Employment in Mexico City

• Most working expats are located in Mexico City. The secondary and the tertiary sectors are flourishing and employ the most people.
• Understanding how to pay taxes and how much is due can be challenging and it is therefore important to get the right information.
• Mexico’s healthcare system is composed of private systems and public ones, like the Seguro Popular. Other specific healthcare plans exist as well.

The Work Hub for Expats

As Mexico City is the nucleus in almost all aspects of the national economy, working here has all but become synonymous with expat employment in Mexico. And the perks are obvious: with more and more global players establishing offices in the capital, being assigned to Mexico City-based subsidiaries of your company is both a realistic and, most likely, career-advancing option. The fact that this is probably also one of the easiest ways for expats to enjoy their time working in Mexico City further sweetens the deal. You can be fairly certain that if a multinational corporation operates in Mexico, be it a bank, an automobile manufacturer, or an IT company, they will also have offices in Mexico City.

Of course, you do not need to be employed in a multinational company to be able to start working in Mexico City. The capital is also the preferred site for headquarters of an astounding number of Mexican companies, and it’s the main hub for the national media. The application process, however, is a bit less straightforward than a simple transfer and requires some perseverance and effort on your part.

A Paradise for the Secondary and Tertiary Sectors

Estimates are not always in agreement about how big a part of the national GDP the men and women working in Mexico City are responsible for (a number of sources seem to peg it at around 18%). Yet, there is no disputing that Mexico City is the spearhead of the Mexican economy and a hub for finance, industry, services, and the media. Whether for the size of its workforce, the city’s political significance, or the potential for synergies with other companies, Mexico City and, in turn, the Valley of Mexico Metropolitan Area (ZMVM), are highly attractive for companies in the secondary and tertiary sectors. As such, if you are considering working in Mexico City, you can expect to find a job in these sectors. The primary sector is close to non-existent, as the highly urbanized valley and its environmental problems give agricultural endeavors very little chance of s쳮ding.

Companies within the secondary sector in Mexico City and its immediate environs operate in the pharmaceutical and chemical, textiles, electronics, steel, transportation, and foodstuffs industries. The tertiary sector, however, is even more highly developed,  with services making up almost three-fourths  of the metropolitan area’s GDP. In this sector, industries such as banking, insurance, telecommunications, and tourism are prevalent. Furthermore, the sector includes public services provided by the government, like hospitals, mains water, and electricity.

Many of the city’s 16 districts function as economic centers and sub-centers as well, notably Benito Juárez and Cuauhtémoc. Tourism is a very valuable service industry, as it generates foreign income. Of the two million people employed in this sector in the whole country, 400,000 work in Mexico City. As a matter of fact, it is one of the most beloved vacation destinations worldwide, with 10 million visitors a year. The tourist infrastructure has consequently been built up to meet the demand. Around 600 hotels and many other places for people to stay can be found in Mexico City.

Expat Business Info Mexico D.F.

How Much Tax Do You Owe?

Before starting work in Mexico City, you need to register with the Secretaría de Hacienda y Crédito Público, who will supply you with your individual tax ID.

If you’re staying in Mexico for less than half a year (i.e. 180 days), you will be considered a non-resident alien for tax purposes. Any salary you receive from a Mexican employer will then only be subject to a withholding tax, the rates of which depend on your total income. For low incomes, the rate can be as low as 10%, but most expats end up paying around 25% withholding tax.

For residents, on the other hand, including most expats who stay longer than 180 days, the progressive tax rates are as follows, based on your annual income:

• Up to 5,953 MXN: 1.9%
• 5,954–50,525 MXN: 6.4%
• 50,526–88,793 MXN: 10.9%
• 88,794–103,218 MXN: 16.0%
• 103,219–123,580 MXN: 17.9%
• 123,581–249,243 MXN: 21.4%
• 249,244–342,842 MXN: 23.5%
• 342,843 MXN and above: 30.0%

Please note that individuals taxed as residents are taxed on their worldwide income, not only on the income from sources within Mexico. Fortunately, Mexico has signed double taxation treaties with quite a few countries, including, but not limited to, the USA, the UK, Canada, and Germany. If you are receiving income from one of those countries while working in Mexico, you should be able to get tax relief in most cases.

Mexico’s federal states also impose a wage tax on your salaries, which usually goes towards social security. The wage tax rate for Mexico City is 2.5%. This tax is withheld by the employer. All different types of remuneration paid to an employee have to be taken into account when calculating the monthly income tax withholding. Employers have to contribute by paying 2% of payroll to an employee retirement fund and 5% of the payroll to a housing fund.

Private Healthcare or Seguro Popular?

Mexico’s healthcare system consists of both smaller, private systems and larger, universal public schemes. The latter mainly aim to provide basic and affordable healthcare to those in need, and Seguro Popular (Popular Health Insurance), an insurance program initiated in 2004, has since helped Mexico achieve full healthcare coverage. With about 50 million beneficiaries, the scheme provided by the Institute of Social Security is by far the largest. If you opt to be insured in this scheme, part of your monthly salary, depending on how much you earn, will automatically be deducted and channeled into the fund. Your employer contributes a significant amount as well.

Note, however, that the public healthcare system has the obvious downside of only allowing access to public clinics and hospitals, the quality of which can vary greatly. As an alternative, most expats either opt to invest in private healthcare or negotiate a healthcare coverage plan with their employer.