On November 12, 2020, the Federal Executive filed before the Chamber of Deputies of the Congress of the Union the “Initiative of the Federal Executive that reforms, adds and derogates various provisions of the Federal Labor Law, Social Security Law, Law of Employees Housing Fund Institute, Federal Tax Code, Income Tax Law and Value Added Tax Law.” To date, this proposed amendment is still under discussion and review. Notwithstanding the proposed federal legislation, at the local level additional schemes to regulate outsourcing have been developed.
In Mexico City, on January 1, 2021, the amendment to the Tax Code of Mexico City (TCMX) came into effect, adding an obligation that individuals and legal entities file a notice before the Ministry of Administration and Finance of Mexico City (MAF) when hiring staff or subcontracting services from a contractor that constitute the subcontracting of personnel. (Currently, the obligation is in the terms of Article 15-A of the Federal Labor Law. Furthermore, we understand that this obligation is updated when the payment of remunerations to subcontracted personnel is subject to Mexico City payroll tax.)
The notice must be submitted by means of the application—currently in development—established by the MAF through the Contribution Administration System (CAS); temporarily, the MAF provides an email to provisionally submit the corresponding notices, and within 10 days following the execution or modification of the respective contract, include, among other information, the original or certified copy of the contract. A transitional provision provides an initial term of 30 days to submit the notice on contracts entered into effect or modified before January 1, 2021.
The MAF is empowered to require the filing of omitted notices within a term of 10 days. The fine for such an omission or for an untimely filing ranges from $3,713 Mexican pesos to $9,413 Mexican pesos.
The State of Quintana Roo has already implemented similar requirements. On January 1, 2019, an amendment to the state’s Payroll Tax Law came into effect, which implemented a similar obligation related to payments of cash or in-kind remuneration for subordinate personal work, regardless of the designation given to them, as long as they derive from construction for a particular work or specified time.
O. Iván Andrade Castelán is a law clerk in the Mexico City office of Ogletree Deakins.