Mexico: Details on agreement under outsourcing initiative

Mexico: Agreement under outsourcing initiative

The Ministry of Labor and Social Welfare issued Bulletin 041/2021 (5 April 2021) reflecting an agreement on subcontracting between labor and business sectors and the Mexican government.

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The agreement addresses the following topics that may affect Mexican companies:

  • The agreement aims to regulate the calculation of employee profit sharing (PTU) using the greater of: (1) a maximum limit of three months of the worker's salary, or (2) the average of the PTU collected by the worker in the last three years.
  • Under the agreement, calculation of the PTU base remains the same, but it is now “individualized” in such a manner that the individualized amount of PTU that an employee receives is five months (if the individualized PTU that an employee received in the last three years was four months, then the maximum amount will now be five months).
  • The agreement continues the prohibition of personnel subcontracting. Accordingly, structures such as “insourcing providers” or internal personnel service providers will be prohibited, as well as the hiring of personnel who perform activities that are related to the corporate purpose or main economic activity of the contracting company.
  • The agreement refers to the regulation of “specialized services” that apparently is a reference to shared services (and thus is relevant for corporate groups that provide services to various group member companies in Mexico, to the extent they obtain the proper authorization from the Ministry of Labor and comply with registration rules).

There is a three-month “grace period” before the provisions are effective. 

KPMG observation

Tax professionals have observed that the three-month grace period may not provide sufficient time for companies that may need to restructure their organizations to comply with the terms of the agreement.
 

Read an April 2021 report prepared by the KPMG member firm in Mexico


For more information, contact a KPMG tax professional in Mexico:

Armando Lara | +52 555 246 8300 | armandolara@kpmg.com.mx

Manuel Rico | +52 555 246 8558 | rico.manuel@kpmg.com.mx

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