When you start business in Mexico, whether you are Mexican or foreign, you should know what the Tax Administration Service (SAT) and the Mexican Institute of Social Security (IMSS) are, so in this article we will be detailing it.
What is the SAT?
The SAT is a dependency of the Federal Public Administration, which aims to collect taxes and monitor compliance with the tax obligations of taxpayers in the country. Therefore, it is the dependency to which federal tax returns are submitted, such as ISR, VAT and IEPS.
The SAT is the agency which issues the Federal Taxpayer Registry (RFC) which serves to identify taxpayers in Mexico, which is essential for natural and legal persons to carry out economic activities in the country.
Registration in the RFC can be done in person or online depending on the taxpayer's situation.
Once you have your RFC, whether from a natural or legal person, you will be able to process your electronic signature known as e.firma, which are a set of electronic files that are made up of a certificate, private key and password. The e.firma will allow you to carry out your electronic invoicing and comply with your tax obligations in Mexico.
What is IMSS?
The Mexican Social Security Institutel was founded in 1943 and is currently the health institution with the largest presence in Mexico. Employers are required to register their employees with the IMSS and pay the social security contributions related to said institute.
The objective of the IMSS is to organize and administer Social Security, which must guarantee access to health, medical assistance and protection of the means of subsistence of Mexican workers.
It is important to know that in Mexico any person who performs a subordinate activity in exchange for a consideration is considered a worker, and when being worked it is essential that their employer affiliates with the IMSS.
The determination of the fees to be paid to the IMSS are made by both the employer and the worker, these fees are determined based on the worker's salary and are presented monthly and bimonthly.
Conclusions
The social security contributions are independent of the withholdings of the Income Tax (ISR) that the employer must make to the worker on his salary and pay the entire amount to the Tax Administration Service (SAT).
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