Although no formal process is required, it is encouraged that the termination be formalized before the conciliation and arbitration court.

No notice period for termination is required.

Probationary periods are optional in Mexico, but the common practice is 3 months.

If the resignation is voluntary, the employer is required to pay the employee all accrued benefits. If an employee has at least 15 years of service, he or she is entitled to 12 days' pay for each year worked. Employers must pay all benefits due to employees who are terminated for cause. The employer will also entitle 12 days of pay for each year worked by the employee. Severance pay will equal three months' salary, 20 days for each year of service, and a seniority bonus of 12 days per year of service for terminations without cause. Additionally, the employee will be compensated for lost wages from the date of termination to the date on which the employer complies with the Labor Board's decision.

The minimum wage is 141.70 MXN per day. However, the minimum wage in the Free Economic Zone of the Northern Border is different and is set at 213.39 MXM per day.

The corporate income tax (CIT) applies to income earned by Mexican resident taxpayers from global sources, as well as income earned by foreign residents from Mexican wealth sources and income earned by foreign residents from permanent establishments (PEs) in Mexico.

CIT is levied at a federal rate of 30%.

All corporate entities, including civil organizations, branches, and so on, are subject to the tax laws that apply to Mexican companies (unless specifically ruled out, such as not-for-profit organisations).

Taxpayers who only participate in agricultural, livestock, fishery, and forestry operations are eligible for a 30% decrease in their tax obligation.

Even if recent inflation rates have been steady at low levels, the Mexican Income Tax Law includes provisions to recognize the impacts of inflation for tax purposes in the areas of monetary assets and liabilities (annual monetary adjustment) and depreciable assets.

After a company has paid its CIT, after-tax profits (i.e. earnings from the after-tax earnings account, Cuenta de Utilidad Fiscal Neta or CUFIN) may be given to shareholders with no corporate tax charge. A withholding tax (WHT) of 10% is levied on dividend payments made to individuals or foreign persons (including foreign companies); this WHT does not apply to distributions of earnings subject to corporate-level tax made prior to 2014. If a corporation makes a distribution from earnings that have not been subject to CIT for any reason, such as distributions of book earnings (i.e., earnings that have not yet been recognized for tax purposes in Mexico), the corporation will also be subject to CIT on the grossed-up distributed earnings (gross-up factor is 1.4286).

Tax paid on dividends issued in excess of CUFIN may be applied to the CIT of the year or the two fiscal years after the year in which the tax on non-CUFIN distributions was paid. The CUFIN for the tax years in which the credit is claimed must be reduced by the amount of the grossed-up dividend payout.

Resident people, regardless of nationality, are liable to Mexican income tax on their global income. Non-residents, even Mexican nationals who can establish tax residency in a foreign country, are taxed solely on income earned in Mexico.

For an income between MXN 0 to MXN 7,735.00, the tax rate is 1.92 percent.

For an income between MXN 7,735.01 to MXN 65,651.07, the tax rate is 6.4 percent.

For an income between MXN 65,651.08 to MXN 115,375.90, the tax rate is 10.88 percent.

For an income between MXN 115,375.91 to MXN 134,119.41, the tax rate is 16 percent.

For an income between MXN 134,119.42 to MXN 160,577.65, the tax rate is 17.92 percent.

For an income between MXN 160,577.66 to MXN 323,862.00, the tax rate is 21.36 percent.

For an income between MXN 323,862.01 to MXN 510,451.00, the tax rate is 23.52 percent.

For an income between MXN 510,451.01 to MXN 974,535.03, the tax rate is 30 percent.

For an income between MXN 974,535.04 to MXN 1,299,380.04, the tax rate is 32 percent.

For an income between MXN 1,299,380.05 to MXN 3,898,140.12, the tax rate is 34 percent.

For an income above MXN 3,898,140.13, the tax rate is 35 percent.

If the employee is deemed a non-resident for Mexican tax reasons, the tax rate on pay will range from 15% to 30%. The first MXN 125,900 in employment income earned during a 12-month floating period is tax-free.

VAT is levied at a standard rate of 16% on all sales of goods and services, as well as lease payments and imports of products and services.

In the case of the northern border area, a tax credit of 50% on the VAT rate may apply, resulting in a rate of 8% rather than 16%.

In Mexico, it is legally needed to have a robust employment contract in place that specifies out the conditions of the employee's remuneration, benefits, and termination criteria. A salary and any compensation amounts should always be stated in Mexican pesos rather than a foreign currency such as USD in an offer letter and employment contract in Mexico.

There is no set length for assignments. This is usually indicated in the employment contract for fixed-term employments.

Mexican Peso