Doing Business

Doing Business in Mexico 2015

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91 Doing Business in Mexico 2015 Social security Social security system The Mexican Social Security Institute (IMSS) was established in 1942, and the social security system is in effect in all industrial areas and agricultural zones throughout Mexico. In these areas the employer's statutory obligations in connection with occupational risks are covered by payments of social security premiums. The Institute provides for employees' and their dependents' medical attention, including hospitalization, and limited unemployment compensation in cases of illness and maternity, occupational disease and accidents, in addition to disability and old-age pensions. A separate social security system operates for employees of the government and its agencies. Coverage The IMSS system is mandatory in regard to all non-government employees throughout the country. Special rules cover self-employed persons, domestic servants and some others. All employers having at least one employee, including non-profit institutions and others that might be tax exempt, are required to register with the IMSS and pay its premiums. Foreign employees of Mexican companies working in Mexico are subject to the social security system on an obligatory basis. Contributions Social security contributions/premiums are incurred by both the employer and the employee (through withholding) and remitted to the social security authorities every month. Premiums are determined as a percentage of each employee's wages, and the computation differs depending on the following categories. • Sickness and maternity. • Life and disability. • Day-care centers and social benefits. • Retirement Savings System (SAR) and old age. • Occupational risks. The percentage contributions for each category (except for occupational risks) and maximum contributions are shown in Appendix XI. The premium for occupational risks, paid entirely by the employer, is a percentage of the total earnings base. The applicable percentage varies, depending on the risk class to which a company is assigned. Table VIII shows the average percentage applicable to each risk class in the case of a newly incorporated entity. All employees of a company located in the same city or other social security jurisdiction are classified in the same group, regardless of the type of work each performs. The percentages shown can be lowered or raised somewhat, depending on the safety equipment installed and the actual frequency and costs of claims made by the employees of a particular company (actual experience). In the second month of the year the corresponding percentage rates will be self- determined, based on prescribed procedures and according to actual experience under the regulations of the Social Security law. 10

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