After individuals and corporations make their annual income tax return (ISR) to the Tax Administration Service (SAT), companies acquire the obligation to distribute the payment of profits to their workers. Profits, also known as Worker Participation in Enterprise Profit Sharing (OCT), are a constitutional right that employees must receive.
In accordance with the provisions of article 123 of the Political Constitution of the United Mexican States and chapter VIII of the Federal Labour Law, “the sharing of profits among workers must take place within sixty days from the date on which the annual tax is due, even if it is in objection procedure of workers”.
According to the SAT, profits are an instrument that seeks to contribute to the distribution of wealth and social justice, as well as to stimulate productivity by remunerating the efforts of workers who attract income through wages. In this way, workers have the right to receive part of the profits that the company, employer or employer earned in the previous year.
The distribution of profits will have to be carried out in two equal parts. The first is divided equally among all employees and takes into account the number of days worked per year, regardless of the amount of salary, while the second is divided in proportion to the amount of wages received during the year.
In this way, companies must take into account the following items when distributing profits, according to the multinational Sodexo:
1. Determine taxable income, which is determined by subtracting non-deductibles and deductions from gross income.
2. Apply percentage of employee participation. This is determined by the SAT and is 10%.
3. Determine number of collaborators.
4. Perform the distribution in two parts.
Remember that profit sharing is deductible as long as the participation of workers does not exceed 15 days of the general minimum wage. Companies must grant the amount for this concept to workers from April 1 to June 29 based on the following guidelines. Likewise, there will be a period of one year from the day after the obligation is generated, for the collection of profits.
- If you work for a company, profits must be deposited to employees between April 1 and May 30.
- If your employer is a natural person, the distribution must take place from May 1 to June 29.
In the event that workers do not receive the profits, they may file a complaint with the Ministry of Labour and Social Security (STPS) using the following e-mail address: inspeccionfederal@stps.gob.mx or, failing that, contact the Office of the Defense of Labor, to receive advice on the distribution.
Finally, the individuals and corporations who are not obliged to give the amount of profits to their employees are the following:
1. The start-up companies, during the first year of operation.
2. The start-up companies, dedicated to the development of a new product, during the first two years of operation.
3. Companies in the newly created extractive industry, during the exploration period.
4. Private care institutions recognized by law, which are not for profit.
5. The IMSS and decentralized public institutions for cultural, welfare or charitable purposes.
6. Companies whose annual income declared to income tax is less than 300 thousand pesos.
KEEP READING: