Mexico is an attractive emerging market for foreign business, with the second-largest economy in Latin America. Mexico has both political and economic maturity, and the labor force is young and growing each year.
There can be challenges to expanding internationally and managing payroll in Mexico. The culture and language differences can be difficult, as Spanish is the main language used in business. The federal tax and local labor laws can be complex and very costly if not strictly adhered to.
Starting a company in Mexico requires registration at the National Registry of Foreign Investment, obtaining a tax identification card, and registering as an employer with Mexican Social Security and from governing bodies in the local jurisdiction. In-country bank accounts are mandatory for making payments to employees and to the government social security and tax agencies. Companies must supply tax identification number to open bank accounts.
Hiring employees in Mexico requires an Employee certificate of registration from the National Institute of Migration (INM). Foreign nationals can get a temporary visitor visa with work permissions, and a temporary resident visa can be obtained when a person receives a job offer from a company in Mexico.
Employers in Mexico must also report monthly and contribute bi-monthly to the housing fund contribution. Payroll taxes must be paid and filed by the 10th of each following month.
Leave policies must follow the labor laws in Mexico. Employees must notify the social security authority in the event of a disability leave which will pay part of the employee salary, while the employer pays 40% the employee salary. The social security authorities issue a notification stating the number of days the employee is disabled because of sickness. In the event that the employees does not notify social security, the payment of their salary would rely on the policy of the employer.
Mexico has a multitude of compliance issues that are a result of anti-corruption efforts, making it difficult to maintain compliance. Corruption is deeply embedded throughout the society and fed by billions of narcotics-related dollars. The 1994 North American Free Trade Agreement (NAFTA) helped Mexico’s economy triple in the last several years.
Blue Marble provides cloud-based payroll technology with customized reporting so you can track your payroll in real-time. Our in-country experts can help with payroll and compliance questions and ensure you stay up to date with all payroll regulations in Mexico. If you need help simplifying payroll and compliance in Mexico, we can help – talk to us today about how our easy-to-use payroll and reporting tools can save time and resources.