Global HR & Payroll

Mexico is the 14th largest economy in the world, and therefore  provides a large market while also being protected by international trade agreements, like The United States-Mexico-Canada Agreement (USMCA). Expanding to Mexico can feel like the first, and easiest step into the international market for US companies, which has led to Mexico being the second-largest overall trade partner with the US.

Not only does Mexico have favorable trade deals with the US,  it has 13 free trade agreements, which is more than any other country. This makes Mexico an important hub and launching pad for companies entering the global market.

Employers in Mexico are responsible for payroll tax payments at both the federal and state level. Federal-level tax withholdings are consistent across the country, but state-level taxes range from an additional 1% to 3% of employee salaries, depending on your location. 

The tax code in Mexico is tiered based on the total annual pay of the employee, which offers both a fixed fee as well as a surplus tax rate. However, if an employee is low-income, their taxes are subsidized, leading to employers withholding less than originally calculated.

Other payroll withholdings include Social Security, Social Housing, disease and maternity insurance, and work risk insurance.  

IRIS Global Workforce Management’s comprehensive coverage encompasses all payroll processes, allowing you to rest easy knowing that you are compliant with all relevant Mexican payroll processes and regulations.

Full time employees are legally entitled to: social security (Instituto Mexicano del Seguro Social / IMSS), healthcare contributions, 13th month salary (Aguinaldo), and profit sharing. Profit sharing is one of the biggest bonuses for international employees, as all companies doing business in Mexico must share 10% of their global annual profits with their Mexican employees.

Vacation premiums are a major benefit as well. Employees are paid a bonus for taking their vacation, at a base of at least 25% of their base salary, effectively earning 125% while they are on vacation. These vacation days increase as the employee stays with the company, earning additional vacation days each year. 

IRIS Global Workforce Management streamlines the management and tracking of employee benefits, to ensure your Mexican employees are rewarded and compensated fairly.

Mexico City is a business-friendly city that has been on the rise on the international market, with businesses around the globe recognizing the strength and resources available there. In the past decade, local government officials kickstarted a wave of urban renewal, bringing in a new wave of investors that led to further growth and development.

Mexico City is built with a solid infrastructure and has access to a young, talented, and available workforce. As the capital of Mexico, Mexico City has also become a central hub for international government officials and businesses, making it a great place to establish and build your professional network. 

Ciudad Juárez, also referred to as just Juárez, is the second largest city in Mexico. Juárez is a sister city with El Paso, Texas, and Santa Teresa, New Mexico, which are only a few miles north. Because of its close ties and connections to the United States, Juárez is home to the largest bilingual and binational workforce, making it an easy first step for any company’s global expansion plans.

Because of its international popularity and high demand, it’s common to expect some delays to processing time when first doing business in Juárez. It’s recommended that if you plan to expand to Juárez, to start the legal process early to give yourself enough time to receive the necessary permits and tax codes. 

Durango is often overlooked, but it is the hidden gem of Mexico industry and an important city to consider in your global expansion. Durango is a mining state with access to silver, gold, copper, and zinc mines, making it a major manufacturing hub, regularly exporting materials to India, China, and the United States.

Many businesses based in those countries have established manufacturing and assembly facilities in Durango, leading to Durango having a highly skilled labor force.