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Human Resources and Payroll Manager, TMF Mexico
20 June 2018
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2 minutes

Complying with the electronic payslips system in Mexico

When doing business in Mexico, it is important to understand employment, payroll and tax laws. It is why the understanding and correct implementation of official wage-type catalogues for payroll is crucial for employers.

New payroll rules

There have been changes in the regulations that affect how payroll wage-types are reported to the Mexican tax authority (SAT). With these new laws, the employer must match their wage-type codes with the official wage-types published by SAT before sending the information to be e-signed by SAT.

If the match is not made correctly, there may be the following risks:

  1. Tax authority may assume that the employer is deducting from their income higher salary expenses than the ones reported in the electronic payslips.
  2. Electronic accounting and electronic payslips reported to SAT will not have the same information in salaries and it may cause a Tax audit to the company.
  3. When an employee fills in his/her annual tax return, he/she may be requested to pay a higher tax or may receive back a higher amount as a tax return that is in the requested letter by the Tax authority including surcharges.

The process of electronic payslips

The process of issuing payslips to employees is fully electronic. All payroll must go through a process before it can be issued to the employee. First, the electronic payslips must be submitted, validated and e-signed by the SAT (Mexican Tax Authority). To do the process, there is an intermediary called PAC, the authorized provider of certification. Through the PAC, the employer sends the payslip information of each employee to SAT, which then returns the payslips already e-signed also through the PAC. The payroll must contain personal and job information of the employee and employer. Also, it must include each wage- type paid including in the payment, perception, taxes withheld, other deductions and net to be paid. 

Taxes and electronic payslips

Using the electronic payslips will make it easier for companies to comply with tax obligations but it is very important to ensure that all data included be correctly reported in order to avoid any problems for employers and employees. 

TMF Group

TMF Mexico is experienced in managing the complex system of electronic payslips for payroll. Our experts work with companies to manage every step of the process from the submitting, to approval and administering of the payslips to employees. We also help you and your company to maintain a compliant operation. Contact us to talk about how we can help.

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