Companies Face Tax Penalties Under Mexican Outsourcing Bill

Legislation limiting employee outsourcing in Mexico would increase tax compliance requirements for companies and introduce harsher criminal penalties for corporate structures that evade taxes.

The initial bill proposed last November sought to ban the outsourcing of personnel altogether. But Mexico’s government, business groups, and unions agreed this month to cap labor costs and allow for the subcontracting of “specialized services” while still putting in place penalties for business using “factureras”—shell companies that produce fake invoices that third parties use to cut taxes.

“It’s good news, a very good agreement,” said President Andres Manuel Lopez Obrador in a press conference presenting ...