Our guide to Payroll in Mexico

Doing Business in Mexico

Investing in Mexico

Investing in Mexico provides access to strategic geographic advantages, trade integration, cost efficiency, and expanding industrial capabilities. These factors, combined with demographic strength and market potential, position Mexico as a compelling and competitive investment destination in the global economy.

Situated between United States and Canada, Mexico provides direct access to one of the largest consumer markets in the world. Through the United States-Mexico-Canada Agreement (USMCA), investors benefit from preferential trade conditions, reduced tariffs, and clear regulatory frameworks that promote stability and transparency.

One of Mexico’s most significant advantages is its robust manufacturing ecosystem. The country has established itself as a global hub for automotive, aerospace, electronics, and medical device industries. Leading multinational corporations have set up operations in key industrial regions, taking advantage of a skilled workforce, competitive labor costs, and well-developed supply chains. In addition, Mexico’s growing trend of nearshoring has further increased its appeal, as companies seek to relocate production closer to North American markets to reduce logistics costs and geopolitical risks.

Mexico also offers a diversified economy supported by a solid financial system and a network of free trade agreements with over 50 countries. Major industrial corridors in states such as Nuevo León, Jalisco, and Querétaro continue to attract infrastructure investment and technological innovation.

Basic Facts about Mexico

Full Name: Estados Unidos Mexicanos (United Mexican States)

Population: ~131 million

Capital: Mexico City

Major Language(s): Spanish (official), plus 60+ recognized Indigenous languages (including Nahuatl, Maya, Mixtec)

Monetary Unit: Mexican Peso (MXN)

Main Exports: Automobiles & auto parts, electronics, crude oil & petroleum products, machinery, agricultural products (avocados, tomatoes, beer)

GNI Per Capita: ~US$11,500-12,000 (World Bank Atlas method estimate range)

Internet Domain: .mx

International Dialing Code: +52

How to Say

Hello: Hola

Good Morning: Buenos días

Good Evening: Buenas noches

Do you speak English? ¿Habla usted inglés? (formal) ¿Hablas inglés? (informal)

Goodbye: Adios

Thank you: Gracias

See You Later: Hasta luego

Public Holidays

Employees are paid for seven public holidays, plus two additional days in election years and every six years when the handover of the presidential mandate occurs. Other recognized holidays are also commonly given to employees each year.

Registrations and Establishing an Entity

Mexico has several benefits and incentives to promote trade and investment.

Tax benefits for Key Export Sectors are granted to companies in the general regime or simplified trust regime and to individuals with business and professional activities who are engaged in the manufacturing and export in some industries such as semiconductors, automotive sector, pharmaceutical sector, among others.

Those benefits consist of: 1) Immediate deduction of investments in fixed assets used for the first time in Mexico; 2) The immediate deduction applies in the income tax prepayments, which benefits the companies’ cash flows; 3) For the VAT, the immediate deduction will be considered as a fully deductible expense; 4) An additional 25% deduction of the increase in training expenses.

IMMEX Program is intended for companies exporting at least US$500,000 or 10 percent of their production. Destined to conduct manufacturing, maquiladora, and export services. Allows the temporary importation of goods and provides the benefit of deferring duty payment on imports.

PROSEC Program is destined to companies conducting a manufacturing process within 24 listed sectors. Allows the importation of goods with reduced tariff rates regardless of their country of origin. The finished products can be either exported or sold in domestic market.

VAT & Excise Tax Certification is focused on companies that are compliant with their tax and

customs obligations. Provides fiscal credit over the VAT & Excise Tax payable upon temporary importations. It is available for companies operating under IMMEX program, Automotive Bonded Warehouse and Strategic Bonded Warehouse.

Strategic Bonded Warehouse is intended for companies that have the legal use of facilities located within a Strategic bonded warehouse. Allows the temporary importation of goods for their handling, storage, custody, exhibition, sale, distribution, manufacturing or repair.

Legal aspects

Mexico’s laws are generally favorable for investors and make it easier for companies to do business in the country.

Mexican legislation on Foreign Investments allows Mexican entities with foreign investment

to engage in most of the sectors and economic activities except for: 1) National land transportation of passengers, tourism and cargo (excluding courier and parcel services); 2) development banking; 3) rendering certain technical and professional services, according to specific Mexican laws; 4) Activities reserved to the Mexican Government (such as exploration and extraction of oil and other hydrocarbons; planning and control of the national electricity system; generation of nuclear energy; radioactive minerals; telegraphs, radiotelegraphy and

post mail; currency issuance and coinage; and control, monitoring and surveillance of airports, ports and heliports.

Mexican Foreign Investments Law establishes restrictions on land ownership by foreign investors.

Other activities with certain restrictions are: manufacture and sale of explosives, fireweapons, cartridges and ammunition; radio broadcast; printing and publication of newspapers for exclusive circulation in national territory; legal services; and private preschool, elementary school, middle high school, high school and upper or combined education services.

Setting up a Legal Structure

The common options for doing business in Mexico are through the incorporation of a Mexican entity or the registration of a branch (that may or may not create a permanent establishment). It is important to determine which is the convenient scheme, considering all applicable perspectives.

Branch: Lacks distinct legal personality from its head office, it operates as an extension thereof, with the head office assuming full responsibility for its obligations and liabilities.

Subsidiary: It is an entity with an entirely independent legal personality from its equity holders and, consequently, it acts on its own behalf.

Mexican Corporate law is primarily regulated by the General Law of Commercial Companies (GLCC), which establishes various forms of subsidiaries, the requirements for their incorporation, and it also sets forth their corporate governance directives, as well as the rights and obligations of shareholders, directors, and officers.

There are two main and commonly used forms of subsidiaries contemplated in the GLCC:

Corporation (“Sociedad Anónima” or “S.A.”)

• The liability of shareholders is limited to the amount of their contributions.
• Requires a minimum of two shareholders, with no maximum limit.
• No minimum capital is required; however, the shareholders must subscribe the capital in full within one year.
• May be incorporated as a variable capital entity (“S.A. de C.V.”), for flexibility in capital increases or reductions without amending the by-laws.
• Governance is managed by a Sole Administrator or a Board of Directors.
• Shareholders’ Meetings are the Supreme Authority.
• Can adopt the modality of “Sociedad Anónima Promotora de Inversión” or “S.A.P.I.” to allow the shares to be offered to the public (if registered with the National Securities Registry).

Limited Liability Company (“Sociedad de Responsabilidad Limitada” or “S. de R.L.”)

• Liability is also limited to the capital contributions.
• Requires at least two and no more than 50 partners.
• No minimum capital is required.
• Capital is divided into equity quotas (not shares), which are not freely transferable.
• May be also incorporated as a variable capital company (“S. de R.L. de C.V.”).
• Governance is conducted by one or more Managers.
• Certain decisions require unanimous consent of the partners.
• Provides special treatment concerning US tax purposes (considered a pass-through entity).

Taxpayers Registry

In order to obtain a Taxpayers Registry in Mexico, the subsidiary or branch will need to provide a tax domicile located in Mexico and the legal representative must be a Mexican resident for tax purposes and have a valid Taxpayers Registry in Mexico.

Banking

Considering that one of the different formalities to claim a valid tax deduction out of the expenses implies the need to pay the same throughout a bank account in the name of the subsidiary or branch, at least one Peso-denominated bank account is required.

The legal representative to open bank accounts must be a Mexican or a foreigner resident with a valid migratory visa in Mexico (Mexican residency).

Financial institutions residing in Mexico or abroad with branches in Mexico undertake the procedures to identify foreign accounts or reportable accounts for the Automatic Exchange of Information on Financial Accounts for Foreign Account Tax Compliance Act (FATCA) and Common Reporting Standard (CRS) purposes.

Working Week

The Federal Labor Law (FLL) establishes maximum regular hours of work on a daily basis, the normal work week ranges from 40 to 48 hours. The maximum number of hours that an employer may require its employees to work, without having to pay overtime, is 48 hours per week for the day shift, 45 for the mixed shift, and 42 for the night shift.

• Day shifts: Eight hours between 6 a.m. and 8 p.m., equivalent to 48 hours per week
• Night shifts: Seven hours between 8 p.m. and 6 a.m., equivalent to 42 hours per week
• Mixed shifts: Seven and a half hours divided between the day and night, equivalent to 42 hours per week

Employees work a maximum of six days a week and are paid for the seventh day. Employees are entitled to double pay for the first nine hours of overtime and triple pay thereafter, provided that they do not exceed more than 3 hours per day or 3 times per week; otherwise, they are subject to triple pay. In addition, Sunday work entitles workers to a 25% premium.

A reform to the Federal Labor Law is currently under review and approval. The proposal provides for a gradual reduction of the standard workweek to 40 hours, along with a cap of 12 hours of overtime per week. It is widely expected that the reform will be approved, with implementation scheduled to begin in 2027.

Employment Law

Labour relationship in Mexico is governed by the Federal Labor Law (FLL), which applies to all employees in Mexico regardless of nationality.

Holiday Accrual / Calculations

Holidays are calculated and paid as normal working days.

Maternity/Paternal Leave

Working mothers in Mexico have several rights under FLL. Working mothers have the right to participate in maternity and childcare benefits provided by the Mexican Social Security Institute. Working mothers are entitled to the following rights:

1. They cannot work in dangerous places (i.e., hazardous waste, pesticides, and chemicals in general, among others).
2. Maternity leave of six weeks before childbirth and six weeks afterward receiving full wages from the Mexican Institute of Social Security (to be eligible to receive this benefit from the Institute, a working mother must have been registered with IMSS for a period of at least 30 weeks). Otherwise, the employer must pay the salary during the maternity leave at the working mother’s request with previous authorization of her medic, and considering the employer’s opinion, four of the six weeks, before the baby is born, may be transferred afterward.
3. Right to two daily half-hour rest periods to feed the baby in a clean and healthy place. If this is not possible, she is entitled to work one hour less per day.
4. Right to remain performing activities during pregnancy as long as the mother is able to perform her activities in a safe manner.
5. Mothers are entitled to six weeks of paid leave when adopting a child.
6. Working mothers cannot be laid off due to their pregnancy. However, if the working mother is dismissed for a justified reason or she voluntarily resigns, then the employment relationship would be terminated without incurring the company any liability whatsoever.

Working fathers are legally entitled to the following benefits:

1. New fathers, through birth or adoption, are entitled to enjoy a paid leave-of-absence of five days.
2. Social Security Law provides child-care and social welfare insurance for widowed or divorced fathers who need someone to care for their children while they work.
3. Childcare centres can take care of children 43 days after birth and until they are four years old. This service is provided during working hours.

Employers may grant more generous benefits at their discretion. It is important to mention that there is no distinction based on the industry of the company.

Sickness

Sick leave is paid by the IMSS at 60% of the capped daily salary basis of the employee starting on the 4th day of sick leave. It is at the employer’s discretion as to whether they pay for the first 3 days of sick leave.

National Service

Currently involves all males reaching the age of eighteen based on a random draft process. For those selected, the service obligation is for twelve months, and it is conducted during weekends.

Tax & Social Security

The domestic fiscal year runs from 1^st January to 31^st December for all Mexican entities.

The key Tax Authorities are the following:

1. Secretaria de Hacienda y Crédito Público - SHCP - (Ministry of Finance and Public Credit).
2. Servicio de Administración Tributaria – SAT- (Tax Administration Service).
3. Instituto Mexicano del Seguro Social – IMSS - (Mexican Institute of Social Security).
4. Instituto del Fondo Nacional de la Vivienda para los Trabajadores – INFONAVIT- (Workers’ National Housing Fund Institute).
5. Instituto del Fondo Nacional para el Consumo de los Trabajadores – INFONACOT- (Institute of the National Fund for the Workers’ Consumption).

Tax Rates

Residents working in Mexico must obtain a Tax ID number (aka RFC) and a Uniform Population Registry Code (aka CURP). Mexican employers are obligated to register all employees with the Mexican tax authorities. In practice, foreign individuals need to obtain the tax ID number directly from the tax authorities and a CURP from the immigration authorities. To get an RFC, the individual must submit proof of fiscal domicile and a certified copy of the individual’s work permit visa.

Income Tax

The Income Tax Law (aka LISR) provides definitions and concepts such as residence and source of wealth for purposes of determining which individuals and companies are subject to this tax. All individuals or companies who, under the Federal Fiscal Code (aka CFF), are considered “tax residents” in Mexico, must pay income tax based on worldwide income. Specific provisions of this Tax Law determine the cases in which income obtained by a “non-resident” in Mexican territory qualifies Mexico as the source of wealth, in which case, a Mexican final payment may be assessed on Mexican source income only. Furthermore, the network of over 50 tax treaties may provide relief to determine the non-tax residency qualification of an individual.

The Income Tax (ISR by its acronym in Spanish) is a federal tax payable at a flat 30% rate for legal and corporate entities, who are compelled to make monthly prepayments to the Tax Administration Service (SAT) based on an estimated tax calculated on the income received and applying a profit. In general terms, the annual ISR is determined by deducting from gross income the allowed deductions.

Corporations resident in Mexico are taxable on their worldwide income from all sources. Non-resident corporations in Mexico are subject to corporate income tax on income earned from carrying on business through a permanent establishment in Mexico or, in the absence thereof, on Mexican-source income.

The individual income tax (ISR) for a resident is calculated at graduated progressive rates that vary from 0% to 35%. A non-resident will be subject to individual income tax rates which range from 0%, 15%, and up to 30% on salary income.

Employers have the legal obligation to withhold income tax from employees’ salary and remit it to tax authorities. Income tax rates depend on the individual’s annual income. The top tax rate is 35%.

There are 10 types of taxable income:

1. Salaries and other income assimilated to salaries according to the LISR
2. Professional fees and income from business activities
3. Incorporation regime
4. Rental income
5. Income from the sale of assets
6. Income from the acquisition of assets
7. Interest
8. Prizes
9. Dividends
10. Other miscellaneous income

Among others, the following types of income are tax-exempt; they must be properly documented and meet the requirements established by tax law. Furthermore, there is a cap applicable to some of them:

1. Insurance benefits for sickness or work-related injury
2. Reimbursement of medical and funeral expenses
3. Certain Social Security benefits
4. Social Security (IMSS) contributions (the employee portion paid by the employer)
5. Benefits received from the Workers’ Housing Fund (INFONAVIT)
6. Travel expenses, when they are actually spent in the employer’s service, and this circumstance is verified with the corresponding tax invoices
7. Bonuses that employees receive from their employer when they are granted in a general manner, vacation premiums, and profit sharing up to the threshold established by the LISR
8. Salary received by foreigners in the following cases (when there is a reciprocal law in the country of origin that applies to Mexican nationals), as an example:
1. Diplomatic agents
2. Consular agents
3. Embassy and consular employees
4. Official delegation members

The employee’s Income Tax is withheld at source and must be paid out to the tax authorities by the 17^th day of the following month.

A non-voluntary late payment of tax can attract a penalty as high as 50% of the amount due.

Expatriates who are tax residents of Mexico must file an annual tax return. Non-residents do not file annual returns. If a resident’s only source of income is from a Mexican employer and the compensation received in a calendar year is less than MXN$400,000.00, the employer is responsible for making annual withholding tax adjustments for the employee. They must be e-filed in April of the following year through the website of the Tax Administration Service.

Social Security

For a Mexican employer is mandatory to register all its employees with the Mexican Social Security Institute (IMSS). Once registered, the employee will receive a confirmation of the registration. The employee should present/submit this to the clinic that corresponds to the employee’s domicile if they intend to use the social security benefits, such as medical care.

Employee contributions to the Mexican Social Security Institute are withheld at source. The employer also makes contributions. Both contributions are calculated at varying rates and subject to various limits based on multiples of the Measurement and Update Unit (UMA, by its acronym in Spanish).

This is an economic reference in pesos to determine the amount of payment of the obligations and assumptions provided for in federal laws, state laws, as well as in the legal provisions that emanate from all the above. The monthly value of the UMA is calculated by multiplying its daily value by 30.4 times, and its annual value is calculated by multiplying its monthly value by 12.

IMSS

Administers the social security system. In addition to the old-age benefits, it provides full pay for 78 weeks of disability and offers permanent disability insurance. Other benefits include pensions, death benefits, daytime nurseries, and paid maternity leave. The system also covers work-connected accidents and illnesses and non-occupational diseases. The penalty for late payment of Social Security taxes is up to 40% of the amount due.

Social Security contributions are capped to an integrated daily salary (Salario Diario Integrado or SDI) for calculation purposes.

INFONAVIT

Is the federal institute for worker's housing. It is the largest mortgage lender in Mexico, whereby more houses are now built by developers and purchased with a mortgage than through a self-build process.

INFONAVIT receives 5% of all formal workers’ salaries and provides a series of housing-related mortgage products. These include a mortgage to buy a new or existing home, a mortgage to remodel a home, or a mortgage to build a new home.

Both the employee and employer must make contributions to the Federal pension system in Mexico:

• The employer pays 2% of the employees’ base salary as pension contributions for retirement.
• The employer pays 3.150 to 7.513% of employees’ base salary as pension contributions for unemployment and old-age insurance.
• Employees pay 1.125% of their base salary as pension contributions for unemployment and old-age insurance.

Employer federal pension contributions – including social security, housing, retirement, and all other aspects covered by the IMSS – are tax-deductible. Contributions to IMSS are not subject to Income Tax, likewise, a portion of the pension received is exempt from income tax.

Mandatory pension rights transfer regardless of the employer.

The following is a chart summarizing the Social Security contributions percentage:

Supplementary Pensions

Mexico reformed its pension system in 1997, transforming it from a pay-as-you-go (PAYG), defined benefit (DB) scheme to a fully funded, private, and mandatory defined contribution (DC) scheme. The Retirement Savings System and Retirement Fund Administrators (AFOREs) provide retirement and pension plans. A major reform bill was passed and approved in 2018. It revised the entire retirement system’s financial provisions and made the investment process more efficient for all pension fund administrators (AFOREs), which are private financial institutions responsible for managing employees’ retirement accounts.

The Social Security Law provides personal supplementary schemes, in which both the employee and/or the employer may agree to pay a greater contribution than that established by the law to increase the retirement funds in their accounts. An authorized AFORE shall be hired.

It is common (but not compulsory) for employers to provide access to supplementary pension schemes for their employees.

These contributions are not taxable income for the employee and are a deductible expense for the employer, provided that certain requirements are met. Depending on income, a certain proportion of supplementary pension scheme income is exempt from income tax.

There are different types of supplementary pension schemes and ways to determine their value. As these are contractual benefits, employers can freely determine their terms and conditions.

Most supplementary pension plans include a provision allowing beneficiaries to transfer their benefits to a new employer pension plan in the case of termination of employment, without it becoming a taxable event.

Employers can deduct a portion of their pension fund contributions from their income tax calculation, provided that certain requirements are met. Pensions paid to employees are partially tax-exempt, including those paid by insurance companies, provided certain requirements are met.

Supplementary employees' pension rights on a business transfer depend on the terms of the transfer. In the case of an employer substitution, the employees' pension rights remain the same as they were before the business transfer.

Employees who are working abroad can participate in a pension scheme established by a Mexican parent company. The tax implications will depend on the employee's tax residency.

Employees of a foreign subsidiary company can participate in pension schemes established by the company's parent company. However, all documents issued concerning the pension plan must comply with the requirements of Mexican law.

Local Payroll Tax

Most Mexican states impose a tax on salaries in cash or Payroll Tax (aka Impuesto sobre Nómina or ISN), but none on the overall compensation, which is payable by the employer. For instance, Mexico City imposes a 4% payroll tax, as it is payable by the employer; it constitutes a tax-deductible expense.

Reporting

Employment-associated taxes and Social Security contributions are filed and paid out on the following basis:

The submission is electronic.

The payroll provider needs to be granted a Power of Attorney (POA) for legal representation for tax filings. This will allow access to the e-filing system.

New Employees

The employer and employees must be registered in the IMSS.

New starters should register with the IMSS within their first five (5) days of employment commencing.

To set up a new start, the following information is required:

1. Employment Contract
2. Employee Compensation package & benefits
3. Employee Personal Information
4. Employee Bank Details
5. Copy of Identification, tax ID (RFC), general population registry (CURP), social security number
6. Proof of Address

Please note: If an employee has a loan from the INFONAVIT or the INFONACOT, the payroll provider will require a copy of the document stating the amount to be withheld throughout the payroll.

Leavers

For leavers, the payroll company will require an email confirming the leaving date and whether it is a resignation, or the employee requires termination or a severance payout.

Workers may be dismissed for cause, such as disobedience or disciplinary problems, within 30 days of the act warranting dismissal. Beyond that “probation” term, the employer still has the right to terminate an employee without any responsibility for severance if he has “justified cause”, defined by the Federal Labor Law as acts that are disciplinary in nature, continued absence, gross misconduct, etc.

In the event a termination is undertaken with just cause, the employee would only be entitled to receive any accrued benefits in arrears and contractual entitlements, including vacations, vacation premium, Christmas bonus, and any other accrued benefit.

Employees dismissed for other reasons are entitled to severance indemnification equal to three months' full integrated salary, plus 20 days' salary for each year of rendered services (in certain situations). This remedy is calculated based on the integrated salary of the employee (including premiums, bonuses, commission, and any other accrued benefits). Additional severance pay may be due depending on the reason for dismissal as well as the terms of the original work contract.

A worker dismissed is entitled to a seniority premium equal to 12 paid days per year of service, computed based on a maximum of two minimum daily salaries. If the employee resigns voluntarily with more than 15 years of service, the premium also becomes payable.

If an employee appeals a dismissal when not receiving full severance pay and the decision is favourable, the employee is entitled to full pay from the last day of work with a limit of one year until the court reaches a final decision on the merits of the dismissal.

Employee Benefits

In general, employee benefits are deductions for corporate income tax: pension plans contributions, social security taxes, benefits granted under the same policy for all employees (capped) such as meal tickets, saving funds, medical and life insurance.

Government Pension Schemes: There is a Retirement fund contribution included in the Social Security contributions.

There is a Christmas bonus known commonly as a 13th-month payment; while business practice may allow for more, the statute provided a fifteen-day payment and is prorated based on the number of days worked during the year.

Employees are paid for seven public holidays, plus an additional day in Presidential election years. Other generally recognized religious or traditional holidays are also commonly given to employees each year.

After a year of service, employees are entitled to twelve days' paid vacation. The vacation period increases by two days for every additional year of service until twenty days’ paid vacation. After the fifth year of service, the vacation period increases by two days every five years of service. If the employee has less than a year of service, he has the right to a proportional amount of vacation days. In practice, from fifteen to twenty days of paid vacation are granted to white-collar employees after one year of service.

A mandatory cash vacation premium of 25% of the regular salary must be paid for the vacation period established by the Labor Law, although it is a common business practice to pay up to 50% for this benefit.

The House Allowance is used for “relocation purposes” as a “relocation bonus” (just one time) when an employee has to be relocated to another county, state, or abroad. Normally, the provided amount equals 1 to 3 months of house leasing, hotel expenses for the employee and his family, moving expenses, etc., but there is no limit established in any local law.

As a fringe benefit, in Mexico, you can receive food coupons (vales de despensa) alright and they are tax-deductible. There are specific tax rules and limits for these. This benefit is different than food allowance (ayuda de alimentos), being this benefit not for all employees and is payout in cash (as determined by the company), there must be withholding to the employee for receiving this benefit.

Profit-sharing (PTU): every year, 10 percent of a company’s taxable profits are distributed to employees in the form of employee profit-sharing. According to Mexican law, every employee has a right to receive it. Exceptions are managing directors, board members, domestic workers, and casual workers. The amount of profit-sharing per employee is calculated based on the number of working days completed during the financial year and the salary received during the same period. Companies to which this regulation does not apply according to Article 126 of the Federal Labor Law are the following:

• Companies during the first year after the start of business.
• Companies that develop new products during the first two years after the start of business.
• Companies whose taxable income is less than 300,000 Mexican pesos per year.
• Newly formed companies currently in the Exploration Period operating in the extractive industry.
• Non-profit private aid institutions dedicated to humanitarian causes.
• The Mexican Institute for Social Security (IMSS) and decentralized public institutions for cultural, social or charitable purposes.

The distribution of employee profits, also known as PTU (Participación de los Trabajadores en las Utilidades), is both a constitutional right of the company’s employees and an obligation on the part of employers to generate these profits. If one of them does not comply with this obligation, sanctions may be imposed by the employment authority. The distribution of profits must take place by 30 May of the current year at the latest.

Article 127 of the Federal Labor Law establishes a cap for the distribution of profit sharing for up to three months of the employee's salary, or the average of it paid in the preceding three years, whichever would be higher.

Expenses are usually treated through general expense reports and shall be supported by official invoices to be obtained by the employees, otherwise, the reimbursement of non-supported expenses would turn into an item of income for the employee, and the employer shall withhold income tax and report.

Home Office

Remote work regulations were introduced to the Labor Law in 2021, recognizing it as recurrent paid activities performed in places other than the establishment of the employer, using information technologies, and only in cases where they are conducted in more than 40% of the time at the worker's home or the place intended for that purpose. It is not considered as such if performed occasionally or sporadically.

This modality must be established in a written agreement and is voluntary for the parties, except for the cases of force majeure, such as the pandemic situation we went through. Likewise, it is reversible, meaning it can be agreed again to return to face-to-face mode.

The main obligations of the employer concerning the Home Office are:

1. Provide the necessary equipment such as computers, ergonomic chairs, or printers.
2. Bear the costs of telecommunication services and the proportional share of electricity.
3. Keep track of the supplies delivered to workers.
4. Implement mechanisms to preserve information and data security.
5. Respect the right to disconnection of people who do Home Office.

Visas & Work Permits

To work in Mexico, all business visitors must obtain a visa. The visa application should be made before traveling to Mexico. Applicants should make their request for a visa to the Mexican Consulate within their country of origin or temporary residence.

Those who enter Mexico for business activities are regulated by the Immigration law and its legal framework, consequently, such foreigners can stay in Mexico under either one of the following legal conditions; (i) Visitor (ii) Temporary Resident (iii) Permanent Resident.

Such conditions confirm the legal status of foreigners in Mexico and set the visa’s classification that the Mexican grants in accordance with the activities the foreigners carry out.

There are four types of Visa for expatriate employees:

Key changes for 2026

The legislative process for the approval of the 2026 Tax Reform began on September 8, 2025, through the presentation to the Chamber of Deputies of the Economic Package for Fiscal Year 2026. Finally, on November 7, 2025, the Presidency of the Republic published in the Official Gazette of the Federation (DOF) the Tax Reform for 2026, including the amendments to the Federal Revenue Law (LIF), Federal Tax Code (CFF), Special Tax Law on Production and Services (LIEPS) and the Federal Law of Rights (LFD); becoming the end of the process and entering into force as of January 1, 2026. It should be noted that some items within the reformed provisions will have their entry into force early and others at a later date.

Key changes include:

Surcharge Rate

Surcharge rates had remained fixed since 2018; however, as of 2026, these rates will be increased as follows:

As a result of the above and based on the provisions of article 21 of the CFF, the surcharge rate of 1.47% will be increased to 2.07%.

Interest Withholding Rate

In relation to the interest paid by financial institutions indicated in articles 54 and 135 of the Income Tax Law (LISR), the withholding rate applied to the amount of the capital for the years 2024 and 2025 has been 0.50%; however, for the fiscal year of 2026, this rate will be increased to 0.90%.

Federal Tax Code

Finally, this article 29-A incorporated the facility that has been granted by the Annual Temporary Tax Regulations (RMF), in relation to the maximum period for CFDI cancellation, extending the period no later than the last day of the month in which the annual income tax return must be filed.

Article 29-A Bis was added, which grants the tax authority the power so that, if, in the exercise of its powers of verification, it detects the issuance of CFDI that does not cover existing, true operations or real legal acts, to determine the corresponding tax consequences, without the need to exhaust the home visit procedure. Likewise, article 42, states that the tax authorities may carry out home visits in order to verify that the tax receipts cover existing, true transactions or real legal acts.

In the same article 42, a third paragraph was added empowering the tax authorities in home visits for the physical verification of goods during transport, and the use of technological tools to generate multimedia material of the development of the proceedings carried out, which may be attached to the record drawn up.

Finally, the new article 30-B, incorporates the obligation for taxpayers who provide digital services to allow tax authorities, on a permanent basis, online and real-time access to their digital platforms in order to verify proper compliance with tax obligations. Failure to comply will lead to the temporary blocking of access to the digital service.