PTU (Participación de los Trabajadores en las Utilidades) is a mandatory annual profit-sharing mechanism in Mexico. It ensures workers receive a portion of the profits their labor helped generate. Understanding PTU is crucial for any business operating within the country, as it is a core element of the national labor framework. Compliance is a necessary function of business operations, as the obligation is deeply embedded in the legal structure of Mexico.
Defining PTU and its Legal Framework
PTU is established as a constitutional right for workers in Mexico, enshrined in Article 123, Section A, Clause IX of the Mexican Constitution. This mandate signifies that the right of employees to share in company profits is a protected legal entitlement. The operational details are outlined in the Federal Labor Law, specifically within Title III, Chapter VIII. This legislation provides the structure for calculation, distribution, and the specific obligations employers must meet. PTU holds a prominent place in Mexican labor law and is subject to strict compliance requirements for virtually all employers.
Companies Obligated to Pay and Exemptions
Generally, all legal entities and individuals with business activities that employ personnel and generate taxable income in the previous fiscal year are required to pay PTU. This obligation applies broadly to both domestic and foreign businesses with a legal presence in Mexico. The requirement is tied directly to the company’s taxable income as reported to the Mexican Tax Administration Service (SAT). The law provides specific exemptions from this mandatory payment for certain types of entities.
Exempt Entities
Newly created companies are exempt during their first year of operation.
Companies manufacturing a new product are exempt for their first two years of production.
Non-profit institutions and government agencies are exempt.
Companies whose declared annual income is below a threshold set by the Ministry of Labor and Social Welfare (STPS) are also exempt.
Employee Eligibility Requirements
The right to receive PTU extends to most employees under an employment contract, regardless of whether they are permanent or temporary workers. To qualify, an employee must have worked at least 60 days during the fiscal year for which the profits are being shared. This ensures that even former employees or those with limited tenure who contributed to the company’s profitability are included in the distribution.
Specific employee roles are excluded from receiving PTU to maintain a distinction between labor and high-level management. Individuals who are directors, general managers, or administrators are not eligible for the payment. Temporary workers who did not meet the 60-day minimum, and professionals who provide services under a fee structure, are also excluded from the distribution.
The PTU Calculation Methodology
The total amount to be distributed is a fixed 10% of the company’s annual net taxable income, as determined from its annual Income Tax Return. This percentage is established by a National Commission and is the base figure from which all individual employee payments are derived. The calculation distributes this 10% pool using a two-part method to ensure fairness based on both time worked and salary earned.
The first half (50%) of the total PTU amount is distributed equally among all eligible employees based on the number of days each worked during the year. This portion recognizes the physical time and effort contributed by every worker, treating each day of service as having equal weight. This ensures that lower-salaried employees receive a significant share based on their presence.
The remaining 50% is distributed proportionally based on the annual salary received by each eligible employee during the fiscal year. This second part rewards employees who contribute at a higher salary level, recognizing the relative value of their work. This two-part structure balances the principle of equal contribution with proportional compensation.
Payment Deadlines and Distribution
The distribution of PTU is governed by a strict deadline that follows the company’s annual tax declaration. Employers are required to pay the PTU within 60 days following the date of their annual tax return filing. For most legal entities, the deadline to file their tax return is March 31st, making the mandatory payment deadline for PTU May 30th of the corresponding year. For individuals who are employers with business activities, the later tax filing deadline extends their PTU payment deadline to June 29th. A joint commission, known as the PTU Commission, is often formed with both employer and employee representatives to review the tax declaration and oversee the distribution process.
Recent Regulatory Changes and Maximum Limits
A major regulatory change occurred with the 2021 labor reform, which was primarily aimed at regulating outsourcing practices in the country. To mitigate the financial impact of this reform on employers, a cap was introduced to limit the maximum amount an employee could receive from profit-sharing. This reform added a specific clause to the Federal Labor Law outlining the new constraints. The law now mandates that the individual PTU payment cannot exceed one of two calculated amounts, whichever is more favorable to the worker. The first option is a limit equal to three months of the employee’s salary. The second option is the average of the PTU received by that employee over the previous three years. This dual-option cap ensures that the worker receives the higher of the two figures, providing protection for the employee while establishing a predictable maximum liability for the employer.