To build or not to build in Mexico? Really the question
in this case is; If I do wish to build in Mexico what are the laws and
liabilities concerning workmen’s compensation insurance or “seguros” as it
is commonly referred to here in Baja California ?
In this article with the help of Jorge Ayala we will
see some of the most common and frequently asked questions concerning this
and how to avoid the pitfalls that may be encountered along the way.
Frequently Asked Questions about seguro social (Mexican
Institute for Social Security) and building in Baja:
Q.- I understand in Mexico that as the property
owner, I’m ultimately responsible for the payment of seguro (insurance)
for any workers on my construction job. Is that true? Can’t I have my
contractor pay the seguro and I pay him?
Q.- Are there any special things I should know about reporting to the
government that I need to be aware of?
A.- Depending what government office you are
referring to, if it’s IMSS, just have your builder or yourself to register
all the workers so this way you are covered of having insurance in the
case of a worker getting hurt or killed on your project. Because, if you
do not, then you are liable for all the worker hospital bills, medicine,
etc., even the funeral expenses.
Q.- What about when the job is finished?
A.- I recommend that you write a letter or have
someone do it for you, and make it out to the Delegate of the County you
are in, and state in it the need of a letter from them that saying that
you have complied in all the requirements of Employer-Employees
A.- Yes, it’s true. The owner is the final
responsible for the workers compensation insurance, even though you might
have a contract that it states that the contractor is liable for all of
the workers comps obligations and taxes. With IMSS, Institute Mexicano del
Seguro Social, the owner of the property is also the Solitary Responsible,
meaning if the contractor does not pay them because of various reasons,
for example Bankruptcy, he left town and they can not find him anywhere?
This is why I strongly recommend that you hire a third
party to do your accounting of the IMSS~INFONAVIT obligations. Or you can
put it in the contract, where the contractor will pay this for you, BUT in
your Name and that he shall supply you with the receipt every 17th of the
month, if he does not comply with this you shall hold off payments until
it has been has been taken care of.
Q.- What all do I need to set up an account with
seguro? What is the official name of Seguro office?
A.- Its official name is “INSTITUTO MEXICANO DEL
SEGURO SOCIAL” and what do you need…
Copies of the following documents:
Official I.D. of the employer or representative
(Foreigner Passport)
Mexican Driver’s Licences
IFE Card (Voting Card)
Cartilla (Mexican Military I.D.)
Official document of where the construction will take
place
(Fideicomiso) for foreigners
Utility Receipt, Water, Telephone, Light Bill CFE
Registration before Hacienda (Mexican IRS)
(not applied for foreigners as long as you do not
have any ongoing business here in Mexico)
Corporate Papers (same above)
A letter that manifests the authorization for other
persons to sign off official papers- formats in the event or doing any
movement before the IMSS. For example to put them on or off the payroll
listing.
Obligations, also to attach to this letter copies of all
the payments occurred so that they can figure out if you have underpaid
them, which you will be charged with late fees and the differences for
each month, or if you are flat even, or if you have over paid them (this
is done when the contractor keeps on dragging on the job for months and
months). With this letter from them, this gives you more of a peace of
mind knowing that you have done it right.
Q.- What if I did not pay the seguro properly
when I had something built in the past? What should I do and what kind of
penalties are there for not complying? How do I comply after the fact?
A.-
If you can prove somehow that you have built the
construction over 5 years ago (you must have evidence such as pictures,
receipts or invoices and in some cases some witnesses), you are off the
hook, if not? And if you had some part of it paid but you are not sure
of the rest? Then, you can apply with the same letter mentioned above.
If you did not pay anything of it within this 5 year
period, then you can write a letter same as the above letter but you
will not attach any receipts to it.
The penalties can be very hefty, but they are there
always to help you and if you come in yourself (meaning that you were
not left a citation) then they are obligated to assist you in complying
with them. I know that there is a law article that states more or less
“if a contributor comes in his own will to pay any attributions of taxes
that he shall not be fined or charged late fees”
In the case you did not pay anything at all, you can
apply in writing a letter, saying basically that you did not know about
these labor taxes nor were you aware of all the complications of such.
Also, that you want to make it right with this obligation.
Fill out some of their Official Formats:
AFIL 01, this form is used to give you an employer
tax number or to modify an existing one given.
CLEM 01, this form is used to give them an idea of
what type of construction you are pretending to build, the types of
materials, equipment and tools that you’ll use during the process.
AFIL 02, this is used to enroll the workers name and
data up in their system.
AFIL 15, this form will require the information of
the construction, location, building permit information and other. This
is the form that shall be posted visibly on the construction site.
A sketch-map of the location of the job site.
Here in La Paz you go into their office that is located
on 5 de Febrero Blvd and I. Altamirano St. in the second story, go to
affiliations and got to window number 3. In Cabo, I’m not familiar where
they do this at.
Q.- Where, when and how is Seguros paid?
A.-
Where? Any Bank will receive the payment, beware some
Banks have their own politics for their client preferences.
When? After the end of the month, you have until the
17th of the following month to pay it. Watch out, if you do not pay this
on time, you will be fined and it can up to about 40% of the amount to
pay that month.
How it’s paid? It runs about 32 % of the payroll that
is declare to them, which does not work out to be 32% of the Labor Cost
(Don’t ask why?), how do you pay it at the Bank? Now days, someone like
an accountant or a specialized IMSS consultant will give you a diskette
so that you can take this to the bank and they will print out a form and
you can then pay it at the Bank Teller. Or, you can also pay it thru you
National Bank Online Internet Service.
Q.- What do I do if I find that the seguro
payments are not being made as I have contracted to be done?
A.- I would recommend first go to the “PROFECO ~
Procuraduría Federal del Consumidor” This is a consumer affairs office
(federal office) and if you do not speak any Spanish at all you can go
over to the Department of Tourism and they will help you in getting a
translator to assist you at PROFECO, if this does not to the trick then
they will turn it to the court system. This should help you in someway
with the IMSS authorities at the end.
This is why I recommended from the beginning that you
have a third party to do this. Watch out also there are a lots of people
who claims that they can do this….. “Simple Rule” Always ask for referrals
and check them out.
I want to give my thanks to:
The guys at IMSS Affiliation Department in La Paz for
their assistance, Tel (612) 122-0715, ext. 117.
· To the Accountant Ubaldo Verdugo Rodriquez, Tel
(612) 122-5307 his direct line (English Spoken), email:
ubaldovr@hotmail.com.
Or Call:
Baja
California Real Estate & Consulting
Cabo San Lucas • Las
Vegas, NV (702)-953-8756 or Cabo San Lucas 624-143-4327
I want to thank Jorge for his help on getting
these answers for the Baja Insider. I also want to add a little personal
experience of my own concerning seguros. One of the main reasons I began
looking for these answers was because a contractor I trusted, I had asked
that all permits and seguros payments be made for my job and of course
they were not. When I asked the contractor for the receipts he just
laughed and said I never pay seguros.
Well I went to seguros to pay the late fees and
fines so that I would be legal. They did cut the fines and late fees way
down and reduced the payment I had to make by half.
I explained to them my frustration as I had wanted
these paid knowing I was ultimately liable for these payments. They helped
me out and also took all the information of the contractor. This
contractor has now spent 3 days in jail for fraud and had to pay
$9500.00USD to get out of jail, of which most or all of those funds will
be paid to me to finish and repair the building that he built. Seguros
also unbeknownst to him is investigating and watching everything he does.
In other words there are many Mexicans in the government that do care and
will work to help eliminate these bad apples so to speak.
However, it is better to avoid the problem in the
first place. I hope you find this information helpful and that you will
heed the advice given, especially that of getting referrals. You cannot
always tell if someone is who they say they are but their past clients can
help a lot in this area.
Frequently Asked Questions about seguro social (Mexican
Institute for Social Security) and building in Baja:
