Mexico published a Decree in the Official Gazette on 31 July 2021 that defers the implementation of certain provisions of the Decree published 23 April 2021 that amended various provisions of the Federal Labor Law, Fiscal (Tax) Code, Income Tax Law, Value Added Tax Law, and other legislation to reform the country’s labor outsourcing system. As previously reported, the April Decree effectively eliminated most outsourcing (subcontracting) of employees in Mexico in order to protect labor rights and abolish practices that allowed employers to avoid their obligations. This includes important tax changes that disallow tax deductions and input VAT credits in relation to payments or compensation made for outsourcing (sub-contracting) employees in certain cases.
The April Decree generally entered into force on 24 April 2021 while the new tax provisions were to enter into force on 1 August 2021. With the Decree published on 31 July, the new tax provisions are deferred to 1 September 2021. Certain registration and reporting obligations in relation to outsourcing employees are also deferred to 1 September 2021.
Source Orbitax
