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Cross-border Tax Talks

May 12, 2021

Acción Inmediata: Mexico adopts labor subcontracting rules

Doug McHoney (PwC's US International Tax Services Leader) and David Cueller (PwC Mexico’s Tax and Legal Services Leader) discuss Mexican developments, including outsourcing reform and Mexico's current position in the OECD BEPS Project. Doug and David cover: the history of Mexico's outsourcing regime; recent disruptive changes made to various laws, including the Income Tax Law, VAT Law, and Labor Law; the specialized services exception; companies impacted by the recent law changes; the potential for penalties and tax fraud; relevant compliance concerns; and US tax considerations. They also discuss Mexico's BEPS-aligned legislation and the non-deductibility of payments to certain foreign entities.

Timestamps:

  • 4:00 - Explanation of the Mexican outsourcing regime
  • 10:30 - How do the new rules operate and who is subject to them?
  • 13:20 - What is considered a specialized service?
  • 17:45 - How should companies comply with these new rules given the short time frame to do so?
  • 23:15 - What are the US tax implications? Specialized services
  • 26:00 - What happens if a service entity is serving more than one operating company?
  • 32:00 - Mexico’s BEPS aligned legislation
  • 35:15 - Mexico’s non-deductibility of payments to certain foreign related entities

 

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Doug McHoney

International Tax Services Co-Leader, PwC US

Geoff Jacobi

ITS, Knowledge Management Managing Director, PwC US

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