State Tax Processing

In Mexico, only employers pay state taxes. Each state defines which earning and deduction types are part of its taxable income and the applicable rates.

To process state taxes:

  1. Define which earnings and deductions are eligible for state taxes on the State Taxes Earn/Ded page.

  2. View and verify state tax rates on the State Taxes Rates page.

  3. (optional) Define state and local tax rates at the company level for Chihuahua and Ciudad Juarez on the State Rates by Company MEX page.

    Note:

    You have to define these taxes only if you have operations in these states or cities.

  4. Get the state tax base by company; this is the sum of the tax base per employee working for such company during the payroll period.

    GP Mexico processes payroll by employee, therefore there’s no way to get the State Tax base unless it is manually entered or calculated in a separate process after all payrolls are calculated. If your company goes with the second option then you’ll need to recalculate the payroll in order to calculate State Taxes and store the information in the writable array IE WA REPORTE.

    There are two options to get the Total Base State Tax:

    1. Enter value for variable IE VR BASE EXCPT at Supporting Element Overrides by Pay Groups or any other level, the payroll will take this value as Total Base State Tax.

      Supporting Element Overrides

      Supporting element overrides

    2. Calculate all payrolls with employees in the given company and then run SQR process GPMXIE01 with the option Generate Positive Input checkbox turned on; the process will generate Positive input for employees in open payrolls working in the selected state and that belong to the company during the selected period.

    Note:

    Step 4 is only applicable for Campeche, Hidalgo, Queretaro, Oaxaca and Durango states.

  5. Process tax contributions during regular payroll runs.

  6. Run the State Taxes by Location report every month after the last payroll process of that month.

Note:

The State Taxes Earn/Ded page, the State Taxes Rates page, and the Spec. Taxes Rates page are described in other topics.

Related Topics