Mexico company registration

Mexico company registration

DOING BUSINESS IN MEXICO

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.

SummaryTax resident LLCStock CorporationEPZ companyLimited PartnershipRepresentative officeBranch company
Also known asS. de RLSociedad AnonimaMaquiladoraS. en Comandita SimpleOficina de representacionSucursal
Best use of company?Trading CompanyTrading CompanyManufacturing and exportProfessional servicesPromotion, market ResearchConsolidated statements
Legally tax exempt if properly structured?NoNoNoNoNoNo
Corporate bank account location?HSBCSantander BankING BankScotiabankBanorteCitibank
Client must travel to Mexico?NoNoNoNoNoNo
Can secure trade finance?YesYesYesYesNoYes
Limited liability entity?YesYesYesYesNoNo
VAT payable on sales to local customersYesYesNoYesNoYes
Withholding tax on payments to overseas shareholders?YesYesYesYesYesYes
Average total engagement costs?US$16,050US$16,050US$17,550US$17,800US$18,050US$18,050
Average total engagement period?5 months5 months5 months6 months6 months6 months

See full table

Accounting and tax considerationsTax resident LLCStock CorporationEPZ companyLimited PartnershipRepresentative officeBranch company
Statutory corporation tax payable?30%30%30%30%30%30%
Must file an annual Mexico tax return?YesYesYesYesYesYes
Effective corporation tax rate on net profits of US$250,000?30%30%30%30%30%30%
Must file annual financial statements?YesYesYesYesYesYes
Investment income is legally tax exempt in Mexico?NoNoNoNoNoNo
Access to double taxation treaties?YesYesYesYesNoYes
Monthly VAT reporting to the Government?YesYesYesYesNoYes
Legally tax exempt entity?NoNoNoNoNoNo
Dividends received are legally tax exempt?NoNoNoNoNoNo
Company registrationTax resident LLCStock CorporationEPZ companyLimited PartnershipRepresentative officeBranch company
Mexico resident legal representative\partner\manager required?YesYesYesYesYesYes
Minimum number of shareholders\partners?2222Parent companyParent company
Minimum number of directors/managers?111111
Minimum paid up share capital?US$200US$3,500US$200US$200N/AN/A
Shelf companies available?YesYesYesYesNoNo
Time to incorporate a new entity?8 weeks10 weeks6 weeks8 weeks8 weeks8 weeks
Can easily convert to a local PLC company?YesYesYesYesNoNo
Can have preference shareholders?YesYesYesNoNoNo
Business considerationsTax resident LLCStock CorporationEPZ companyLimited PartnershipRepresentative officeBranch company
Can invoice local customers?YesYesYesYesNoYes
Can hire local staff?YesYesYesYesYesYes
Can rent local office space?YesYesYesYesYesYes
This entity can secure a residence visa for business owner?YesYesYesYesYesYes
Good entity for trademark registration?YesYesYesYesNoYes
Other useful informationTax resident LLCStock CorporationEPZ companyLimited PartnershipRepresentative officeBranch company

Mexico has signed free trade agreements?Yes, see this page
This country is a member of WIPO and TRIPS?Yes
The country is a member of the ICSID?No
Average customs duties suffered?6.2%
Government foreign investment approval is required?No
Average monthly office rental? (US$ per sq m)US$ 22
Minimum statutory hourly salary?US$ 3.547
Average monthly US$ salary for local employees?US$742
Mexico MXN deposit interest rate? (1 year average)0.59%
US$ deposit interest rate? (1 year average)0.20%
Overseas remittance currency controls?No
Public register of shareholders and directors?Yes
Banking considerations
Multi-currency bank accounts available?Yes
Corporate visa debit cards available?Yes
Quality of e-banking platform?Medium
Crowd funding available in this country?Yes

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. Forming a company in Mexico is easy because:
      • Registration of a Mexican limited liability company can be completed within three weeks with only 1 director and 2 shareholders, 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, although our Firm usually recommends our Clients to contribute at least US$3,200 (MXN50,000) to ensure that the Mexican Public Registry of Commerce of the city of incorporation approves the application for registration of their Mexico business;
      • Foreign entrepreneurs can hold all their company’s capital in US dollars rather than Mexican peso;
      • Most industries are fully open to foreign investment.
    2. Our Clients establishing a subsidiary in Mexico will also benefit from the following advantages:
      • Withholding tax on dividends distributed to or by a Mexican companies can be reduced or waived if the foreign subsidiary or parent company is located in one of the 60 countries which have signed a DTA with Mexico. The list includes i) the United States ii) Canada iii) Hong Kong iv) China v) Australia vi) Singapore vii) most EU countries viii) Russia ix) the United Arab Emirates and x) India;
      • Dividends from one Mexican company to another are 100% corporate tax exempt;
      • There are no import/export controls levied by the Mexican government on foreign goods/services;
      • There are no exchange controls in Mexico to hamper the convertibility of Mexican peso into a foreign currency;
      • 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.

    Problems of Mexico company registration

    1. Mexico is a high tax jurisdiction with i) a standard corporate tax rate of 30% ii) personal income tax rates of up to 35% iii) Value Added Tax rate of 16%;
    2. Starting a business in Mexico can be difficult for foreigners because:
      • Mexico is ranked 43rd out of 72 countries in the English Proficiency Index, indicating a low standard of spoken English. Non-Spanish-speaking entrepreneurs will have a hard time working with suppliers and customers;
      • 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;
      • 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;
      • Mexico suffers from a high corruption, being ranked the 95th least corrupt country in the world in the 2015 Corruption Perception Index by Transparency International;
      • Mexico City, the main business hub in Mexico, is considerably more dangerous than most Western cities. Mexico has more manslaughter convictions annually than any other country in the world;
    3. Exporting and importing products prove to be very expensive for business according to the location of their operations. In Mexico City, the border compliance for imports/exports is almost 3 times higher than the average for OECD high income countries.
  • Best uses for a Mexico company

    1. Mexico is an excellent place to form a manufacturing and distribution company because:
      • 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 companies 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;
      • Companies registered in Mexico benefit from law labor costs. The average annual salary of a Mexican worker is US$9,000, compared to an average of US$50,000 and US$58,000 for Canada and the USA respectively;
      • 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.

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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