Compliance and Taxes in Mexico
We proactively update ourselves daily on changes in both labor and tax laws.
Mandatory Payroll Taxes
Income Tax (ISR): Withheld from employee wages at progressive rates (1.92% to 35% based on income).
Social Security Contributions (IMSS): Employers contribute 20%–28% of the employee’s salary for healthcare, maternity, pensions, and worker’s compensation. Employees contribute 1.65%.
Retirement Savings (SAR): Employers contribute 2% of the employee’s integrated salary to the retirement savings system.
Housing Fund (INFONAVIT): Employers contribute 5% of the employee’s salary to the National Housing Fund.
Payroll Tax (ISN): A state-level tax of 1%–3% on total payroll expenses, varying by state.
Compliance
Employment Contracts: All employees must have a written contract specifying salary, role, hours, and benefits. Contracts can be indefinite, fixed-term, or trial-period (up to 30 days, extendable to 180 for management/technical roles).
Payroll Records: Employers must maintain accurate records and issue payslips compliant with SAT (Tax Administration Service) and IMSS regulations.
Compliance with Local Laws: Employers must register with IMSS, INFONAVIT, and SAT to manage contributions and taxes. Using an Employer of Record (EOR) can simplify compliance for companies without a legal entity in Mexico.
