Employees’ Profit Sharing (“PTU”) is an obligation that grants employees the right to receive a percentage of the profits generated by the employer company during the last fiscal year.

Derived from the labor reform of 2021, the Federal Labor Law (“FLL”) provides a new maximum limit for its calculation:

“Article 127.- The employees’ right to participate in the distribution of profits, acknowledged in the Political Constitution of the United Mexican States, shall be in accordance with the following rules:

[…]

VIII. The amount of the profit sharing shall have a maximum limit of three months of the employee’s salary or the average of the profit sharing received in the last three years; whichever is more favorable to the employee shall be applied.”

The deadline for the payment of PTU is on May 31st, 2024.

The percentage calculation employee profit sharing shall correspond to 10% of profits, in the understanding that profit shall correspond to the taxable income of the company, calculated pursuant to the Income Tax laws.

For the distribution of the 10% of the distributable profit, it must be divided in two equal parts:

1. The first half shall be distributed among the total number of employees in the company, regardless of the salary that corresponds to each one of them.

2. The second half shall be distributed proportionally to the average amount of the salaries corresponding to each employee during the last year.

Participation in the company’s profits is subject to the following guidelines:

• a) Directors, administrators and general managers may not participate in the profits;

• b) Other personnel in “trust positions” may receive PTU, but the calculation of their average salary during the last year will be limited to the equivalent resulting from adding twenty percent to the amount of the salary received by the highest paid unionized worker within the company;

• c) Domestic employees are not entitled to participate in the profit sharing; and

• d) Temporary workers will be entitled to participate in the company’s profits when they have worked at least sixty days during the year.

Companies among any of the following scenarios shall be exempt from the obligation of profit sharing among their employees:

1. Newly incorporated companies, within the first year of operation;

2. Newly incorporated companies, engaged in the elaboration of a new product, during the first two years of operation;

3. Companies of extractive industry, of new creation, during the exploration period;

4. Private assistance-institutions, as recognized by law, that execute acts with humanitarian purposes, without profit purposes and without individually designating the beneficiaries;

5. Decentralized public institutions with cultural, charitable or welfare purposes.

In the event of noncompliance with the payment of PTU within the term and in contravention of the aforementioned, the tax authority is entitled to impose a fine of $27,142.50 M.N. and up to $542,850.00 M.N.