April 26, 2021
Mexico enacts labor reform, denies deductions for outsourcing services
Service companies providing specialized services and projects, and companies operating under a subcontracting regime should evaluate the labor and tax impacts the labor reform could have on their operations and implement an action plan to comply.
On 23 April 2021, Mexico published, in the Official Gazette, the labor reform affecting outsourcing services, thereby enacting it. The labor reform is effective 26 April 2021. The tax provisions of the reform, however, are effective 1 August 2021. For more information, see EY Global Tax Alerts, Mexico introduces bill to amend labor and tax laws to prohibit outsourcing, dated 16 November 2020, Mexico postpones legislative action on outsourcing bill to 2021, dated 9 December 2020, Mexican Congress approves bill that would prohibit outsourcing services in Mexico, dated 21 April 2021, and Mexican Congress approves labor reform addressing outsourcing services, dated 26 April 2021.
For additional information with respect to this Alert, please contact the following:
Ernst & Young LLP (United States), Latin American Business Center
Ernst & Young Tax Co., Latin American Business Center, Japan & Asia Pacific
Ernst & Young LLP (United Kingdom), Latin American Business Center, London