Mexico Global Payroll & Tax Information Guide
Do you need assistance with global payroll services in Mexico? We are a global payroll technology partner who can introduce you to a payroll services provider from our global payroll network. We specialize in technology for Global Payroll Management and assist companies who require global payroll services as they scale into new countries.
We help multinational employers to
- Standardize their global payroll process,
- Integrate and consolidate global payroll data,
- Centrally manage their payroll with visibility & control.
Payslip would be delighted to partner with you to ensure compliant and accurate global payroll management.
Due to covid-19, the following measures were taken by the Mexican authorities
- Employers can defer payments of worker-employer social security contributions up to 48 months.
- Mexican government announced that it will be granted one million loans of MXN 25,000 each 500,000 for the informal economy and 500,000 for the formal economy.
Global Payroll Mexico
Our partner J.A. Del Rio has put together a short video explaining Mexico’s payment regulations and laws. Watch Alejandra Campero from the Client Success Department at J.A. Del Rio presenting the top 5 new features of the CFDI in Mexico.
Basic facts on payroll in Mexico
Employers in Mexico are responsible for federal income tax withholding and remittances, Social Security withholding and contributions, and state payroll tax payments.
Foreign workers in Mexico are offered the same protections and legally-mandated benefits as resident workers. Mexican employers are required to have a workforce in which at least 90 percent of the workers are Mexican citizens.
Mexico provides special treatment for businesses that qualify as maquiladoras. Maquiladoras are foreign-owned companies in Mexico that are able to import machinery and materials duty free, export finished products around the world and avoid permanent-establishment status for tax purposes.
Employers must keep accounting documents on record for five years after they were emitted. The tax year runs from 1st January to 31st December.
There is payroll tax in Mexico which is levied at the state level. The rate ranges between 1 and 3 percent of salaries and is withheld by the employer.
- Employee Social Security
The Social Security Rate levied on employees is 1.65 percent. This comprises of contributions to disability and life insurance and contributions to unemployment and old age.
- Employer Social Security
The Social Security Rate levied on employers is 7.58 percent. This is composed of retirement pensions, healthy and maternity insurance, occupational risk, day-care, disability and life insurance, and unemployment and old age insurance.
Compensation and Benefits
Labor and benefit requirements, such as minimum wage and overtime, and are governed by Mexican law even if an employment contract was signed outside of Mexico. Employers have an obligation to contribute to private retirement and old age insurance accounts of employees. In addition, profit sharing is required for most employers.
Foreign workers in Mexico
For tax purposes, nonresidents pay taxes as Mexican citizens except in the case of those working under the maquiladora tax regime.
The following people are considered to be residents in Mexico:
- individuals that have their house in Mexico,
- individuals obtaining more than 50 percent of their annual income in Mexico,
- individuals whose center of professional activities is located in Mexico, or
- people who are Civil servants or Mexican workers, even when the main base of its business is abroad.
Residents in Mexico, despite having foreign nationality, will pay taxes as any other national resident individual in Mexico.
- Temporary visitor with permission to engage in lucrative activities visa:
This visa allows foreign nationals to live and work in Mexico and receive a local salary for up to one year.
- Temporary visitor border worker visa:
This visa authorizes citizens of countries bordering Mexico to the south to live and work in Mexican border regions for up to one year.
- Temporary resident visa:
This visa authorizes foreign nationals to live and work in Mexico for up to four years.
- Permanent resident visa:
This visa authorizes foreign nationals to live and work in Mexico indefinitely.
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Using Payslip, we can manage all our payrolls across nine in-country vendors on one platform. When the global Covid-19 pandemic arose, it was not an issue from a payroll perspective, and critically getting everyone paid. The Payslip platform enabled continuity for our international payroll service including the fast and seamless implementation of the Payslip Employment Self Service during this time.
Payroll Manager, LogMeIn
Payslip as a technology platform has added a missing piece in our payroll set-up. As an international company with offices in 16 countries, it’s important to us that every employee at GetYourGuide has the same great experience when accessing their pay data.
At the same time, we work well with smaller local payroll providers, supporting us with direct local expertise in their countries. We were able to combine those two elements by placing the Payslip platform in the middle, to simplify reporting and communication with local providers, and to have one simple employee-facing solution across all locations.
Head of HR, GetYourGuide
With business and employee growth rates of above 50%, we rely on our vendors to deliver on time, every time. Payslip’s workflow automation, enables Phorest to manage our payroll provider process – data driven, real time and transparent. Payslip saves us time so we can focus on our business growth.
International Payroll Manager, Phorest
Payslip positions your team for success, and allows you to onboard hundreds of people when you need them very quickly and efficiently, in the same way for each country. The uniformed approach empowered our payroll teams to keep pace with our business.
Payslip also made our payroll process entirely transparent, which is invaluable to our payroll teams as we continue to grow and scale at such a rapid pace.
HR Systems Lead, Wave