Every time we receive our payroll, it is a moment of happiness and peace of mind, because with it we can cover our expenses, save or even pay debts. But it has happened to more than one of us that when we review the payroll receipt we see a series of deductions that subtract from the gross total, among which is the famous Income Tax (ISR).
Many times we simply let it pass, because we see it as normal, without understanding what this tax is and how it is calculated.
What is ISR?
Income Tax (ISR) is a tax levied on income received by an employee that increases the taxpayer's net worth.
To understand it better, we can say that the higher the income, the higher the tax.
Yes, the more you earn in salary, the more tax will be withheld.
This tax is deducted from your gross salary and then applied to your net salary.
Net salary is the exact amount you receive paycheck after paycheck.
As you can imagine, with more than 59 million people making up the Economically Active Population (EAP) in Mexico, income tax is one of the most important taxes and represents a significant amount of tax collection, since it is a tax that must be paid by both individuals and corporations.
But we will go into more detail on that later.
Who must pay ISR?
In accordance with the Income Tax Law, the payment of this tax is mandatory for both individuals and corporations, in which the following points apply:
- Individuals residing in Mexico, regardless of the location of the source of income.
- Mexicans residing abroad who have a permanent establishment in the country, with respect to attributable income.
- Residents abroad, who receive income from sources of wealth located in national territory.
In the case of foreigners, they are also required to comply with the payment of ISR if the source of their income is located in our territory.
How is ISR calculated?
To calculate the amount to be paid, do the following:
1. Identify your total income for the monthly, bi-weekly or annual period.
2. Once you know your monthly income, it must be located within the " Lower Limit" and "Upper Limit" of the tables provided by the Tax Administration Service (SAT), which define the ISR percentage to be applied according to the range of your salary. (There are tables to calculate the monthly, annual or biweekly ISR).
Have you identified your salary range? The next step is to subtract the lower limit of the salary range from your income.
4. To the result obtained from this subtraction, the rate indicated in the table will be applied.
5. The amount resulting from applying the percentage will be added to the fixed fee established by the SAT, which varies according to income level.
The result of this will be the ISR withholding.
Here is an "accordion" of the formula.
But not everything is a loss, you can recover a percentage of that ISR.
How to recover a percentage of ISR?
You can do it directly in the SAT portal.
- Once in the portal, you must enter the "Procedures" section and then choose the "Tax Mailbox" option.
- You will be asked to enter your RFC and password or your e.firma. Then click on the "Submit" button.
- Now you must go to the procedures section and select "Returns and Compensations", and choose "Return Request".
- You will have to fill in some personal information. You can also upload files.
- Now all you have to do is send the form to SAT and wait for the electronic acknowledgement to the e-mail address you have registered.
Finally, we remind you that to keep up to date with the world of payrolls you can follow the notes of our blog-magazine.
See you next time!
