When doing business in Mexico, it is important to understand employment, payroll and tax laws. New Mexican Income Tax regulations have caused changes in the way employees are paid in Mexico.
New payroll rules
New regulations affect how payroll is done and issued to employees in Mexico. The new law outlines a process that all employers must abide by.
The process of issuing payslips to employees is now fully electronic. All payroll must go through a process before it can be issued to the employee. First, the electronic payslips must be submitted, validated and e-signed by the SAT (Mexican Tax Authority). To do the process, there is an intermediary called PAC, the authorized provider of certification. Through the PAC, the employer sends the payslip information of each employee to SAT, which then returns the payslips already e-signed also through the PAC. The payroll must contain personal and job information of the employee, the bank account number, tax Id (RFC), citizen Id (CURP), social security number, position, cost centre, etc. Also, it must include each wage type paid including in the payment, perception, taxes withhold, other deductions and net to be paid. The amount of money must also match the amount sent from the employer's account to the employee's bank account.
It is important to note that the employer must match their wage type codes with the official wage types published by SAT before sending the information to be e-signed by SAT.
Taxes and electronic payslips
Using the electronic payslips will make it easier for companies to comply with tax obligations. Prior to the introduction of this system, it was difficult for employers and employees to present an annual tax return. Now, all the information is already collected and resides in one place electronically, making it easy for the filing of annual taxes.
All companies must participate in the electronic payslip program – any company that doesn't comply with the tax authority will face penalties.
Get expert help
TMF Mexico is experienced in managing the complex system of electronic payslips for payroll. Our experts work with companies to manage every step of the process from the submitting, to approval and administering of the payslips to employees. We also help you and your company to maintain a compliant operation. Contact us to talk about how we can help.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.