NEWSLETTER
Firming up the Difference
Tax and Labor,
Newsletter
July 27, 2016
Social
Security
and
Immigration
Practices
Outsourcing: Recent rulings and issues regarding its treatment
before the Tax Administration Service
Regulated by the Mexican Federal Labor Law (LFT per its Spanish
acronym), outsourcing is an important issue for the development of
business in Mexico.
Sánchez Devanny is a leading
Mexican law firm that provides
integral legal advice both to
Mexican
and
international
clients.
Practice Areas
Corporate and M&A
Corporate and Project Finance
Changes to the LFT in 2013, especially those concerning the practice of
outsourcing, have resulted in several authorities’ construing article 15-A
legal scope. Value added tax (VAT) refund requests have been denied by
the Tax Administration Service (SAT per its Spanish acronym), arguing
that outsourcing must not be considered as rendering independent
services for which VAT should be paid as the article 15-A of the LFT set
forth.
In addition, the Taxpayers Defence Ombudsman1 (PRODECON per its
Spanish acronym) and the Federal Tax Court (TFJFA per its Spanish
acronym) have issued several decisions challenging the SAT’s stance
regarding the denial of VAT refund requests2.
On July 15, 2016, the Third Circuit Court for Administrative Matters sitting
en banc published the ‘legal precedent by contradiction’ (mandatory for the
Third Circuit only), same that establishes the following: “INDEPENDENT
SERVICES. IN ORDER TO DETERMINE IF VAT APPLIES TO THE
COMPENSATION PAID FOR THE OUTSOURCING OF PERSONNEL,
REFERRED TO IN THE SECOND TO LAST PARAGRAPH OF ARTICLE 14
OF THE VALUE ADDED TAX LAW, IT IS NECESSARY TO CONSIDER
ARTICLE 15-A OF THE FEDERAL LABOR LAW.“
Financial Institutions and Services
International Trade and Customs
Real Estate, Infrastructure and
Hospitality
Tax
Private Wealth Management and
Estate Planning
Labor, Social Security and
Immigration
Corporate Governance and
Regulatory Compliance
Energy, Natural Resources and
Environmental
Life Sciences
By virtue of this precedent it was settled that in order to determine
whether the payment for outsourcing services is subject to or exempt from
VAT, the SAT shall analyse whether the relevant outsourcing complies with
the requirements set forth in the LFT (article 15–A). If outsourcing does
not comply with such requirements, a labor relationship could be found
with respect to the outsourced personnel and the contracting party,
thereby exempting this compensation for VAT purposes and denying the
taxpayer the ability to credit such paid VAT3.
To be considered outsourced work under Article 15-A, the work must meet
the following conditions:
a) The work cannot cover the totality of work activities, whether equal or
similar, that are carried out in the workplace;
b) The work should be justified due to its specialized character; and
c) The work cannot include tasks equal or similar to the ones carried out
by the rest of the employees of the contracting party.
Intellectual Property, Entertainment
and Sports Law
Data Privacy and Information
Technology
Litigation and Alternative Dispute
Resolution
Antitrust
We understand that in the near future the SAT will release a standard
regarding their stance on this issue. Considering the foregoing, in order to
prevent possible problems and to lower existing risks, we encourage
companies to conduct reviews of their outsourcing structures and
contracts.
At Sanchez Devanny, our Labor and Tax practice areas have extensive
experience in these matters, so if you require any further information or
support regarding the aforesaid, please do not hesitate to contact us.
Best regards,
It is important that taxpayers carefully review the impact that these
measures have on their tax compliance obligations.
This bulletin was jointly prepared by Guillermo Villaseñor Tadeo
([email protected]),
Jorge
Lopez
Lopez([email protected])
and
Antonio
Vizcaya
Abdo
([email protected]).
______________
1http://www.prodecon.gob.mx/Documentos/RecomendacionesSPDC/2015/37-2015recomendacion/files/downloads/(Testado)%2037-2015%20Recomendaci%C3%B3n.pdf
http://www.prodecon.gob.mx/Documentos/CriteriosNSAJ/compilacion_criterios_sustantivos
_sasen_actualizada.pdf
2 http://sctj.tfjfa.gob.mx/SCJI/
3http://sjf.scjn.gob.mx/SJFSem/Paginas/DetalleGeneralV2.aspx?ID=2012122&Clase=DetalleT
esisBL
Contact
Tax
José Ángel Eseverri Ahuja
[email protected]
Ricardo León Santacruz
[email protected]
Abel Francisco Mejía Cosenza
[email protected]
Guillermo Villaseñor Tadeo
[email protected]
Labor, Social Security and Immigration
Alfredo Kupfer Dominguez
[email protected]
David Puente Tostado
[email protected]
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