Understanding Deductions

In Mexico, there are different types of deductions:

• Before taxes − reduces the net salary and the taxable gross for federal retention. Examples are maternity leave, tardiness, and sick leave.

• After taxes – reduces the net salary. Examples are savings fund and union contributions.

• Subject to state tax − represents all deductions that are subtracted from the taxable base of the state tax. Examples are disabilities and absences.

• State taxes − each state has its own taxable base.

To ensure that the new deductions you create are used correctly in other calculations, you need to know which accumulators they should contribute to, since the value of the accumulated deductions is critical to these other processes. The accumulators to which you will be adding your deductions are the same ones that Global Payroll for Mexico has created for the delivered deductions. These include:

• Any deduction that you want to contribute to the net pay should be included in the TOTAL DEDUCCION N accumulator.

• Any deduction that you want to subtract the taxable base for federal tax purposes should be included in the BASE ISR accumulator.

  Also, each of these deductions should have a supporting element override for the variable FD VR METODO ISR with the corresponding value depending on which tax method you want to affect (113, 142, 148, or 112).