Calculating the Subsidy Factor
Every year, companies in Mexico need to calculate their subsidy factor based on the earnings and deductions of a single year. This subsidy factor is used to determine the creditable and non-creditable portions of taxes that are going to be calculated during the federal tax calculation process.
Due to recent tax laws, all employees will have their subsidy calculated using the following formula:
Subsidy Proportion = Total taxable base / Total earnings in the last year.
Here is an example of the subsidy factor calculation, using an employee's data for the year 2001. The amounts shown are in Mexican pesos.
Earnings |
Taxable Base |
Non Taxable Base |
Total Earnings |
---|---|---|---|
Salary |
152,000.00 |
152,000.00 |
|
Vacation Premium |
8720.00 |
1018.00 |
9738.00 |
Christmas Bonus |
9700.00 |
2115.00 |
11,815.00 |
Overtime |
21,510.00 |
3820.00 |
25,330.00 |
Other Earnings |
8540.00 |
35,660.00 |
44,200.00 |
TOTAL |
200,470.00 |
42,613.00 |
243,083.00 |
Subsidy Proportion = Total Taxable Base 2001 / Total Earnings in 2001
Subsidy Proportion = 200,470.00 / 243,083.00 = .82
You will use this subsidy proportion to calculate the non-creditable subsidy and creditable subsidy for all employees in the company.
For example:
1 - .82 = .18 x 2 = .36
.36 = Non-creditable subsidy
The subsidy proportion (.82) is subtracted from 1 (which is 100 percent of the subsidy proportion) and then multiplied by 2 (formula provided by law) to find the non-creditable subsidy.
1 - .36 = .64
.64 = creditable subsidy
The non-creditable subsidy (.36) is subtracted from 1 (which is 100 percent of the subsidy proportion) to find the creditable subsidy (.64) that will be accredited to an employee's taxes.