Chihuahua, Chih., January 27th, 2020.
Dear clients and friends,
On December 9th, 2019 the “DECREE which amends, adds and repeals provisions of the Income Tax Law, Value-Added Tax Law, Special Tax on Production and Services Law, and the Federal Fiscal Code” was published on the Federal Official Gazette; and entered into force on January 1st, 2020.
Among the herein amendments, section IV of article 1-A of the Value-Added Tax Law was added, which states, that the referred tax retention, is mandatory for “Companies and individuals that perform commercial activities, that hire services that imply the appointment of personnel, either to the contracting party or a related party; whether or not the personnel provides the services in the premises of the contracting party or any related party’s; under the direction, supervision, coordination, or dependence of the contracting party, or not; and regardless of the name given to the contractual obligation. In this case, the referred retention would be of 6% of the paid compensation”.
Due to the vague wording of the referred amendment, its effect is not clear; it has been concluded that said tax retention would be applicable for outsourcing services and any other kind of services. Hence, the Attorney General for the Taxpayers Defense (PRODECON) requested the Tax Administration Service (SAT) to clarify, no later than January 24th 2020, the retention of the 6% Value-added tax that Companies and Individuals that perform commercial activities that hire outsourcing services, should be performing since January 1st, 2020.
In the coming days, we will be informing the SAT’s official response, regarding the herein.
For more information regarding this topic, please do not hesitate to contact Mr. Sergio Humberto Salas Medrano, Partner of the Fiscal and Administrative Area, at his email ssalas@iclmx.com, as well as Mrs. Ana Gabriela Moreno Luna, at her email amoreno@iclmx.com, and Mr. Fernando Antonio Borunda Bustamante at his email fborunda@iclmx.com.
Mr. Sergio H. Salas Medrano.
Inintegrum Corporación Legal, S.C.
