Create an Employee Tax Card for Mexico

This topic demonstrates how you can create an Employee Tax Card at the person level. The Employee Tax Card calculation card captures information for a person.

An Employee Tax Card captures the ISR tax and social security attributes specific to an employee. It also enables you to specify the person's INFONAVIT loan information (if needed) as well as information related to the calculation of SDI. The values entered in the Employee Tax Card replace the values defined at the legislative payroll statutory unit (PSU) and tax reporting unit (TRU) levels.

For the Employee Social Security and SDI Calculation components, the rates or values displayed in the Employee Tax Card are the default values defined at the legislative level. They're provided on the Employee Tax Card for reference purposes.

Note: SDI is the Integrated Daily Wage - A daily wage that integrates the annual fixed compensation and the previous bimonthly variable compensation.

Example of Setting Up a Person Calculation Card

Let's look at an example that shows how to create calculation components, component details, and association information for a new employee using the Calculation Cards task. This example assumes that you created an Employee Tax Card calculation card automatically (or manually) during the new hire process.

The employee in this example works in the private sector. They have federal ISR tax withheld from their earnings as well as social security through the main tax reporting unit (TRU) in Mexico City. The employee is excluded from the annual tax adjustment process and has Pensions and Beneficiaries and Retirement exemptions for social security. The employee also has an INFONAVIT loan.

Note: INFONAVIT is the National Housing Fund Institute for workers. It's a Mexican government agency that provides housing loans to eligible workers.

Before You Start

1. Define all legal entities and related information, including payroll statutory units (PSUs), legal employers, TRUs, and registration information.

2. Define element eligibility for the Employee Taxation element.

3. Complete the new hire process for the employee. Make sure that the employee has a valid payroll relationship with a Mexico payroll statutory unit under the payroll relationship. The new hire process should have created the Employee Tax Card calculation card for the new hire automatically.

This table summarizes the key decisions you need to consider.

Key Decisions	In This Example
What deductions will this employee take?	Federal ISR income tax, Social Security, and INFONAVIT
Does this employee qualify for a special exemption?	Yes, the employee has notified to the employer that they will file the annual tax declaration directly to the tax government agency therefore the application should not compute the annual tax adjustment. In addition, the employee is a pensioner. Therefore, the application should not compute some social security insurance types.
Is the employee's social security contribution area the same for all assignments?	Yes, individual income tax contribution is made through one TRU, as is the social security.

How to Define the Taxes Component

1. Expand the Taxes region on the Employee Tax Card.

2. Select the pencil icon to edit the Employee ISR Tax component.

3. Enter the start date of the changes for When does this change start?

   Override Name	Description	Value Type	Value Example
   Exclude From Annual Adjustments	Provides the option to exclude an employee from the annual tax adjustment process. The default value for this field is No. If you want to exclude the employee from the annual tax adjustment, select Yes.	String	No
   ISR Severance Rule	Determines which Severance ISR tax calculation method to use. The default is Subject Earnings Greater Than or Equal to Monthly Salary. This means that the Severance tax calculation method is used if the Severance ISR Subject portion is greater than or equal to the Monthly Salary. If you select None, the severance ISR calculation method is used with no comparison and regardless of the severance amount. If you choose Total Earnings Greater Than or Equal to Monthly Salary, the severance tax calculation method is used if the total severance payment (subject plus exempt portions) is greater than or equal to the Monthly Salary.	String	Subject Earnings Greater Than or Equal to Monthly Salary
   ISR Subsidy Adjustment on Regular Run Type	For each payroll run, the standard ISR calculation adjusts the amount of subsidy for employment to prevent exceeding the monthly cap. This adjustment compares the month-to-date (MTD) subject earnings balance with the prorated monthly subsidy for employment rates. This override determines if the ISR Subsidy for Employment is adjusted during a Regular payroll run type. Subsidy for employment is calculated (adjusted or not) based on the rates determined by the existing ISR Subsidy Proration on Payroll Run Type override. The default is yes, whereby the Subsidy for employment is adjusted based on the MTD ISR subject earnings balance. If no is selected, the Subsidy for employment is calculated with no adjustment considering the current processing pay period ISR subject earnings (Run balance).	String	Yes
   ISR Subsidy Proration on Payroll Run Type	This override determines if the ISR Subsidy for Employment is calculated based on the periods in the month and on the proration of the monthly Subsidy for Employment rates. The Subsidy for Employment calculation basis will be the MTD ISR subject earnings balance in all scenarios except if the ISR Subsidy for employment Adjustment on Regular payroll run override is set to No. In this case, the basis will be the Run balance. The payroll run type(s) excluded by this value definition will use a Subsidy for Employment rates factor of one (no proration). This means that the full monthly rates are used to calculate the Subsidy for Employment. The default is Regular and Monthly Tax Adjustment (Default). This means that the Subsidy for Employment Proration is applied to both payroll run types: Monthly Tax Adjustment and Regular. For None, no Subsidy for Employment proration (factor 1) is applied to both payroll run types, Monthly Tax Adjustment and Regular. If you select Regular, proration is applied only to the Regular run type. The Monthly Tax Adjustment run type will use a Subsidy for Employment proration factor of one. If you select the Monthly Tax Adjustment, proration is applied only to the Monthly Tax Adjustment run type. Regular run type will use a Subsidy for Employment proration factor of one.	String	Monthly Tax Adjustment
   ISR Tax Calculation	This override determines if the ISR tax is calculated. The default value is Yes. Note that if this override is set to No, it takes precedence over all other Employee ISR Tax component overrides.	String	Yes
   ISR Tax Proration on Monthly Tax Adjustment Run Type	The standard Monthly Tax Adjustment ISR tax calculation procedure calculates the tax rates based on a factor derived from the periods the employee has worked in the month. This override applies only to the Monthly Tax Adjustment payroll run type and determines to calculate the tax based on the periods in the month. The tax calculation basis will be the month-to-date (MTD) ISR subject earnings balance. The default is yes. This means that the ISR tax calculation determines the tax rates based on a factor derived from the periods the employee has worked in the month. If you select No, the ISR Tax rates are applied with a factor of one (no proration), regardless of the period when the Monthly Tax Adjustment run type is processed nor the employee hire date.	String	Yes
   Pay Subsidy for Employment on Payroll Run Type	When an employee has two or more employers, they must select which employer will pay the subsidy for employment in the ISR tax calculation. The options to determine when the subsidy is calculated include: Monthly Adjustment The subsidy for employment is calculated only for the monthly tax adjustment run type. None The subsidy for employment is never calculated. Regular The subsidy for employment is calculated only for the regular run type. Regular and Monthly Tax Adjustment (default) The subsidy for employment is calculated only for both regular and monthly tax adjustment run types.	String	Yes
   State Tax Exempt	Some companies or government agencies aren't required to pay the employer state tax. Select Yes to exclude this employee from the state tax calculation. The default value for this field is No.	String	No

4. Click Save.

How to Define the Social Security Calculation Components

1. Expand the Social Security region on the Employee Tax Card.

2. Select the pencil icon to edit the Employee Social Security component.

3. Enter the start date of the changes for When does this change start?

   Override Name	Description	Value Type	Value Example
   Additional Quota	The percentage of the additional quota.	Rate	N/A
   Additional Quota Exempt	Employee's exemption to additional quota.	String	N/A
   Benefits in Cash	The percentage of the benefits in cash.	Rate	N/A
   Benefits In Cash Exemption	Employee's exemption to benefits in cash.	String	N/A
   Day Care Centers	The percentage of the day care centers.	Rate	N/A
   Day Care Centers Exemption	Employee's exemption to day care centers.	String	N/A
   Disability and Death	The percentage of the disability and death.	Rate	N/A
   Disability and Death Exemption	Employee's exemption to disability and death.	String	N/A
   Fixed Quota	The percentage of the fixed quota.	Rate	N/A
   Fixed Quota Exempt	Employee's exemption to Fixed Quota.	String	N/A
   Pensions and Beneficiaries	The percentage of the Pensions And Beneficiaries.	Rate	N/A
   Pensions And Beneficiaries Exempt	Employee's exemption to Pensions And Beneficiaries.	String	Yes
   Retirement	The percentage of the retirement.	Rate	N/A
   Retirement Exemption	Employee's exemption to retirement.	String	Yes
   Social Security Leaving Reason	Records the social security leaving reason when an employee transfers from one tax reporting unit to another.	String	N/A
   Suspension in Age Outpost	The percentage of the suspension in age outpost.	Rate	N/A
   Suspension in Age Outpost Exemption	Employee's exemption to suspension in age outpost.	String	N/A
   Social Security Exemption	Determines if the employee is exempt from having social security quota liabilities calculated.	String	N/A
   Tax Reporting Unit for Social Security	Select the tax reporting unit to be used for reporting this employee's social security quotas if it's different to the Association's tax reporting unit.	String	N/A

4. Click Save.

5. Select the pencil icon to edit the SDI Calculation component.

6. Enter the start date of the changes for When does this change start?

   Override Name	Description	Value Type	Value Example
   Annual pay period unit	Employee's unit of the annual pay period.	Total amount	N/A
   Number of biweekly periods in the year	Number of biweekly periods in the year, which triggers the employee's SDI calculation.	Total amount	N/A
   Number of days in the year	Employee's number of days in the year.	Total amount	N/A
   Number of hours in the year	Employee's number of hours in the year.	Total amount	N/A
   Number of months in the year	Employee's number of months in the year.	Total amount	12
   Number of semimonthly periods in the year	Employee's number of semimonthly periods in the year.	Total amount	N/A
   Number of ten-days periods in the year	Employee's number of ten-day periods in the year.	Total amount	N/A
   Number of weeks in the year	Employee's number of weeks in the year.	Total amount	N/A
   SDI Variable Portion Override	Use the SDI Variable Portion Override to specify an employee's previous bi-monthly variable earnings. This override amount will be used for the calculation of SDI (integrated daily wage). This can also be used for any new hires/rehires where variable earnings form part of the employee's expected earnings.	Total Amount	N/A

7. Click Save.

How to Define the Loans Calculation Component

To add the details required to process an employee's INFONAVIT loan:

1. Select the Add icon in the Loans region on the Employee Tax Card.

2. Enter the start date of the changes for When does this change start?

3. Select Employee INFONAVIT for the question What Component would you like to add?

4. Enter the required information when adding an INFONAVIT credit loan, which includes:

   • Credit number

   • Credit start date

   • Discount type

   • Discount value

   Override Name	Description	Value Type	Value Example
   Credit Number	The employee's unique identifier for this INFONAVIT loan.	N/A	123456
   Credit Start Date	The start date of the INFONAVIT loan.	Date	01-May-2018
   Discount Type	Select the discount type for the loan: Fix quota in currency Fix quota in number of times minimum wage Percentage	String	Fix quota in currency
   Discount Value	The amount of the loan.	Total Amount	1000
   Deduction Table	Applies the INFONAVIT reduced rates based upon the credit criteria.	String	No
   Transaction Type	The type of transaction associated with the creation or edit of the INFONAVIT loan. Select one of these: 15 - Beginning of housing credit 16 - Suspension of discount 17 - Discount resumption 18 - Modification of discount type 19 - Modification of discount value 20 - Modification of credit number	Total amount	17
   Use SDI Cap	Indicates if the 25 Times UMA Cap will be used or not to compute the INFONAVIT loan. It will be applicable depending on the Discount Type.	String	No

   Note: UMA stands for Measure Unit and Upgrade. It's the reference value to calculate Mexican payroll taxation and regulate the amount of mandatory payments required by the federal, state, and city laws. This replaces the minimum wage after the reformulation of the Mexican constitution.

5. Click Save.

How to Define the Benefits Calculation Component

To add the details required to process employee's profit sharing:

1. On the Employee Tax Card, in the Benefits area, click Add.
2. To answer the question When does this change start?, enter the start date of the changes.
3. To answer the question What do you want to add?, select Profit Sharing.

   Profit Sharing

   Override Name	Description	Value Type	Value Example
   Exclude from Profit Sharing	Use this override when you need to exclude an employee from the Profit Sharing process. The default is No.	String	Yes

4. Click Save.