We are not a law firm. Do not consider our information as legal advice. This information has been summarized based on our legal inquiries. Information can become obsolete from one day to another due to changes in laws, regulations, or government procedures. Consult labor and tax attorneys for legal advice. (Note from HR Mexico staff)
Mexican Expense Reimbursements
Mexico is different than the USA and other countries as it relates to tax deductible expenses and expense reimbursement.
For example, your sales person in the USA can walk into an Office Depot, purchase a replacement laptop charger by paying cash, obtain a cash register receipt, turn in the receipt to your company, you approve, and reimburse the sales person tax free (No tax withholding for the employee), and then right off the expense, not paying corporate income tax on that expense.
This is not the case in Mexico. It is not that easy. Here in Mexico, the following applies:
The only way to correctly pay the worker expense reimbursements is by complying with the Mexican tax laws so that the expenses are tax deductible to the employer, not taxed to the employee as income.
There are certain actions that can be taken by the company as the employer to maximize the use of tax deductible expenses in compliance with the tax laws. Here are a few things that can be provided: (Check with your Mexican CPA for guidance for how to manage the tax deductible expenses. Some items have caps.)
It should be the responsibility of the employee that asks for the reimbursement to ensure and prove the following:
It is important to implement written policies and procedures for handling expenses and expense reimbursements.