How do legislative reforms affect how specialized service providers are evaluated and engaged?How are tax and labor risks derived from current regulations managed?

The companies engaging specialized service providers through the designation of personnel have become a channel for monitoring tax compliance. For the leaders of the organizations, it is vital to find out, evaluate and manage this information to prevent tax and labor risks that could imply a high cost.

At the end of 2023, invitation letters were issued to more than 34 thousand employers, derived from surveillance actions regarding outsourcing. Having the necessary information to present the corresponding clarifications to the authority is vital to preserve the tax and labor effects.

The foregoing requires collecting and keeping documentation such as the payroll receipts (CFDI) of the personnel that provided the service, the Income Tax (IT) return with the tax withheld from said workers  by the supplier, the Value Added Tax (VAT) return with the tax paid, as well as the payments of social security contributions and the current folio of the Registry of Providers of Specialized Services or Specialized Works (Repse, per Spanish acronym) related to the engaged activity. Failure to comply with this regulation could represent an increase in the tax burden of up to 46% on the cost of said expenses.

Considering the tax and labor impact this regulation represents for companies, the following four considerations are important:

The financial impact that non-compliance with this regulation could mean represents 46% of the current cost of this type of services; that is, up to 30% of IT for being non-deductible and 16% VAT for not being creditable, without overlooking the joint responsibility that is acquired.

Source: Federal Tax Code

During 2024, the Repse renewal process will be carried out for those service providers who have requested their registration three years ago. In this situation, it will be crucial to continue with practical compliance schemes.

Source: Federal Tax Code

Our technology tool for Comprehensive Control of Service Providers (CIPS, per Spanish acronym) accompanies organizations in the management of compliance with obligations. This will allow to identify, in a timely manner and in real time, the level of risk or financial impact that not having information on service providers and other issues may represent.

Identifying and knowing the type of operations that are carried out on a day-to-day basis makes it possible to deal with the new tax regulations imposed by the authority on each of them in a timely manner.

Contact KPMG specialists to design and implement a comprehensive strategy tailored to your business in the management of service providers.

Our services:

We work shoulder to shoulder with you to become your business partner in matters of social security, payroll management, evaluation of operational structures in accordance with the Federal Labor Law, the Mexican Social Security Institute (IMSS per Spanish acronym), the National Work er Housing Fund Institute (Infonavit per Spanish acronym).

With a comprehensive approach, we can assist you in evaluating specialized services, providing an analysis of the systems, as well as improving controls and tools to safeguard information.

Similarly, we are prepared to provide the following services:

— Technologies and control mechanisms, considering geographic factors
— Structure and alignment of business processes
— Risk management
— Regulatory compliance
— Planning and strategic alliances
— Price forecasts, optimization of consumption curves and strategic negotiations for the supply

Contact our specialists to learn about the CIPS system and the benefits it can bring to your business.

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