The term "outsourcing" or subcontracting has been a common word in the Mexican business lexicon for years. However, following a profound legislative reform in April 2021, the business landscape has changed. Outsourcing MX has changed dramatically. What was once a widespread practice, though often controversial for its abuses to the detriment of labor rights and tax collection, is now strictly regulated. Understanding what is Outsourcing MX Currently, understanding what is prohibited, what modalities are permitted under strict conditions, and what the legal implications are for non-compliance is critical for any company operating in Mexico, including those in Quintana Roo.
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What Was Outsourcing Meant Before the 2021 Reform?
Prior to the 2021 reform, the model of Outsourcing MX It was widely used for one company (contractor or beneficiary) to obtain from another (contractor or outsourcing provider) the supply of workers to perform tasks within its own workplace. Many companies resorted to this approach for all or a significant portion of their workforce, seeking administrative flexibility, reduction of direct workloads, or, in some cases, to avoid tax and social security responsibilities. Practices such as "insourcing" (creating companies within the same group to provide personnel) or the use of service companies that only managed payroll were common, but often resulted in the weakening of workers' rights.
The 2021 Outsourcing Reform: A Before and After for the Outsourcing MX
Published in the Official Gazette of the Federation on April 23, 2021, the reform on subcontracting modified various laws, including the Federal Labor Law (LFT), the Social Security Law, the Infonavit Law, the Federal Tax Code, the Income Tax Law, and the VAT Law. Its main objective was to combat abusive practices of personnel outsourcing, guarantee labor rights, strengthen tax and social security collection, and redefine the rules of the game for the Outsourcing MX. This Mexico's subcontracting reform 2021 marked a milestone.
Prohibition of Subcontracting of Personnel in the Outsourcing MX Current
The most significant change of the reform is the prohibition of subcontracting of personnel. This means that, as a general rule, a natural or legal person cannot make their own workers available for the benefit of another. Workers who carry out the main and substantive activities of a company must be directly employed by the company and be part of its payroll. This was a direct blow to the structures of Outsourcing MX which were based on the mere intermediation of labor.
Companies operating under personnel subcontracting schemes had to regularize their workers' status, in many cases transferring them to the payroll of the beneficial owner (recognition of the employment relationship).
Specialized Services and Specialized Works: What is Permitted under the New Law
The reform to the Outsourcing MX did not completely eliminate the possibility of a company hiring external services. What is allowed is the subcontracting of specialized services or the execution of specialized works, as long as these are not part of the corporate purpose or the primary economic activity of the beneficiary company. In other words, services that provide specific added value and are not the "core business" of the contracting company may be contracted.
The REPSE: Registry of Providers of Specialized Services or Specialized Works
In order to provide specialized services or carry out specialized works, contracting companies must obtain their registration in the Public Registry of Contractors of Specialized Services or Specialized Works (REPSE), administered by the Ministry of Labor and Social Welfare (STPS). To obtain and maintain the REPSE, companies must demonstrate, among other requirements, the specialized nature of their services and be up to date with their tax and social security obligations. Registration is valid for three years and must be renewed. This is a pillar of the current business model. Outsourcing MX.
Formalization of the Specialized Services Provision Contract
The contract between the beneficiary company and the specialized services contractor must be formalized in writing and must clearly specify the purpose of the services to be provided or the works to be executed, as well as the approximate number of employees who will be involved in the fulfillment of the contract. In addition, the contractor must provide the beneficiary with a copy of its REPSE registration.
Key Legal Implications of the New Scheme Outsourcing MX
The legal implications of outsourcing in Mexico Under the new scheme, they are profound and cover various areas:
Joint Liability
The company that hires specialized services (beneficiary) is joint liability outsourcing together with the contracting company regarding the labor and social security obligations of the workers used to perform these services, in the event of the contractor's failure to comply. This requires the beneficiary to be very diligent in the selection and supervision of its suppliers.
Tax Implications (ISR and VAT)
In order for payment for specialized services to be deductible for ISR purposes and for the transferred VAT to be creditable, the beneficiary company must verify that the contractor has a valid REPSE registration, obtain a copy of the CFDI payroll of the assigned workers, of the payment vouchers for employer-employee contributions to the IMSS, contributions to Infonavit and the VAT declaration. Failure to comply with the rules of the Outsourcing MX can have serious tax consequences.
Implications for Social Security (IMSS and INFONAVIT)
Companies providing specialized services must provide detailed information on their contracts to the IMSS and INFONAVIT (ICSOE and SISUB, respectively) every four months. Beneficiaries must verify this compliance.
Penalties for Non-Compliance
Carrying out prohibited subcontracting of personnel or hiring specialized services from a company without a valid REPSE registration entails sanctions for illegal subcontracting very severe, which can include fines of thousands of UMAs. In addition, simulating the provision of specialized services can constitute a crime of tax fraud. It is essential to understand the Outsourcing MX allowed in Mexico to avoid these risks.
How to Adapt to the New Framework of Outsourcing MX in Quintana Roo?
For companies in Quintana Roo, especially in sectors such as tourism, hospitality, construction and services, which historically may have used outsourcing schemes, adapting to the new framework Outsourcing MX It has been both a challenge and a necessity. Key steps include:
- Internal Diagnosis: Analyze personnel structures and contracted external services to identify any schemes that could be considered prohibited personnel outsourcing.
- Regularization: If personnel subcontracting is detected, the beneficiary company will hire the workers directly.
- Hiring of Specialized Services: If external services are required, ensure that they truly qualify as specialized (not part of the corporate purpose or primary activity of the beneficiary) and that the provider has a valid REPSE (Registered Accounting System) and is up to date with its obligations.
- Contract Review: Adapt service provision contracts to comply with legal requirements.
- Compliance Audits: Implement processes to periodically verify compliance of specialized service providers.
The correct implementation of the model Outsourcing MX It is vital to the operation in Quintana Roo.
Difference between Specialized Services and Provision of Traditional Goods or Services
It is important not to confuse the outsourcing of specialized services regulated by the reform with the traditional contracting of other services or the acquisition of goods. For example, hiring a cleaning company that sends its staff with its own equipment and supervision to clean offices, or hiring an accounting firm to do the accounting, is permitted if these services are specialized and the provider has a REPSE (Spanish Social Security Administration). However, the purchase of supplies, the leasing of machinery without an operator, or the hiring of a catering service for an event are distinct commercial relationships that do not necessarily fall under the strict regulation of the REPSE, as long as they do not involve the provision of personnel who work under the contractor's authority.
The Role of Legal Consulting in Outsourcing
Given the complexity of the reform and the serious consequences of non-compliance, the legal consulting outsourcing is more important than ever. A labor lawyer or corporate specialized in the new scheme of Outsourcing MX can:
- Help determine if a service qualifies as specialized.
- Provide advice on the process of obtaining or renewing the REPSE for supplier companies.
- Prepare or review contracts for the provision of specialized services.
- Implement verification and compliance mechanisms for beneficiary companies.
- Defend companies against STPS inspections or requests from other authorities.
At City Laws, we offer legal advice in Playa del Carmen and all of Quintana Roo to navigate these regulations.
The transformation of the Outsourcing MX This has forced companies to reevaluate their labor and supply structures. Although the goal has been to protect workers' rights and the integrity of the tax and social security system, adaptation requires a clear understanding of the new rules. The key lies in correctly identifying truly specialized services and in diligently selecting and contracting suppliers that comply with the REPSE and all its obligations. For companies in Quintana Roo, ensuring this compliance is critical to their viability and reputation.
If your company needs guidance on the legal framework of the Outsourcing MX, obtaining the REPSE, or reviewing their service contracting schemes, Contact City LawsWe will provide you with expert advice to operate safely and compliantly.
