On April 23, 2021, the Mexican government amended several legal statutes including the Federal Labor Law, Social Security Law, National Workers’ Housing Fund Institute Law, Federal Tax Code, Income Tax Law and Value Added Tax Law, to forbid the subcontracting of personnel (the “Bill”). A summary of the most relevant matters addressed by the Bill may be found in our April 23, 2021 Alert.
Although companies had the obligation to comply with the Bill within 90 days following its enactment, on July 30, 2021, the Mexican Congress approved an extension of the compliance obligations to September 1, 2021.
We strongly suggest that companies identify and assess not only whether their operations comply with the Bill, but also that their corporate purpose is sufficiently narrow to allow them to subcontract specialized services when needed. Companies should perform these assessments and act accordingly and expeditiously to prevent adverse and significant tax, labor and social security consequences.