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One of the important export targets of business on the American continent – this is how Mexico, officially the United States of Mexico, currently appears. It ranks among the most open economies. With an area of ​​1,964,375 km2 and more than 112 million inhabitants, this 13th largest country in the world represents a huge market, absorbing a considerable amount of goods of all kinds.

But everything can be different. The current situation in Mexico can be summed up in one word – uncertainty. This is due to the current development after the new American president took office. Donald Trump's pre-election statements already raised considerable concerns about the future of further relations between the US and Mexico. And so far it is difficult to predict how the actions of the Trump administration will affect the Mexican economy and therefore its trading partners.

Company formation and business in Mexico

Production plants. Currently, Mexico is a popular destination for manufacturing plant relocations. Mexico is an increasingly interesting destination for investors. Many American companies have moved their production to China, which, however, is starting to show higher and higher costs, so companies are looking for alternatives to where to move their production.

Mexico offers cheap and skilled labor, lower logistics costs, and simpler production control and management. It is simply a country that is here to save you money. There are 107 export zones that offer zero import and export tax, zero income tax and zero VAT. Can you imagine that?

Mexico offers complete company control as it allows 100% ownership of companies by foreigners. Unlike some other jurisdictions where local people must own the business, in Mexico you can be the sole owner of the business. However, the condition of at least two shareholders and one director must be met – as already mentioned, all of them can be foreigners.

Most registered companies are Sociedad Anónima (SA) and the Sociedad Limitada de Resposabilidad (SRL). A more common type of SRL is a company equivalent to our limited liability company. For SRL, the size of the share capital is 3,000 pesos (at least half must be paid up), the maximum number of shareholders cannot exceed 50.
At least 20 % of the SA company's capital stock of 50,000 pesos must be paid up. Mexico is a signatory to 51 double taxation treaties.

Information you need to know before starting a company in Mexico

  • The company must elect a supervisory member whose task is to control the proper and legal management of the company.
  • The tax system is not an easy matter in this country. Mexico ranks among the countries with the highest taxes. The basic corporate and personal income tax rate is 30 %. Value added tax is 16 % in most districts, it is reduced to 11 % in border areas.
  • The withholding tax on dividend payments is 10 %, but if the dividends are directed to offshore destinations, the withholding tax is increased to 40 %.
  • A specialty of Mexican companies is the obligation to share 10 % of profits with employees.

Basic information

  • Type of legal entity: Sociedad Limitada
  • Establishment time: 9 working days
  • Number of shareholders: minimum 1, can be any nationality
  • Shareholders: members can be FO or business entities
  • Share capital: EUR 200
  • Shares on bearer: not allowed
  • Registered address is mandatory, but does not have to be physical
  • A registered agent is required
  • Directors: minimum 1, maximum not defined
  • Resident function of the director: the director does not have to be a resident of Mexico

Taxation

  • Corporate income tax 30 %
  • Branch tax rate 30 %
  • Capital gains tax 30 %
  • Tax on dividends 10 %
  • Interest 10/15/21/35 %
  • License fees 5/25/35 %
  • The standard VAT rate is 16 %, certain foods and medicines are exempt from tax
  • Net operating losses can be carried forward against income for 10 years
  • Double taxation agreements with 40 countries applied, determining tax rates on dividends, interest and royalties
  • Billing and preparation of accounts is required, filing is required
  • Audit is not required
  • Anonymity and privacy. Information about directors (administrators) and shareholders is open in the commercial register.

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