Chihuahua, Chih., June 3rd, 2021.

Dear clients and friends,

We hereby inform you that as a result of the outsourcing amendment, in which several provisions of the Federal Labor Law, the Social Security Law, the Law of the National Workers’ Housing Fund Institute, the Federal Tax Code, the Income Tax Law and the Value Added Tax Law were modified and repealed, all of which are aimed at prohibiting the outsourcing of personnel in activities related to the corporate purpose of the company or in the core business economic activity of the company who receives such services, there are severe sanctions, including the non-deductibility or accreditation of payments or fees made regarding the outsourcing of activities, amongst others.

Due to the above, this firm recommends to review integrally the activities (operationally & legally) of the company receiving services to confirm such services are not on the corporate purpose or the core business economic activity of the provider, consequently it is important to carry out a complete review, with the different areas of the company, the operations and different documents of the latter in order to avoid falling into a forbidden outsourcing scheme.

Additionally, it is suggested to identify the services rendered by third parties that are currently required for the normal operation of the company, in order to define clearly and precisely the specific works, actions and tasks performed by the service providers and whether such activities can be considered as specialized based on the core business economic activity of the company and its corporate purpose, as well as the review of service agreements entered into with such third parties to determine whether they have the necessary protection measures to avoid any possible non-compliance of the new provisions.

If you would like further information, please do not hesitate to contact Mr. Rolando Castellanos Macal at rcastellanos@iclmx.com; and Mr. Jorge Almanza Rios at jalmanza@iclmx.com.