MSST 03-2013 Employee Profit Sharing

In accordance to article 123 of the Mexican Constitution and article 117 of Federal Labor Law, employers are obligated to pay there employees certain amount of cash participation, derived from the corporations Statutory Profit Sharing (PS).

In accordance to article 122 of the Federal Labor Law, this amount should be pay to employees no latter than 60 days after filing and paying the annual income Tax; this date is May 31 for corporations, or June 30, for individuals.

Employees who should receive profit Sharing in accordance to de Federal Labor Law are the following:

• Floor employees, for any period worked.
• Temporary employees, when they have worked at least 60 days.

In order to determine the taxable income derived from this payment, the amount is except from tax for up to 15 days of the minimal wages currently applicable, the exceeding amount will be taxed in accordance to article 113 of the Income Tax Law, Employers should determine the tax as well pay it.

There is also an option to determine the tax withholding derived from this payment by means of applying article 142 of the Income Tax Law Rulings.

We recommend that you evaluate both scenarios and apply which ever is more beneficial to both the Employee as well as the employers.

We are at your service to attend any matter regarding the present, and should you require revise this matter specifically to your situation.


MSST Consulting, Limited Liability Partnership.

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