Mario Barrera Quoted in Milenio on Potential New Outsourcing Law in Mexico

“Deputies will vote this Thursday law of the 4T to regulate outsourcing”

The initiative to regulate labor subcontracting , presented by President Andrés Manuel López Obrador on November 12, will go to vote in the ordinary session of the Chamber of Deputies this next Thursday, as provided by the coordinator of the majority fraction of Morena, Ignacio Mier , who expressed the support of his bench to limit and establish severe sanctions against companies that defraud the treasury through outsourcing.

…Mario Barrera , tax specialist at the Thompson & Knight law firm ,  explained that if outsourcing is prohibited, companies will have to reorganize their workforce to withstand the impact and not have such a strong tax burden derived from this reform. In addition, it will be a disincentive for hiring staff or maintaining a workforce.

Currently, he said, when a company pays another a subcontracting service, it incurs an expense that it credits for the purposes of the Value Added Tax (VAT); whereas if there are people who leave formal employment, they will not be able to pay the Income Tax (ISR) on their salary; with which the Ministry of Finance and Public Credit (SHCP)  will have a lower collection.

Barrera indicated that the bad practices have been tried to combat with modifications in different laws, “it has been sought to attack bad cholesterol” because outsourcing is neither good nor bad, it is a form of workload management, how it is used, there there is the problem.