow sufficient time for favorably complying with the reform.
Monreal further commented that in the reform bill, the relevance of several legislators receiving direct feedback from those upon whom the actual labor outsourcing reforms would apply, which led them to consider the need to propose an extension to the deadline on the 1st of August of this year. They considered that such an extension would allow for better execution of the approved reforms, and make it possible to comply with the tax obligations that will be implemented as a consequence of the reform.
The legislator added that, aware of the great effort that the transformation of outsourcing implies for the economic and productive activity in Mexico, it is pertinent to propose that a one-month extension be granted, in this single instance, for the provisions of the aforementioned reform to be satisfactorily complied with, proposing that the provisions of articles 4, 5 and 6 enter into force on September 1, 2021, and the provisions of articles 7 and 8 enter into force in the fiscal year 2022.
Monreal added that deadlines are established for the sectors involved to carry out a series of actions, among which the following stand out very clearly: 1) registering with the Ministry of Labor and Social Welfare of individuals and legal entities that provide services of subcontracting and the transfer of the goods that are the object of the company or establishment, as provided in the reform of article 41 of the Federal Labor Law, and 2) canceling the employer’s records before the social security authorities, carried out under the validity prior to this reform.
The legislator indicated that the 30 additional days that are proposed will allow, on the one hand, that the purpose of the proposed reform is not lost and, on the other, fulfill the purpose of the fiscal measures that will be implemented as a consequence of the aforementioned decree.
Senator Monreal pointed out that September 9, 2021, will be the deadline by which the President proposes the fiscal package for 2022, which must already contain the criteria in fiscal and economic matters.
Senator Monreal commented that to fulfill this purpose he will present this reform bill before the Permanent Commission, which he has informed, so that if they do have the necessary agreements and consensus, the Chambers can be summoned to an extraordinary period for Thursday, the 29th or Friday, the 30th of July, in order to discuss, and potentially approve this project.
Consequently, a series of comments were made in the press of the ECONOMISTA newspaper on July 26, these being the following:
The Mexican Institute of Social Security (IMSS) will extend the transition periods for the fulfilling of the obligations derived from the outsourcing reform until further notice;
The Technical Council of the IMSS made the decision to extend the deadline for companies having subcontracted workers, for the reason that these companies could be able to comply with the procedures established by the already approved reform, leaving the term open until the Congress defines the new deadline.
Finally, two reform bill proposals were presented before the Permanent Commission of the Congress to extend the terms of the reform. The first one was presented by Senator Monreal from the political party MORENA, seeking to extend the transition until September 1, 2021. The second one was presented by the political party PAN, seeking to extend the transition until January 1st, 2022. Both proposals were referred to the Labor and Finance commissions of the Mexican Senate for their corresponding ruling in the coming days.
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Luis Schmidt joined OLIVARES in 1991, became a partner in 1995, and has almost 40 years of legal experience, with a specialization in copyright in the business of entertainment and culture. He has represented the world’s leading companies in the music, film, television, book publishing, fine art, design, folklore, and software.