Mexico company registration

DOING BUSINESS IN MEXICO IN 2017

Since 2003, Healy Consultants Group PLC has efficiently assisted our Clients with establishing their business in Mexico. Services provided by our Firm include i) consulting services to determine what is the best corporate structure for our Client ii) Mexico business registration and licensing (if required) iii) corporate bank account opening services iv) human resources strategies and v) assistance to find office, industrial and/or warehousing space.

SummaryLLCFast business setup solutionExport Processing LLCJoint Stock CorporationLLPRepresentative officeBranch office
Also known asSrlFast solution SrlIMMEX MaquiladoraSASCSOficina de representacionSucursal
Best use of company?All products and servicesClose a customer deal nowManufacturing and export tradingTo secure public fundingProfessional servicesMarketing & researchSpecific projects
How soon can you invoice Clients/sign sales contracts?5 months3 months5 months5 months5 monthsCannot6 months
How soon can you hire staff?5 months3 months5 months5 months5 months6 months6 months
How soon can you sign a lease agreement?3 months2 months3 months3 months3 months4 months4 months
How long to supply corporate bank account numbers?2 months1 month2 months2 months2 months2 months2 months
How long to supply company registration / tax numbers?3 months2 months3 months3 months3 months4 months4 months
Corporate tax rate on annual net profits?30%30%30%30%15% to 30%0%30%
Government grants available?YesYesYesYesNoNoYes
Must appoint a resident Legal Representative?YesYesYesYesYesYesYes
minimum paid up share capital?US$200US$200US$200US$3,500US$1nonenone
Corporate bank account location?HSBCSantanderING BankBanorte-lxeHSBCSantanderSantander
VAT payable on sales to local customers?16%16%16%16%16%None16%
Average total business set up engagement costs?US$17,050US$37,600US$17,550US$17,550US$16,050US$18,050US$18,050
Average total engagement period?6 months4 months6 months6 months6 months7 months7 months

See full table

Accounting and tax considerationsLLCFast business setup solutionEPZ LLCJoint Stock CorporationLLPRepresentative officeBranch office
Statutory corporate tax payable?30%30%30%30%30%0%30%
Group HQ tax incentives?YesYesYesYesNoNoNo
Must appoint an auditor?NoNoNoYesNoNoNo
Access to double taxation treaties?YesYesYesYesNoNoYes
Withholding tax on payments to foreign shareholders?10%10%10%10%10%None10%
Company RegistrationLLCFast business setup solutionEPZ LLCJoint Stock CorporationLLPRepresentative officeBranch office
Must appoint a resident Legal Representative?YesYesYesYesYesYesYes
Resident director/partner/manager required?NoNoNoNoNoNoNo
Minimum number of shareholders/partners?22222Parent companyParent company
Maximum shareholding for foreigners?100%100%100%100%100%100%100%
Minimum statutory paid up share capital?US$200US$200US$200US$3,500No minimumNoneNone
Shelf companies available?YesYesYesYesNoNoNo
Time to incorporate a new entity?3 months2 months3 months3 months3 months4 months4 months
Can easily convert to a PLC?YesYesYesYesNoNoNo
Public register of shareholders and directors?YesYesYesYesYesYesYes
Can have preference shareholders?YesYesYesYesYesNoNo
Business ConsiderationsLLCFast business setup solutionEPZ LLCJoint Stock CorporationLLPRepresentative officeBranch office
Limited liability entity?YesYesYesYesYesNoNo
Good entity for trademark registration?YesYesYesYesYesNoNo
Can secure an import and export license?YesYesYesYesNoNoYes
Can secure trade finance?YesYesYesYesNoNoYes
Can bid for Government contracts?YesYesYesYesYesNoYes
Government approval required for foreign owners?No
Sponsorship by a local citizen required?No
Our Client needs to travel to Mexico for business set up?No
Resident director/partner/manager/ legal representative required?Yes
Temporary physical office solutions available?Yes
You need a local resident as bank signatory?No
Legally tax exempt if properly structured?No
can be wholly foreign owned?Yes
The entity will likely be regulated by?Secretaria de Economia
Minimum number of directors/managers?1
Must file an annual tax return?Yes
Must file annual financial statements?Yes
Monthly VAT reporting to the Government?Yes
Security deposit to be kept with Government?No
Must sign an office lease agreement during incorporation?Yes
Shareholders & directors documents to be attested/translated?Yes
Each foreign director needs a personal income tax number?Yes
Foreign director needs a residence visa?No
Maximum number of staff allowed?No limit
Expatriate to local staff ratio?Yes
Can secure residence visa for business owner?Yes
Other useful information
What will be included in my customer sales invoice?(click link)
This country has signed free trade agreements?Yes
This country is a member of WIPO/TRIPS?Yes
This country is a member of the ICSID?Yes
Average customs duties suffered?6.2%
Government foreign investment approval required?No
Average monthly office rental? (US$ per sq m)US$22
Minimum statutory monthly salary?US$112
Average monthly US$ salary for local skilled employees?US$630
US$ deposit interest rate? (1 year average)6.5%
Overseas remittance currency controls?None
Banking considerations
Multi-currency bank accounts available?Yes
Corporate visa debit cards available?No
Quality of e-banking platform?Medium
Crowd funding available in this country?Yes

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Benefits and problems of registering a company in Mexico

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  • Benefits and problems

    Benefits of Mexico company registration

    register business in Mexico

    1. Establishing a business in Mexico can be fast and easy with Healy Consultants Group because:
      • A Mexican LLC (SRL) can be registered within three weeks with only 2 shareholders and 1 director, who can be of any nationality. Our Clients will not be required to travel to complete the engagement;
      • There is no minimum paid-up capital required when incorporating a company. We however recommend our Clients to inject at least US$3,200 (MXN50,000) to maximize the chances of application approval by the Mexican Public Registry of Commerce;
      • There is no restriction on foreign investment capital and foreign entrepreneurs are permitted to hold all their company’s capital in US dollars rather than Mexican peso;
      • A Mexican entity also requires at least one representative to be resident in the country. For Clients who do not meet this minimum office holder requirement, our Firm provides professional passive nominee legal representative services;
      • Foreign investments that do not exceed USD165 million but require Mexico government authorization are automatically approved unless the investment falls under a restricted sector.
    2. Our Clients looking to do business in Mexico stand to benefit from various advantages including:
      • Mexico has signed the most free trade agreements than any country in the world with at least 47 countries in North and Latin America, Europe and Asia which allows free flow of goods and services;
      • Under the North American Free Trade Agreement (NAFTA), US and Canada investors and entrepreneurs are permitted to settle and work in Mexico and import and export goods and services without much difficulty;
      • Mexico is home to one of the most sophisticated financial and industrial systems in the world with a large market of over 110 million people and a steadily growing middle class;
      • Low cost of operations including very competitive labour costs, at least 80% cheaper than the US, especially in the manufacturing industry where investors hire many local workers;
      • Additionally, the government offers an employment incentive of a credit equivalent to 100% of income tax corresponding to remunerations paid to employees with disability;
      • Rents for office space in Mexico City average US$22 per month per square meter. Industrial space costs are much below this level, especially in the Maquiladoras (EPZ companies). Electricity is also cheaply available in Mexico with average rate for industries being US$0.06 per Kwh.
    3. Our Clients establishing a subsidiary in Mexico will enjoy certain government grants and tax incentives including:
      • Reduction or waiver of withholding tax on dividends distributed to non-resident companies if the foreign subsidiary or parent company is located in one of the 60 countries which have signed a DTA with Mexico;
      • 100% exemption from withholding tax on dividends from one Mexican company to another resident legal entity;
      • Absence of import or export customs levied by the Mexican government on foreign goods/services;
      • The Mexican government offers businesses incentives including i) grants, loans and bank guarantees at the state level and ii) R & D investment grants at the federal level;
      • The Mexican government does not impose exchange controls and foreign entrepreneurs are permitted to freely convert Mexican peso into foreign currency without restrictions.

    Problems of Mexico company registration

    1. Doing business in Mexico can be challenging to foreign individuals because:
      • Mexico has a weak legal system. While contracts are generally upheld, courts are inefficient and vulnerable to political interference, leading to unjust decisions in business dealings;
      • Mexico suffers from a high corruption, being ranked the 123rd least corrupt country in the world in the 2016 Corruption Perception Index by Transparency International;
      • Mexico City, the main business hub in Mexico, is considerably more dangerous than most Western cities. The country also leads in manslaughter convictions annually than any other country in the world;
      • While electricity is relatively cheap in Mexico, getting electricity for a new building is time-consuming and expensive. Entrepreneurs can expect to wait 3 months and pay US$35,000 if the building requires new electrical line to be laid;
      • The costs associated with trading across borders in Mexico is much higher than the average costs in South America region and the Caribbean due to the lucrative cross-border trading brought about by the free trade agreements.
    2. Other considerations and certain impediments to doing business in Mexico include:
      • High tax rates including i) a standard corporate tax rate of 30% ii) personal income tax rates of up to 35% and iii) Value Added Tax rate of 16%;
      • Registering a company in Mexico can be challenging without any professional help because company registration in the country is decentralized and each major Mexican city has its own regulations and procedures for business setup;
      • Non-Spanish-speaking entrepreneurs may experience communication barrier working with local suppliers and customers. Mexico is ranked 43rd out of 72 countries in the English Proficiency Index, indicating a low standard of spoken English;
      • Paying taxes can be a time-consuming exercise in Mexico taking up to over 250 business hours per year with payment of corporate tax alone taking at least 122hours. VAT filings can also take several hours to process.
  • Best uses for a Mexico company

    Mexico is an excellent place to form a manufacturing and distribution company because:

    • Mexico has become a major manufacturing base thanks to the country’s open borders and trade policies. Consequently, the country has a strong connection to large consumer markets in South and North America;
    • Mexico has created over one hundred of export processing zones (EPZ, locally known as maquiladoras) which offers many tax incentives, including i) no import/export tax ii) reduced or no corporate tax and iii) no VAT. Mexican EPZ companies are a popular option for entrepreneurs willing to manufacture and export products;
    • Maquiladoras can also benefit from the country’s free trade agreement with the United States and Canada (NAFTA) to export their products and services to these countries without paying any customs duty. The agreement also reduces red tape associated with exporting to these countries.

Contact us

For additional information on our company registration services in Mexico, please email us at email@healyconsultants.com. Alternatively please contact our in-house country expert, Ms. Chrissi Zamora, directly:
client relationship officer - Chrissi
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