Opportunities for foreign investors in Mexico

A privileged geographical position—bioceanic, bordering the United States—and a vast network of commercial treaties make Mexico an attractive country for foreign investment. An opportunity must be accompanied by good professional advice that allows the successful establishment of the business and its future operation, taking into account the tax, corporate, and labor obligations established by Mexican law.

To learn more about this topic, we talked to our partners at Englobally Mexico, Mario César Núñez and Israel Solorzano.

What investment projects open up business opportunities for companies in Mexico?

Large projects will emerge in Mexico, with the Transisthmian Railway megaproject opening new opportunities for domestic and foreign companies. Its construction will have a powerful impact on the Mexican economy and society, as it will connect the Atlantic and Pacific oceans through a 200 km rail transportation route, linking the ports of Coatzacoalcos, Veracruz, and Salina Cruz in Oaxaca. In addition, the Mayan train project in the Yucatan Peninsula will add 1,400 km of railroad tracks connecting the states of Tabasco, Campeche, Chiapas, Yucatan, and Quintana Roo, with the consequent economic and social impact.

What advantages does Mexico offer foreign investors?

Mexico has become a springboard for companies providing technological services. The opportunities are based on the country’s economic stability, a good number of trade agreements, its strategic location, and a large domestic market. We have 14 trade agreements with 50 countries and 30 reciprocal protection agreements in force, which has been attractive for startups, especially marketing services companies and IT and telecommunications companies.

In addition, Mexico is an open economy that, through its network of free trade agreements, guarantees access to international markets; the country has young and highly qualified human capital. On the other hand, thanks to the signing of trade agreements, the country is positioned as a gateway to a potential market of more than one billion consumers and 60% of the world’s GDP.

What could be the most frequent disadvantages encountered by foreign investors?

One of the drawbacks is the time it takes to incorporate a company in Mexico. We at Englobally Mexico accompany the foreign investor in this process from start to finish, speeding up the time as much as possible. In addition, as a member of the OECD, our country must comply with a series of aspects and controls to avoid, for example, tax evasion and strengthen transparency to prevent money laundering.

What requirements do foreign investors have to comply with in Mexico?

We have a foreign investment law that establishes that, to invest in Mexico, either with direct investment or investment in shares, one must be registered with the Ministry of Economy (SE), a procedure that is carried out at the General Directorate of Foreign Investment (DGIE) and that must include the company’s incorporation document.

How long does it take to set up a company in Mexico?

Generally, the process, which includes requesting permission from the Ministry of Economy, notarial authorizations, appointments with the SAT, and paying taxes, takes three months. After that, you can open a bank account and social security registration. To speed up this process, we create companies that are ready to operate when an investor or entrepreneur wants to start activities. We transfer the company clean, without invoicing, and up to date with its obligations. Only the change of partners is done. This shortens the process a lot.

Are there any territories with tax benefits?

On the northern border with the United States, there is the Border Zone, a 20-kilometer strip between the United States and Mexico with an 8% VAT rebate, while in the rest of the country, it is 16% and a reduced Income Tax rate. Special Economic Zones (ZEE) promote the development and competitiveness of specific territories with tax, customs, labor, and investment incentives. Established in 2016, the SEEs comprise the States of Chiapas, Guerrero, Michoacán, Oaxaca, and Veracruz.

What are the requirements for hiring foreign workers?

The company must be registered with the National Migration Institute (INM) as an employer of foreign personnel. The foreign worker must apply for a work visa before the immigration authority and a work permit before the INM.

What about the payments to be made by the employer for each worker hired?

On average, the social charges reach 30%; this varies according to the company’s nature. These include income tax (ISR) deductions, social security contributions, contributions to the Retirement Fund Administrators (afore), severance pay, and health, maternity, and disability insurance.

What is Englobally Mexico’s value proposition?

Mexico, as a member of the OECD, has to comply with accounting, tax, and financial obligations. In addition, regulations establish procedures to combat organized crime and money laundering. All this is enforced through a set of laws that foreign investors must observe and that, with advice, such as that provided by Englobally Mexico, allows them to comply with these requirements with peace of mind.

In addition, being part of Englobally Latinamérica allows us to have synergy and coordination with our international partners. This facilitates the expansion of our clients in the region, with the advantage of having an integrated advisory, which eliminates the need to hire different local services and homogenize studies and reports.

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