Doing Business

Doing Business in Mexico 2015

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86 Tax and Legal Services - PwC Mexico Method of distribution Distribution of the employees' share in the profits must be made within five months after the year-end. The employer is required to make a copy of the company's tax return available to the employees so that they may exercise their right to object. Any objection by employees to the tax return is communicated to the Revenue authorities, which make the final decision; this cannot be contested by the employees. In practice, only a relatively small number of objections are made by employees. However, labor law provides that non-compliance with the provisions of the law establishing profit sharing is grounds for a valid strike. The portion of the company's profit that is distributed among its employees is divided into two equal parts, the first of which is distributed among the employees in accordance with the number of days worked during the year, and the second in accordance with the salaries earned by each employee (with the exception of the principal director) and which is limited for this purpose to 120% of the salary of the highest-paid non- confidential employee. Persons subject to or exempt from profit sharing All individuals, companies or economic units, without legal personality that have employees are required to distribute a portion of their profits to the employees. Taxpayers exempted from income tax and those with certain exemptions should determine their profit sharing without regard to these benefits. Profit sharing is not applicable to the following: • Newly established concerns during the first year, • Newly established concerns that manufacture a new product during the first two years, • Mining and similar concerns during the exploration period, • Public and private welfare institutions recognized by law, • Enterprises whose capital and gross income are less than a specified amount established by the Labor Department. Working conditions Wages and salaries Minimum daily wages are established for separate regions of the country by a National Minimum Wage Committee, working through local committees made up of representatives of government, organized labor and private industry. Formerly, new minimum wages were approved every year, but in the past, as a result of the relatively high rate of inflation, on occasion minimum wages were adjusted more than once a year. In recent years the annual increases have not exceeded the inflation rates as measured by the National Consumer Price Index. The variation in wage rates in the different regions has been considerably reduced, and only two different minimum rates are now in effect, varying from a low of 63.77 pesos per day in some regions to 67.29 pesos per day in Mexico City and in some regions near the U.S. border. The Minimum Wage Committees have also established professional minimum wage rates for a number of semiskilled and skilled jobs and office jobs. The committee for Mexico City fixed rates for a total of 59 different positions for 2014, including, for example, those shown in Table VII.

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