Through the Second Annual Amendment to the 2017 Tax Law (in Spanish: la Segunda Resolución de Modificaciones a la Resolución Miscelánea Fiscal), published this past July 18, the authorities formalized the extension of the period until December 2017 that ensures compliance with the obligations between the contracting party and the contractor.
It should be pointed out that, in accordance with the Law on Income Tax (in Spanish: la Ley del Impuesto Sobre la Renta (ISR), and the Value-Added Tax Law [in Spanish: la Ley del Impuesto al Valor Agregado (IVA)), regarding subcontracted employment, as stipulated in the Mexican Federal Labor Law (in Spanish: la Ley Federal del Trabajo), the contracting party must obtain from the company that is providing services the following information:
A copy of a tax deductible receipt for payment of wages to employees that may have provided subcontracted services.
Acknowledgements of receipts.
A copy of the tax withholding return completed for the aforesaid employees, and;
A copy of the contributions from the worker-employer´s management of the Mexican Social Security Institute (in Spanish: el Instituto Mexicano del Seguro Social).
A regular photocopy of the corresponding return and an acknowledgement of receipt for the payment of the Value-Added Tax, as well as the information that was reported to the Tax Administration Service (in Spanish: SAT).
In the event that the aforementioned documentation cannot be compiled, the Tax Administration Service could consider the Income Tax as non-deductible, and the corresponding Value-Added Tax as non-creditable for these types of transactions.
In turn, the company that renders the service is obligated to provide the contracting party with a copy of the previously mentioned documentation, and to inform the Tax Administration Service of the amount of the Value-Added Tax (in Spanish: IVA), that was transferred in a specific manner to each of its clients, as well as the Value-Added Tax that was paid in the respective monthly return.
The obligations that correspond to the months from January to November of 2017 and those that follow may be fulfilled from December of the same year, and by using the information application that will be published on the website of the Tax Administration Service (SAT).
It´s worth mentioning that this extension is only applicable for those taxpayers that issue the Payroll Digital Tax Receipt (in Spanish: CFDI), using the corresponding complement in version 1.2.
In Payroll Plus we can advise and help you in the review and performance of all the necessary requirements, so that starting December 01 your companies comply with the fiscal guidelines established by the Tax Administration Service.
Please do not hesitate to contact us should you have any further questions.