Quick Hits
- Companies in Mexico must file their tax returns by March 31 of each year.
- Annual corporate tax returns show the yearly financial results of any entity and whether there were gains or losses. Tax returns are the starting point for the obligations mandated by the FLL regarding profit sharing.
General Content and Rules for the Annual Tax Return
In the annual tax return, taxpayers file a report of their income, deductions, withholdings, and tax payments during the tax year—which in Mexico runs from January 1 to December 31. March 31, 2025, is the last day to file the financial report for the 2024 tax year. A failure to timely file the annual tax report may result in SAT fines ranging from MEX $1,800 to $35,000 (USD $88.02 to $1,711.52), as well as fines and/or sanctions that may arise from the FLL.
Annual Tax Return’s Relevance for Profit-Sharing Obligations
Employees need to be notified of the filing of the annual tax return with the SAT, and once the employees are notified, a joint commission consisting of an equal number of representatives for the employees and the company is required to analyze the tax return, define whether profits have been generated, make the necessary calculations, determine the 10 percent of the profits (if any) to be distributed among the employees (with some exceptions), and/or determine if some caps apply for the distribution.
The final PTU amount must be paid to the employees, at the latest, on May 30, 2025.
Regardless of whether profits are generated during the tax year, the FLL requires employees to be notified about the filing of the yearly tax return.
Failure to comply with profit-sharing requirements—starting with properly filing the tax return—could result in fines between MEX $28,285 to $565,700 (USD $1,382.04 to $27,640.76) from the Ministry of Labor and Social Welfare (Secretaría del Trabajo y Previsión Social (STPS)). Note that fines may be imposed per each affected employee, depending on the Labor Ministry’s consideration.
Ogletree Deakins’ Mexico City office will continue to monitor developments and will provide updates on the Cross-Border and Wage and Hour blogs as additional information becomes available.
Pietro Straulino-Rodríguez is the managing partner of the Mexico City office of Ogletree Deakins.
Natalia Merino Moreno is an associate in the Mexico City office of Ogletree Deakins.
María José Bladinieres Ruiz is a law clerk in the Mexico City office of Ogletree Deakins.
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