State Tax 

Definition

State Tax is a tax paid by companies. The employee is not affected by this tax.

The company pays State Tax directly to the government. This tax is paid for every work center, depending on the actual location within the country.

If a company has a work center in D.F. it must pay State Tax for the payments of the employees working in D.F. If a company has a work center in Jalisco, it must pay State Tax for the payments of the employees working in Jalisco and so on.

This is why it is important to know the actual location of the company's work centers. This can be determined by the addresses in the company's Registries that, at the same time, denote a work center.  State Tax is paid by the company in the state in which the company’s registry has its address.

Each state can freely establish its own State Tax. Some State do not even have a State Tax, that is, they State Tax is not charged.

First of all, the Tax percentage to be paid by the company in each State needs to be established. This can be defined by the Implementation guide, under Wage Calculation Mexico ® Tax ® State Tax ® State Tax Maintenance.

It is also important to know what concepts are used as the basis for this State Tax. In this matter, each State can also determine what criteria are used to form this basis. In the SAP system, this basis can be determined by the Implementation guide, under section Wage Calculation Mexico ® Tax ® State Tax ® Wage type ® Conforming relevant wage types. SAP offers a user exit for companies with work centers that have a different status and uses a different basis. Please refer to the Implementation guide, under Wage Calculation Mexico section ® Tax ® Processing client’s adaptations ® Updating accumulation base for State Tax.

Each state has its own legal documents through which payment notification must be made (for example, the basis is notified, what tax is to be paid, whether there is a charge, a fine, how many employees are taken into account for such payment and so on). The SAP system only provides forms that correspond to certain statuses. This form is generally printed once a month.