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From North To South

Also known as subcontracting, is the headache (struggle) of 4.9 million Mexicans


From North To South

By: Abigail Cisneros

Outsourcing, a guarantee for companies in the evasion of taxes

Subcontracting or outsourcing is one of the issues that the deputies left pending in the proposal for reforms to the federal labor law. Although in theory it has been regulated since 2012, Mexicans continue to be abused. Under this contract regime, they lose their rights, especially since it is not clear what is considered as that, it is important to define this activity in the Federal Labor Law (LFT) .

Outsourcing is a business practice, it would be subcontracting that brings benefits to the bosses because it supposedly reduces manufacturing and equipment costs, among other aspects. However, in Mexico, it benefits them by the tax evasion of these companies.

Despite the demonstrations against the Chamber of Deputies, the reforms to the new LFT did not clarify how this activity will be regulated, but it does focus on matters such as conciliation, conflict resolution and unions. The deputies approved this law in recent days with 417 votes in favour, one against and 29 abstentions. The guarantee, in particular, was 258 votes in favour, 67 against and 18 abstentions.

The Mexican Association of Companies of Human Capital details that there are 4.9 million Mexicans that are hired by outsourcing, this activity also implies the evasion of taxes, one of the main objectives of the employers. According to figures from a study commissioned by the Department of Mathematical and Computational Statistics of the Autonomous University of Chapingo by the Tax Administration Service (SAT), the 3.39 per cent of the Income Tax (ISR) collected in 2017 is being evaded.

Translator: Martín Caballero

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