Mexico: New Outsourcing Law Should Prevent Simulation and Tax Evasion

16, December

A report prepared by Amcham Mexico states that outsourcing is a figure endorsed by the ILO, which when applied in ...

A report prepared by Amcham Mexico states that outsourcing is a figure endorsed by the ILO, which when applied in accordance with the law generates formal employment, investment and the development of talent, says AmCham.

The American Chamber of Commerce of Mexico (AmCham) said that the outsourcing initiative of President Andrés Manuel López Obrador should avoid over-regulation of the labor sector, since it causes simulation and tax evasion.

“Companies and workers will have the next Legislative Period as a space for deep and responsible analysis to avoid over-regulation, which generates the risk of greater simulation and evasion,” says the organization where 1,450 companies of U.S. origin are affiliated.

The legislative debate must ensure a consensual transition, protecting formal employment and the viability of companies, at a crucial time for economic recovery, adds the organization that groups companies that generate 21% of the national GDP, as well as 2.5 million direct formal jobs and 6 million indirect jobs.

The American Chamber of Commerce of Mexico said it will continue to participate with recommendations focused on strengthening a culture of compliance, combating informality and generating a competitive environment for businesses and workers.

“Mexico’s economic recovery depends largely on our ability to make the creation of formal jobs more flexible, promote investment and the development of local talent, factors that are essential for small and medium-sized businesses, which represent more than 99% of the country’s companies,” he added.

“Labor outsourcing is a figure legally endorsed by the ILO, which when applied in accordance with the law allows these benefits,” concluded the American Chamber of Commerce of Mexico.

AmCham added that the discussion of the subcontracting initiative should include a thorough understanding of the administrative effects of the reform, as well as clarity on fundamental issues such as specialization and OCTs.

“As representatives of the U.S.-Mexico bi-national business community, we will continue to participate through institutional dialogue channels to achieve a solution that benefits Mexico,” added AmCham.

On December 9, 2020, the President of the Republic and 10 business organizations signed a Tripartite Agreement between the business sector, the labor sector and the Government of Mexico regarding subcontracting.

The tripartite pact establishes that companies, which handle outsourcing payrolls, will stop developing irregular practices harmful to workers such as mass layoffs in December.

“The document signed by the president, employers, and union leaders states, “A call is made to the companies that handle payrolls to immediately stop developing irregular practices that are harmful to the workers, such as mass layoffs in December.

The agreement also states that the IMSS and the SAT will make a formal exhortation to these companies and if irregularities are found or possible crimes are committed, they will proceed immediately to administrative or criminal proceedings.

“The companies will immediately begin the process of regularizing their labor force within the framework of the law initiative presented by the Federal Executive,” states the agreed agreement on outsourcing.

The dialogue between the private sector and the government of Andrés Manuel López Obrador is key to achieving an effective regulatory framework in favor of legality, formality and better labor practices, said AmCham.

Amcham. Forbes