Value Added Tax withholding on outsourced services

Pursuant to the amendments to the Miscellaneous Tax Resolution 2020 (Resolución Miscelánea Fiscal 2020) starting on January 1st, it is mandatory to withhold 6% (six percent) of the compensation paid for the provision of professional services that involve making personnel available to another party.

Outsourced services are those through which a service provider executes works or provides services with his employees under his responsibility, in favor of any individual or corporation, which supervises the development of the services or the execution of the contracted works.

It should be noted that the tax withholding refers to the mere provision of personnel of one person in favor of another, regardless of whether or not they are employees of the service provider, regardless of the geographical location, etc.