Mexico: No Agreement Over Proposed Outsourcing Ban

February 26, 2021

Mexican President López Obrador noted an agreement with the business community over the legislative effort to ban outsourcing had yet to be reached but expressed confidence that the ban would be adopted “in this period.” 

In December, an agreement had been reached with the business community to delay the bill's passage until February in order to allow for negotiations.  The delayed negotiation deadline appears to have expired but President López Obrador confirmed it would be adopted.
  
As we have previously noted, multinational companies in Mexico frequently rely on outsourcing as a workforce composition strategy.  The strategy, combined with a dual-structure setup, allows companies to avoid Mexico's profit sharing rules, which require companies to share 10% of taxable profits with employees.  This profit sharing tax is certainly a sticking point to negotiations over the outsourcing ban.