Practical Guide to PTU in Mexico.
As May approaches, phones start ringing and emails start coming in from employees in Mexico asking about something that catches most foreign companies off guard: PTU.
What is PTU? Why are my employees asking about it? Why did nobody mention this before? Do I have to pay it? When is it due?
That is exactly why we put this guide together. If you use Employer of Record services in Mexico, this is for you.
No complicated legal references, no technical jargon — just the basics, explained plainly.
What is PTU?
PTU stands for Participación de los Trabajadores en las Utilidades, which translates as Profit Sharing. It is a constitutional right that entitles employees to receive 10% of a company’s annual declared taxable profits.
When must PTU be paid?
PTU must be distributed to eligible employees between April 1 and May 30 of each year. May 30 is the hard deadline — no exceptions.
Do all companies pay PTU?
Only companies that report taxable profits for the fiscal year are required to distribute PTU. If no taxable profits were declared, there is no basis for distribution.
The following are exempt: newly established companies during their first year of operation, and for two years if they manufacture a new product; new extractive industry companies during their exploration period; institutions with humanitarian purposes; and certain public entities.
Do all employees receive PTU?
Permanent employees are entitled to PTU, as are former employees and temporary workers who have accumulated at least 60 working days during the year.
Directors, general managers, and administrators are excluded, as are shareholders and any individuals whose services are provided without a subordinate employment relationship, such as independent contractors.
How is each employee’s PTU amount calculated?
The total distributable amount is split into two equal parts. The first half is allocated based on the number of days each employee worked during the year. The second half is distributed in proportion to each employee’s salary earned during the same period. Both amounts are then added together, subject to a cap of three months salary or the average PTU received over the last three years, whichever is higher.
What happens if PTU is not paid?
Failure to pay PTU, or paying outside the established deadlines, is subject to significant penalties from labor authorities. The amount of the fine depends on the severity of the violation and the financial capacity of the company.
How is PTU treated for tax purposes?
For the employee, PTU payments are exempt from income tax up to the equivalent of 15 days of the general minimum wage. Any amount received above that threshold is subject to ISR withholding.
What happens with PTU under an EOR model?
The employing company in Mexico is the legal entity responsible for calculating and distributing PTU to all eligible employees, but only when taxable profits have actually been declared. If the employing company reported no taxable profits or posted a loss for the fiscal year, there is no legal basis for distribution.
In practice, your EOR provider should calculate, process, and invoice any PTU payment only when a real legal obligation exists.
We make this point deliberately. Some international EOR platforms apply a forced PTU charge regardless of whether taxable profits exist, often labeled as “month 12” or “month 13,” with no valid legal basis. This translates into an additional charge that is likely unnecessary and potentially excessive for your business.
It is considered a positive practice for the foreign company, through its EOR, to voluntarily provide employees with a special bonus in May. While not a legal requirement, it reflects the recognition and wellbeing principles that are at the heart of PTU and is generally received very positively.
It is also important to note that, like any company, an EOR cannot guarantee a specific level of profitability or a defined distribution amount. No advance commitment should be made to employees beyond confirming that the legal obligation will be met in accordance with applicable law.
By now you have a clear picture of what PTU is, who it applies to, and what your EOR is responsible for. No more unanswered calls in May. If you have questions about how PTU applies to your specific team or structure in Mexico, we are happy to walk you through it. Reach out and one of our specialists will get back to you the same day.
As a local Employer of Record in Mexico, Umanium handles PTU with full transparency and the correct legal treatment your business deserves. Get in touch at mexico@umanium.mx.