Paying a salary, payroll, salary, fortnight (or whatever we want to call it) is the main obligation that companies/employers have to their workers; no matter the size of the company, it is very important, critical and accurate to pay the payroll, but it is also important to know the payroll deductions.
It must be a professional operation and we must ensure that it provides peace of mind not only to the employees but also to the operatives, financiers and the entire team involved in its calculation, since this obligation transcends beyond the doors of our companies and involves compliance with federal, state and social security obligations.
Today, in Mexico, payroll considers obligations with SAT, STPS, IMSS, Infonavit, state governments (ISN, Payroll Tax) and in some cases also FONACOT.
Therefore, without trying to be so reiterative, the correct, accurate and professional calculation of payroll not only provides peace of mind to workers, but also to companies and those responsible, since it involves compliance with labor laws, tax laws and administrative and financial issues.
Payroll has two key elements: Perceptions and deductions, but what are they and what are they?
Undoubtedly we all remember that moment when we agree or we are offered our base or gross salary and we start working, the surprise is when we receive our first paycheck when we see with astonishment that the agreed amount appears, but it has a series of subtractions where at the end there is a free amount to deposit that is lower than what we expected.
It is a surprise for many people and even some of them fall into claims. That is why it is important to understand what these payroll deductions are due to and to know if their percentages are correct.
On the positive side, we will find insights:
- Salary
- Overtime
- Food vouchers
- Bonuses (punctuality, language, performance)
- Sunday premium
- Savings bank
Starting with salary, the other items in the above list depend on the company and the employees' functions.
In the following link you will find the SAT matrix with all the perceptions and their respective codes for the payroll receipt:
As for deductions, which are the famous payroll deductions, we have:
- Income tax (ISR)
- Payment to IMSS or worker's contributions to the Mexican Social Security Institute
- Absences
- Union dues
- Loan discounts
- Savings fund
- Purchase of shares
- Among others
The savings fund, the purchase of shares and others depend on the company.
All deductions can also be consulted in the SAT guide:
Payroll deductions and the law
Article 110 of the Federal Labor Law stipulates the payroll deductions that may be made from the employee's paycheck; any other type of deduction not included in the law is prohibited.
Therefore, the reasons for which we may make payroll deductions are:
- The payment of debts to the company. Example: If we were overpaid, we can deduct that money, but it cannot be more than thirty percent of the excess of the minimum wage.
- Payment of rents referred to in article 151. This deduction may not exceed ten percent of the salary.
- INFONAVIT credits.
- Savings banks.
- Payment of alimony in favor of maintenance creditors.
- Union dues.
- Credit to the Fondo Nacional para el Consumo de los Trabajadores (FONACOT).
It is very important to know that some of these payroll deductions, such as the savings account, are voluntary; therefore, the employees' authorization is required in order to make them.
http://www.diputados.gob.mx/LeyesBiblio/pdf/125_310721.pdf
We must be aware that, by official disposition, the employer has the obligation to deliver tax receipts (CFDI) for the payment of wages, salaries and similar items, specifying your income, as well as the applicable tax withholdings and other discount concepts.
In addition, we have the SAT Payroll Voucher Viewer, a practical tool where we can visualize the payroll vouchers that have been issued to you and are used to preload your information in the tax return for the fiscal year to be filed.
https://www.sat.gob.mx/declaracion/97720/visor-de-comprobantes-de-nomina-para-los-trabajadores
Payroll compliance is equivalent to the precision of a watch, it has different elements and rules (laws) to comply with.
The following is a list of the most important ones and their respective sections:
Law of the Mexican Social Security Institute (IMSS)
Article 15, paragraph I, establishes the obligation to communicate additions, removals and salary modifications within 5 days.
Article 15. Employers are obliged to:
Registering and registering its workers with the Institute, communicating their registrations and cancellations, changes in their salaries and other data, within a period not exceeding five working days.
https://www.imss.gob.mx/sites/all/statics/pdf/leyes/LSS.pdf
It also indicates the obligation to keep payroll records, which must reflect the exact number of days worked and the salary received by the employees.
Federal Labor Law (LFT)
Article 24 establishes that working conditions must be in writing when there are no applicable collective bargaining agreements. At least two copies shall be made, one of which shall be kept by each party.
Employment contracts must contain the employment relationship, place of work, duration of the workday, format and amount of salary, days of rest, vacations and beneficiaries.
This means that, we must seek to have a copy of the contract we are signing, it is not a common practice and in many companies it is thought of as something bad, however it is the law and we must request our copy.
On the part of the company, we must consider that Article 804 establishes that:
The employer is obligated to keep and exhibit such contracts in case of a lawsuit, as well as the receipts of payments, vacations, Christmas bonuses and any bonuses paid to the employee.
They should be kept during the current fiscal year and for up to one year; however, we recommend keeping the records for at least 5 years.
For more details, please refer to the Federal Labor Law updated as of October 2021.
http://www.diputados.gob.mx/LeyesBiblio/pdf/125_310721.pdf
Federal Fiscal Code
It establishes that the tax authorities may impose penalties for violations of the tax provisions and that they expire after five years, unless the taxpayer has not filed an application with the Federal Taxpayers Registry, which will be 10 years.
http://www.diputados.gob.mx/LeyesBiblio/pdf/8_310721.pdf
What are the consequences of not registering your employees with the IMSS?
In CHAPTER II OF THE INFRACTIONS AND PENALTIES of the Social Security Law, Article 304:
When employers and other obligated parties carry out acts or omissions that imply noncompliance with the payment of the tax items established in Article 287, they will be sanctioned with a fine of forty to one hundred percent of the omitted item.
In addition, Article 308 states:
The crime of defrauding the social security systems shall be punished with the following penalties:
- With imprisonment from three months to two years when the amount of the defrauded amount does not exceed thirteen thousand minimum daily wages in force in Mexico City.
- Imprisonment from two to five years when the amount defrauded exceeds thirteen thousand minimum daily wages in force in Mexico City, but not nineteen thousand minimum daily wages in force.
- With imprisonment of five to nine years, when the amount of the defrauded amount is greater than nineteen thousand minimum daily wages in force in Mexico City.
In other words, if we do not register a worker we could be facing penalties ranging from three months to nine years in prison.
Importance of CFDI and professional PACs
The CFDI is an Internet Digital Tax Receipt (CFDI) that the Federal Tax Code (CFF) and the Income Tax Law (ISR) require taxpayers to issue for the income or payroll they receive or for the tax withholdings they make and must be issued as digital documents.
The CFDI must be delivered by law.
The basis is established in the Income Tax Law in Article 99, Section III:
"To issue and deliver tax receipts to persons receiving payments for the items referred to in this Chapter, on the date on which the corresponding disbursement is made, which may be used as proof or receipt of payment for the purposes of the labor legislation referred to in Articles 132 sections VII and VIII, and 804, first paragraph, sections II and IV, of the Federal Labor Law."
Should the payroll receipt be signed or not, and is it valid if it is only digital?
The answer is yes, even if they lack the employee's signature, the CFDI must have the digital stamp generated by the SAT, which corresponds to the string of characters that allows authenticating the operation performed.
They have probative value in labor lawsuits, in accordance with Article 99, Section III of the Income Tax Law, which states that those who make payments for salaries and, in general, for the rendering of subordinate personal services, must issue and deliver tax receipts on the date on which the corresponding disbursement is made.
Those that may be used as proof or receipt of payment for purposes of paragraphs 132, sections VII and VIII, and 804, first paragraph, sections II and IV, of the Federal Labor Law.
Payroll tax (ISN) and its percentages
Payroll Tax (ISN) rates range from 2% to 3% depending on the state of the Republic.
It is a state tax levied on the payment of remuneration to workers by a self-employed individual or legal entity. In other words, the ISN is a state fee that is paid when performing transactions in thelabor relations of the company.
The Payroll Tax (ISN) is the local tax with the greatest weight in Mexico, since in 2016, for example, it represented on average 64.94% of the tax revenues of the states and its omission or non-compliance can generate penalties or fines for the employer.
Professionalism is critical to be able to be at ease.
Payroll is a process that requires attention and even if we delegate it, it is important to ensure compliance.
Today there are many options to support us, from Excel calculations to certified certified software.
It is important to review in detail before making a decision and seek professional advice, since lack of precision could lead to fines, and even jail, if we omit key processes that seem basic, such as the registration of employees.
[...] This credit is contracted through the financial institution that has the worker's or employee's account open, so that payments are directly and automatically deducted from his or her salary. [...]
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