Business entities in Mexico
Since 2003, Healy Consultants Group PLC proficiently assist our Clients with Mexico company setup and support services. Foreign entrepreneurs looking to do business in Mexico usually prefer to set up a Mexican limited liability company. Alternatively, overseas companies can also register a branch in Mexico, or a representative office if they do not plan to run commercial operations in this country.
Many of our Clients are also interested to use Mexico as a manufacturing base from which they will then export their products. In such situation, the optimal option is to setup a company in a maquiladora, (also known as export processing zone).
The Mexico Limited Liability Company (Sociedad de responsabilidad limitada)
- Our Clients can establish a limited liability Company in Mexico with only i) two shareholders and ii) one director, who can all be foreigners;
- While both shareholders and directors can reside outside of Mexico, one individual, locally known as the legal representative, ordinarily residing in the country must be appointed to liaise with the authorities. If needed, Healy Consultants can provide nominee services: kindly refer to legal representative page for further details;
- There is no legal minimum for the capital to be allocated to the company. Still, our Firm recommends our Clients to contribute an amount of at least MXN3,000 (US$200). 50% of the capital must be paid-up at incorporation of the Mexico company;
- After Mexico business setup, all companies have to submit audited financial statements;
- Best uses: A limited liability company setup in Mexico is suitable for most industries and services due to low initial capital requirements and 100% foreign ownership. This structure is prefered by most of Healy Consultant’s foreign Clients looking to expand in Mexico.
The Mexico Export Processing Zone Company (Maquiladora company)
- Contrary to most other countries in the region, Mexican export processing zones are not geographically allocated, although most EPZ companies are located close to the US frontier, in border cities such as Tijuana, Ciudad Juarez and Nuevo Laredo;
- All Mexican companies can apply for a registration as a Maquiladora provided that they export the higher of i) US$500,000 or ii) 10% of their annual sales;
- Mexican companies can become a maquiladora company by applying to the IMMEX program, regulated by the Mexican Ministry of Economy. They benefit then from exemption from i) custom duties ii) VAT. In most cases, they still have to pay corporate income tax. To keep such status, EPZ companies must submit an annual report on their export operations;
- Best uses: This structure is most suitable for export oriented businesses, especially for companies looking to place their produce on the lucrative North American markets.
The Mexican Stock Corporation (Sociedad Anonyma)
- Stock corporations (known in Mexico as S.A.) are usually incorporated with a minimum share capital of MXN50,000 (US$3,500). Furthermore, 20% of the capital must be paid-up when the corporation is incorporated;
- Best uses: This type of corporate structure is recommended if our Clients wish to raise funds in Mexico and eventually list their company on the Mexico Stock Exchange.
- The General Mercantile Corporations Law allows foreign companies to register a branch in Mexico. Approval from the General Foreign Department of the Ministry of Economy can be granted, provided a legal representative ordinarily residing in the country is appointed;
- The branch is allowed to i) sign contracts with local suppliers and ii) invoice and receive income from local customers. The branch office can only work in accordance with the defined business operations of the parent company;
- Best uses: Branch offices are recommended for business sectors with high capital requirements (for example banking sector). While this structure does not benefit from local limited liability, some foreign investors prefer their Clients to deal directly with a branch of their foreign company, rather than local subsidiary.
- A Mexico representative office is only permitted to engage in non-commercial activities including i) promotion of the parent company and ii) market research;
- Best uses: Companies which do not wish to invoice local Mexican Clients and consequently suffer local taxation in Mexico can use a representative office to promote their foreign products and services.
Table of comparison between different Mexico entities
|Mexican business entity name||LLC||EPZ||Stock corporation||Branch||Rep. office|
|Also known as:||S. de RL||Maquiladora||S.A.||Sucursal||Oficina de reprecentacion|
|How long to set the company up?||8 weeks||8 weeks||8 weeks||12 weeks||12 weeks|
|How long to open company bank account?||4 weeks||4 weeks||4 weeks||4 weeks||4 weeks|
|Minimum share capital?||US$200||US$200||US$3,500||N/A||N/A|
|File annual tax return?||Yes||Yes||Yes||Yes||Yes|
|Corporate bank account?||HSBC||Santander||ING Bank||Banorte-Ixe||HSBC|
|Does our Client need to travel?||No||No||No||No||No|
|Resident director required?||No||No||No||No||No|
|Minimum directors allowed?||1||1||1||N/A||N/A|
|Resident legal representative required?||Yes||Yes||Yes||Yes||Yes|
|Corporate shareholders allowed?||Yes||Yes||Yes||Yes||Yes|
|Mexico corporate tax rate?||30%||30%||30%||30%||N/A|
|Annual financial statements required?||Yes||Yes||Yes||Yes||Yes|
|Statutory audit required?||Yes||Yes||Yes||Yes||Yes|
|Allowed to issue sales invoices in Mexico?||Yes||Yes||Yes||Yes||No|
|Allowed to sign contracts with local entities?||Yes||Yes||Yes||Yes||No|
|Allowed to import and export goods?||Yes||Yes||Yes||Yes||No|
|Can rent an office in Mexico?||Yes||Yes||Yes||Yes||No|
|Can buy Mexico property?||Yes||Yes||Yes||Yes||No|
|Can own equity in other Mexican companies?||Yes||Yes||Yes||Yes||No|
|Total Mexican business setup costs in Yr. 1||US$17,050||US$17,550||US$17,550||US$18,050||US$18,050|
|Subsequent annual costs (excl. accounting and tax fee)||US$5,750||US$5,750||US$5,750||US$5,750||US$5,750|
|Sample engagement fee invoice|