Mexico Payroll Compliance map

WWT –Mexico Payroll Income Tax Deduction

WWT-MX-01 – WWT Tax Entity
Question from client:
Is the Mexico salary income tax levied in federal or states? Or both federal and states?
Are the federal and states personal income tax that levied separately? Or levied together?
What is the standard withholding tax rate?

Answer from Evershine RD:
Payroll tax (ISN) rates for various municipalities and states.
Cities and states 2022 Flat Rates
Aguascalientes 2%
Baja California 1.8% + 1.2% (Sobretasa)
Baja California Sur 2.5%
Campeche 3%
Chiapas 2%
Chihuahua 4%
Ciudad de Mexico (Mexico City) 3%
Coahuila 2%
Colima 2%
Durango 2%
Estado de Mexico 3%
Guanajuato 3%
Guerrero 2%
Hidalgo 2.5% to 3%
Jalisco 2.5%
Michoacan 3%
Morelos 2%
Nayarit 3%
Nuevo Leon 3%
Oaxaca 3%
Puebla 3%
Quintana Roo 3%
Queretaro 3%
San Luis Potosi 3%
Sinaloa 2.4% to 3%
Sonora 2%
Tabasco 2.5%
Tamaulipas 3%
Tlaxcala 3%
Veracruz 3%
Yucatan 3%
Zacatecas 3%

Income tax withholding tables for residents’ employment income, and tables for the employment subsidy were published in Mexico’s gazette, Diario Official.
2022 ISR Rates for Monthly withholding as below:
Lower Limit ($) Upper Limit ($) Fixed fee ($) Percentage to be applied on the excess of the lower limit
0.01 644.58 0.00 1.92%
644.59 5,470.92 12.38 6.40%
5,470.93 9,614.66 321.26 10.88%
9,614.67 11,176.62 772.10 16.00%
11,176.63 13,381.47 1,022.01 17.92%
13,381.48 26,988.50 1,417.12 21.36%
26,988.51 42,537.58 4,323.58 23.52%
42,537.59 81,211.25 7,980.73 30.00%
81,211.26 108,281.67 19,582.83 32.00%
108,281.68 324,845.01 28,245.36 34.00%
324,845.02 Onwards 101,876.90 35.00%

WWT-MX-02 – Registration
Question from client:
The Mexico salary income tax collection is under the jurisdiction of which government unit?
The registration of the Mexico salary income tax collection status, that is, the application procedure for the employer withholding certificate number, paper certificate number application, or online account application? Website? Employer withholding certificate
What is the advance certificate number of the number? Do you need to use the industrial and commercial certificate e-card to apply?

Answer from Evershine RD:
The Tax Administration Service (Servicio de Administracion Tributaria, abbreviated as SAT) or impuesto sobre la renta (ISR) collects all income taxes.
Employers and employees must enroll in the Federal Taxpayer Registry (Registro Federal de Contribuyentes/ RFC) on the SAT website before filing taxes.
Refer to https://www.sat.gob.mx/tramites/28753/obten-tu-rfc-con-la-clave-unica-de-registro-de-poblacion-curp

WWT-MX-03 – WWT Order (OD)
Question from client:
What is the order of Mexico salary income tax withholding declaration (information flow determines tax base) and payment (fund flow)?
Pay first and then declare?
Report first and then pays?
At the same time as the declaration and payment?
Answer from Evershine RD:
Deposit First (DF): Make monthly payments then file the required forms.

WWT-MX-04 – Mechanism of Filing (MOF)
Question from client:
Mexico’ salary income tax withholding declaration (information flow determines the tax base)
What is the method of account return?
Reporting cycle: every month? Every bimonthly? Every season? every half year? Per year?
Electronic filing? Manual filing? Electronic filing and manual filing coexist?
If electronic filing is possible: Web site URL?

Answer from Evershine RD:
Income taxes are paid monthly, and returns must be filed on a monthly and annual basis.
The timetable to file with a state’s tax authority, usually its finance department or treasury department, varies among states, although most states require employers to file with the state monthly or quarterly.
Filing methods also vary with some states requiring payments at given offices, banks, or online.
Monthly tax payments must be made between the 17th to the 22nd of the following month depending on the 6th numeric digit on the employer’s RFC.
Additionally, employers must file annual tax returns and may begin filing for the previous year in January.
The deadline for filing an annual tax return is 15 March.
Employers must file electronically through the Servicios de Declaraciones y Pagos on the SAT website.
Employers can download the DEM on the SAT website.

WWT-MX-05 – Mechanism of Payment (MOP)
Question from client:
What is the funding method for the Mexico salary income tax withholding payment (funding flow)?
Payment cycle: M per month? B every bimonthly? Q every season? H every six months? A every year?
Automatically authorize deduction of ACH (that is, take the initiative of the recipient)?
Electronic remittance to EFT (that is, the payer takes the initiative)?
Bank counter payment OCT?
Or the above methods coexist?

Answer from Evershine RD:
Income tax is paid to Tax Administration Service (SAT).
Monthly tax payments must be made by a date between the 17th to the 22nd of the following month depending on the 6th numeric digit on the employer’s RFC.
To both make monthly payments and file annual returns, employers must be registered and use SAT authorized banks.

BNF – Deduction of Employee Social Welfare

BNF-MX-01 – BNF Entity
Question from client:
Mexico social insurance, medical insurance, pensions, and other employee social welfare levy, is it federal? Is it states? Or is there a federal plus states? If there is a federal and states, are they levied separately? Or levied together? What is the withholding tax rate?
Answer from Evershine RD:
Mexico assesses Social Security taxes (IMSS), a housing fund tax, and an employee loan program tax (INFONAVIT).
Social Taxes Employee Employer
Disability and life insurance (SIV) 0.625% 1.75%
Occupational risk insurance (SRT) 0% 0.5% – 15%
Illness and maternity insurance (SEM) 0.25% – 0.4% 0.7% – 20.4%
Day-care Services and Social Benefits (SGPS) 0% 1%
Retirement, unemployment in advanced age and old age insurance (SRCV) 1.125% 5.15%
National Housing Fund (INFONAVIT) 0% 5%

BNF-MX-02 – Registration
Question from client:
Social Security Certificate Number? What is the name of the government agency in charge of social insurance?
Medical insurance certificate number? What is the name of the government agency in charge of medical insurance?
Pension certificate number? The name of the government agency in charge of pensions?
How to apply for the social welfare certificate number for employees in the country? Paper certificate number application? Or online account application? Website? Need to use the industrial and commercial certificate electronic card to apply?
Are the above three certificate numbers unified or separate?

Answer from Evershine RD:
Compensation and benefits provisions mandated in the Constitution of 1917 and the Federal Labor Law and regulated by the Ministry of Labor and Social Welfare (Secretaria del Trabajo y Prevision Social).
Social Security taxes administered by the Mexican Institute of Social Security (IMSS).
Housing Fund assessment and employee loan program tax are administered by the Mexican Institute of the National Housing Fund for Workers (INFONAVIT).
Employers must first register with the RFC before registering themselves and their employees with the IMSS.
To register with IMSS, employers must submit a Notice of Employer Registration in the Obligatory Regime through the IMSS website.
Upon receipt and review of the notice, the IMSS establishes an appointment time and date at one of the IMSS offices, when and where employers must complete the registration process.
Employers must enroll workers in the IMSS website 5 business days or 8 days, whichever comes first, after their date of hire by presenting Form AFIL-02, Notice of Worker Registration (Aviso de Inscripcion del Trabajador), to the IMSS.
Enrolling employees on the IMSS enrolls them in both social security and INFONAVIT.

BNF-MX-03 – BNF Order (OD)
Question from client:
What is the order of the withholding declaration of social welfare for Mexico employees (information flow determines the tax base) and payment (fund flow)?
Pay first and then declare? Report first and then pays? At the same time as the declaration and payment?
Answer from Evershine RD:

Same Period: Report and pay at the same time.

BNF-MX-04 – Mechanism of Filing (MOF)
Question from client:
What is the method of reporting for withholding of social benefits for Mexico employees (information flow determines the tax base)? Reporting cycle: every month? Every bimonthly? Every season? Every half year? Per year? Electronic filing? Manual filing? Electronic filing and manual filing coexist? If electronic filing is possible: Web site URL?
Answer from Evershine RD:
Employer contributions and employee withholdings for retirement, advanced age and old age must be paid by the 17th of each month to IMSS.
Payments to the INFONAVIT should be paid bimonthly by the 17th of the month.
If the 17th is a Friday or public holiday, payment is due on Monday or the next business day.
The first payment of the year is due Jan. 17th, for taxes incurred over the months of November and December.
Employers with more than five employees are required to use the Automatic System of Payments (SUA) in order to pay all social taxes which can be downloaded from IMSS website.
The software calculates the amount payable to IMSS and INFONAVIT.
The software also produces a CD that must be presented upon payment at an authorized bank.
Employees with four or fewer employees must present certificate of determination of fees, contributions and loan payments along with their payment.
The certificates are available at banks qualified to accept payments.
Employers with more than 300 employees must have a Certified Public Accountant certify that the employer is complying with IMSS regulations.

BNF-MX-05 – Mechanism of Payment (MOP)
Question from client:
What is the funding method for Mexico employee social welfare withholding contributions (funds flow)?
Payment cycle: M per month? B every bimonthly? Q every season? H every six months? A every year?
Automatically authorize deduction of ACH (that is, take the initiative of the recipient)?
Electronic remittance to EFT (that is, the payer takes the initiative)?
Bank counter payment OCT?
Or the above methods coexist?
Answer from Evershine RD:
Employers must withhold social insurance taxes and remit payments to the Mexican Institute of Social Security monthly or bimonthly.
Employee contributions towards the different types of insurances and pensions should be deducted from employees’ paychecks and be paid the 17th of each month to IMSS.
Employees who register for a loan with INFONAVIT should have their bimonthly charges subtracted from their paycheck by their employers.