A package of tax reform measures includes a provision that would address the tax treatment of payments made with regard to the subcontracting of personnel. Under this proposal (which is subject to amendments during the legislative process), such payments would not be deductible or creditable for tax purposes.
The legislation defines when situations would be considered eligible under the definition of subcontracting of personnel. For these purposes, subcontracting generally would not be considered to be the provision of specialized services that are not part of the corporate purpose or the economic activity of the contractor.
For income tax purposes, payments for subcontracting of personnel generally would not be deductible expenses.
Regarding value added tax (VAT), it is proposed that the tax for such subcontracting services generally would not be creditable. Also, the requirement to withhold VAT at a rate of 6% would be repealed when personnel or staff is provided.
Read a November 2020 report (Spanish) prepared by the KPMG member firm in Mexico
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