What are payroll taxes in Mexico?

Individuals are generally liable to income tax at the rate of 25% on their chargeable income (not exceeding 6 million Jamaican dollars [JMD] per annum) less an annual tax-free threshold (where applicable). Chargeable income derived in excess of JMD 6 million per annum is subject to income tax at a rate of 30%.
Pension – employer voluntary contribution up to 20% of salary. This is additional to 2.5% compulsory for NIS.

The AFOREs, which is the Adminstrator of Retirement Funds (Administradora de Fondos para el Retiro in Spanish), are financial institutions that administer retirement savings accounts on behalf of the employee. All employees associated with the IMSS, ISSTE (applies to government employees) as well as independent employees are eligible to open an AFORE account. An AFORE account consists of the following three subaccounts:

• RCV (Retirement, and Unemployment as a result of old Age or subcuenta de Retiro, Cesantia en edad avanzada y vejez in Spanish):
  • Retirement: 2% employer contribution
  • Unemployment due to old age: 3.15% employer contribution, 1.125% employee contribution, 0.255% federal government contribution. Additionally, the federal government contributes $1.45 Mexican pesos daily.
• Housing (this is administered by Infonavit, Mexico’s federal institute for worker’s housing and AFORE only registers and controls the funds): 5% employer contribution
• Voluntary Contributions: Voluntary contributions made by the employee to increase their retirement savings.