Doing Business in Mexico - Incorporating a Company in Mexico - Set up of Mexican Company - Company set up in Mexico

This article has been produced to serve as a guide for foreign companies or individuals interested in investing or doing business in or with Mexico. It addresses many of the questions foreign companies and private investors often have in regards to doing business or investing in our jurisdiction. That being said, this guide is not all-inclusive, and will by no means serve as a substitute for professional legal council in Mexico. In order to make the best decisions in your particular case, we recommend the solicitation of proper legal council. An experienced Mexican corporate attorney is able to offer a company professional advice in the following:

Determining the corporate and tax structure most appropriate for a proposed venture in Mexico based on its needs, expectations, and area of business.
Procuring the proper immigration documentation, as well as the necessary Federal and State licensing.
Fulfilling the necessary Federal and State registrations.
Advising the company on the requisite bookkeeping which must be followed.
Advising the company on various labor law issues.

Attorneys licensed to practice law in Mexico are permitted to do so in any and all 32 states of the Republic, hence location is not nearly as important for your consideration as experience and reputation.

Back

Vehicles for Doing Business in Mexico

Corporate:

When considering expanding business operations into Mexico, many companies and individual investors often ask the same questions, some of the most common are: “How complicated is it to enter the Mexican market?”; “What different legal vehicles are available?”; “What are the implications of each option?” In the end, the answers to these questions depend entirely upon the size and scope of the proposed operation under consideration.

Each different legal vehicle available to the foreign investor or company represents different implications which need to be thoroughly considered before deciding which option best fits the needs, expectations, and area of business of the proposed venture. The most common methods for entering the Mexican free market are:

Representative Office – This represents the most limited way of doing business in Mexico. This form of establishment is enacted by entities which have business contacts in Mexico, but do not have operations of a large enough scale to require a higher level of presence.

The Foreign Investment Law (FIL) recognizes representative offices, but exempts them from the registration requirements set forth by such statute. Likewise, representative offices are exempted from any invoice tax payment obligations provided they receive no income, with the exception of any withholding obligations on local employees. The foregoing exemptions have a simple reason: representative offices are established to serve as a link between the foreign parent company and potential clients in Mexico. Their operations are restricted to mere promotion of the goods or services provided by the principle office, thus, they cannot make any direct sale nor receive any income from a Mexican source.

Branch Office – Through the establishment of a branch office, foreign companies are permitted to engage in business activities in Mexico without being required to incorporate a Mexican subsidiary. However, foreign companies will retain their liability characteristics from abroad, a risk which should be thoroughly discussed with your corporate attorney in Mexico before deciding on this corporate structure.

In order for a foreign company to be permitted to establish a branch office in Mexico, it must secure authorization to register in the Public Registry of Commerce from The National Commission of Foreign Investments, the Ministry of Foreign Relations, and the Ministry of Economy. Upon securing authorization and then registering with the Public Registry of Commerce, the foreign company will then be permitted to conduct business operations in Mexico. Profits accrued by the branch office will be taxed the same as a permanent establishment in Mexico, and will pay taxes on the income generated from such branch offices at the normal corporate income tax rate of 27%, unless the company is headquartered in a country which Mexico has executed Treaties for the Avoidance of Double Taxation, such as the United States, Canada and France. In such a case, the company will only be taxed on income resulting from the operations of the Mexican branch office.

Back

Partnership Venture (Joint Venture) – Foreign investors that require creating a commercial establishment through this legal vehicle may only do so through a branch office or Mexican subsidiary of their company. A partnership venture is defined by the General Law of Business Organizations (“Ley General de Sociedades Mercantiles” also known by its acronym “GLCC”) as a contractual agreement between one managing associate and two or more silent partners for the rendering of one or more transactions. By principle, under such an agreement the managing associate receives the contributions from the silent partners. Unless explicitly stated otherwise, the partners will transfer title of their contributions to the associate, who operates under his own name and is the person liable for his acts before third parties. There is no legal relationship between third parties and the silent partners, who are only responsible for the amount of their individual contributions. The contract of the venture should provide for the conditions of distribution of profits or losses of the venture.

Stock Corporation (S.A. “Sociedad Anonima”) – This is the form of organization most commonly used by foreign investors in Mexico. Stock Corporations are governed in Mexico by similar regulations and provisions as they are in the United States and other countries, in that:

1. their administration is entrusted to a Board of Directors;

2. they have a capital stock divided into shares and their stockholders are liable only to the extent of their contributions;

3. their shares represent equal value, will confer equal rights, and are freely transferable;

4. the shares are divided and presented as titles, (registered bonds), which transmit rights, conditions, etc. of stockholders;

5. the Shareholder’s Meeting is the ultimate source of corporate power;

6. each share bestows the right to one vote in the decisions made by the assembly; and

7. the corporation’s constitution shall be a public document.

Furthermore, in accordance to Mexican law, a stock corporation must be formed by at least two (2) partners and have a minimum capital investment of $50,000 pesos. One share of stock must be purchased by each partner. In Mexico, the incorporation of the company will be carried out by a notary public.

Back

Limited Liability Company (S. de R.L.) – The Limited Liability Company creates a company of limited responsibility similar to a S.A., whereas the liability of the stockholders is limited to the amount contributed. However, unlike a S.A., the number of shareholders is limited to fifty persons (50). A S. de R.L. organization requires a minimum capital investment of $3,000 pesos, which is divided into “participation units”, as opposed to stocks in a S.A. The partners are only liable for this initial capital investment. There are no restrictions in the changing of associates, as long as the associates that represent the majority of the capital agree, unless otherwise specified by the by-law.

Taxes, Tax Deductions and Tax Incentives

Taxes:

Corporate Tax – The Corporate Tax rate in Mexico is assessable at a maximum rate of 27% of a company’s profits, which must be paid annually to the Mexican Tax Authorities. The profits to be taxed may first be calculated against various deductions of expenses to come to the accruable gross income.

In most cases, a company’s income is considered accruable when the following occurs:

1. invoices are issued;

2. a portion or the total of the charge or fee is collected; or

3. goods are delivered or services rendered to or on behalf of the buyer.

Corporate taxes are paid on an annual basis in monthly installments. The provisional monthly payments will be credited against the annual Income Tax Return.

Back

Tax on Assets – A Federal tax on company assets established at a rate of 1.8%, shall be applied to certain current assets as well as fixed assets of Mexican companies, as well as foreign assets located within Mexico which are being improved for export from Mexico. In such cases, Maquiladoras are exempted from paying taxes on assets which are used to obtain profit.

In any fiscal year where the amount of income taxes paid out by a company exceeds the amount paid out on asset tax by that company, such taxpaying entity will be excused from the payment of the asset tax. In such a case, a company which has exceeded the amount of taxes owed, they may request a refund equal to the amount of taxes which were overpaid anytime over the course of the last ten (10) fiscal years.

Value Added Tax – The value-added tax (VAT) is assessable at a rate of 15% applied to the value of the goods or services in question, except in border zones, in which a 10% VAT most normally applies. A VAT will be obliged of the buyer when the company from which it is purchasing goods or services from performs any of the following:

1. the leasing of goods;

2. the providing of temporal use of goods;

3. the rendering of independent services; or

4. the importing of goods or services.

The VAT is charged to the purchaser of the goods or services, not to the company. For this reason, the VAT must be stated separately within the invoice for the goods or services. In short, the company must pay the tax authorities the difference of the VAT it has transferred to its client or paid on the importation of goods or services from the VAT the company had paid to third parties during the course of business.

In the case the company will be re-exporting the goods to somewhere outside of Mexico, and that the goods or services shall be used outside of Mexico, the VAT shall be 0%. The same shall hold true for all food products.

Back

Capital Gains
Securities – Gains from the sale of securities of Mexican companies are taxed at a flat rate of 20% of the gross proceeds of the sale. Non-residents, however, may elect to pay tax at the rate of 25% on the net taxable gain realized, provided that the non-resident has a legal representative in Mexico, who will calculate and pay the corresponding tax to the tax authorities. If the seller is a resident of a low-tax jurisdiction (tax haven), such seller can only apply the 25% rate.

Real Estate – In determining the taxable gain, the cost basis of sales of land and buildings may be adjusted for tax purposes on the basis of the time the assets have been held by applying inflation adjustment factors annually to the net unappreciated balance. Similar rules apply to nonresidents electing to be taxed on net income at 40% through a previously appointed representative. Otherwise, a 20% withholding tax on gross applies.

Machinery and Equipment - Gains or losses from the disposition of machinery, equipment and other fixed assets are also calculated after applying inflation adjustment factors to the net unappreciated balance.

Back

Special Tax on Production and Services – The following activities are subject to the STPS: Alienation within the Mexican Territory or the importation to Mexico of the following goods or the rendering of the following services: (i) certain alcoholic beverages; (ii) tobacco, cigarettes and cigars; (iii) fuel and natural gas (exception on vehicular use); and (iv) sweeteners other than sugar, soft drinks, sodas, etc. (technical rules apply for exceptions).
Payroll Tax – Companies shall be subject to local state payroll tax, the rate of which shall depend on the location of the facility in question. The Federal Government also requires corporations to make social security and other labor related contributions which can amount to up to 33% of the payroll. Such contributions are as follows:

o Social Security Contributions – Social Security contributions must be withheld and paid by an employer and remitted to the Mexican Institute for Social Security every month. Three are three separate types of Social Security contributions, each of which will be based on a percentage of the employees’ wages. The following rates are applicable: (i) invalidity – 2.80% by the employer and 3.125% by the employee; (ii) sickness and maternity – approximately 8.75% by the employer and 1% by the employee; and (iii) retirement fund, old age, severance pay – 5.150% by the employer and 1.125% by the employee.

o Housing – In addition to the contributions required by the Social Security Law, the Labor Law establishes that employers must contribute to the National Worker’s Housing Institute an amount equal to 5% of the employees’ wages.

o Premium for Occupational Risks – The employer must also pay a premium for each employee which is based on a percentage of the employee’s salary and varies according to the risk level of the particular job. Such percentages vary from 0.54% for administrative type employees to 7.5% for employees engaged in heavy industry.

* Payroll taxes are deductible for income tax purposes.

Back

Taxation of Foreigners – Mexico’s tax treatment of income earned by foreigners is similar to that of the U.S. and other industrialized nations.

Mexico has negotiated international trade agreements with a number of its major trading partners, such as Canada and the U.S. These agreements have two basic objectives: (i) to ensure that each participating nation allows tax credits for income taxes paid to the other participating nation to avoid double taxation; and (ii) to reduce the taxes that each participating nation may impose on the nationals of the other (i.e., taxes on income from interest on loans, dividends, and royalties).

Lease of Real or Personal Property – Non-residents’ income derived from the lease of real or personal property is taxed at a flat rate of 25% without deductions, except for the lease of airplanes, ships, railroad cars and containers used for commercial transportation, which is taxed at 5%.
Joint Liability of Withholder – Any company resident in Mexico or a permanent establishment in Mexico must comply with the withholding and payment of taxes on behalf of third parties. If such taxes are not withheld and paid to the Tax Authorities, aside from imposing surcharges and penalties on the company, the latter is not authorized to deduct them as expenses for Income Tax purposes.
Back
U.S.-Mexico Income Tax Treaty – The U.S.-Mexico Tax Treaty reduces the taxation of investment between the two countries. The Treaty includes provisions designed to prevent double taxation and to reduce each country’s tax rates on various levels and types of income earned by nonresidents. The Treaty applies only to income taxes and does not cover sales taxes (i.e., the Mexican Value-Added Tax), social security taxes, etc. The following is a summary of the key provisions of the Treaty.

Residence/Permanent Establishment – The U.S.-Mexico Tax Treaty provides extensive definitions of the terms “residence” and “permanent establishment” to clarify each country’s rules and regulations for the taxation of nonresidents (mentioned above).
Royalties – The U.S.-Mexico Tax Treaty has lowered Mexico’s withholding tax on royalties to a flat rate of 10%.
Dividends – The Treaty has also lowered the US withholding tax (equivalent to the ITL) on dividends paid by US companies to Mexican residents to 5% or 10% depending on the interest in the company.
Related Parties – In order to avoid tax evasion through transactions between related parties (e.g. a U.S. parent corporation with a Mexican subsidiary), the Treaty authorizes the Contracting States to tax such enterprises on any profits that would have been obtained if the transaction were conducted between non-related parties in an arm’s length transaction.
Asset Tax – Although the U.S.-Mexico Tax Treaty does not apply to the Mexican Asset Tax, it assures that U.S. companies will not lose the benefits of the Treaty through application of the Asset Tax. Mexico will apply the Asset Tax to U.S. companies only on income from royalties, real estate, or a permanent establishment in Mexico. In those cases, Mexico will grant a tax credit to compensate for any benefits lost from the Treaty.
Back
Charitable Organizations – Mexico and the U.S. have agreed not to tax religious, scientific, literary, educational, or other charitable organizations that are residents of the other country if such organizations are exempt from taxation in their home country. In addition, both countries will allow the deduction of charitable contributions made to qualifying organizations of the other country.
Dispute Resolution – Under the U.S.-Mexico Tax Treaty, residents of the U.S. and Mexico are able to challenge violations of the Treaty through each country’s legal system or the Treaty’s “Mutual Agreement Procedure”, which provides for the consultation between the competent authorities of each country to resolve the dispute. If the competent authorities cannot resolve the dispute, the Treaty provides for binding arbitration upon the consent of both the taxpayer and the government authorities.
Other – The Treaty clarifies ambiguities with regard to shipping and air transportation, income from real property, visiting artists and athletes, government employees, students and income from pensions, annuities, alimony and child support.

The Treaty also contains a special provision which extends the benefits of the Treaty to entities owned by residents of NAFTA Parties, even if the particular entity does not satisfy the Tax Treaty’s residency requirements.

Finally, the Treaty provides for the exchange of information and cooperation between the tax authorities of Mexico and the U.S. for the purpose of preventing tax evasion. These provisions incorporate and expand upon a prior treaty concluded between the U.S. and Mexico for the exchange of tax information (Convention between the U.S. and the United Mexican States for the Exchange of Information with Respect to Taxes, signed on November 9, 1989, effective January 18, 1990, reprinted in “Highlights and Documents,” H&D International Tax, November 15, 1989, at 1635).

Back

Canada-Mexico Income Tax Treaty – The Canada-Mexico Tax Treaty reduces the taxation of investment income flowing between the two countries. The Treaty includes provisions designed to prevent double taxation and to reduce each country’s tax rates on various types of income earned by nonresidents. The Canada-Mexico Tax Treaty is virtually identical to the U.S.-Mexico Tax Treaty, except for the following variances:

Interest – Canada and Mexico have agreed that the highest tax rate on interest income earned by non-residents will be 15%. Under the U.S.-Mexico Tax Treaty, the tax rates are 4.9%, 10% and 15% depending on the type of loan.

However, according to the Most-Favored-Nation Provision of the Canada-Mexico Tax Treaty, if either country includes a lower tax rate on interest in a tax treaty concluded with another country, that tax rate will apply to the Canada-Mexico Tax Treaty, but under no circumstances shall the rate be lower than 10%. Consequently, upon ratification of the U.S.-Mexico Tax Treaty, the same tax rates on interest applied between Canada and Mexico, except that 10% will be the lowest tax rate—versus 4.9% (see Canada-Mexico Tax Treaty, Protoco).
Dividends – While the U.S.-Mexico Tax Treaty reduces U.S. taxes on dividends to a rate of 5% or 10% (see above), the rate between Canada and Mexico will be 10% or 15%.
Back
Royalties – The Canada-Mexico Tax Treaty’s maximum tax rate for royalties earned by foreign residents is 15%. The U.S.-Mexico Tax Treaty applies a maximum 10% rate. Therefore, in compliance with the Protocol described in the preceding paragraph, the maximum 10% rate will also apply to royalties between Canada and Mexico.
Dispute Settlement – The “Mutual Agreement Procedure” of the Canada-Mexico Treaty is identical to that of the U.S.-Mexico tax Treaty, except that Canada and Mexico did not provide for binding arbitration.
Other – In addition to the foregoing differences, the U.S.-Mexico Tax Treaty has a series of provisions that are not included in the Canada-Mexico Tax Treaty, such as rules regarding the taxation of branches, alimony and child support, and exempt organizations.

Back

Tax Deductions:

Depreciation and Depletion – Straight-line depreciation does so at rates specified by law, which are based on the estimated time period of utility for various types of assets. These rates may be increased by the application of the percentage increases in the NCPI since the month of acquisition of the asset. When an asset becomes inutile and is disposed of, the remaining depreciative historical cost may also be deducted after application of the appropriate adjustment factor.

Mining exploration and development expenses incurred prior to operations and the cost of mining claims may be deducted at 10% per year after applying the adjustment factors unless the taxpayer properly elects to deduct these costs as incurred.

Net Operating Losses – Subject to limitations, losses incurred by business enterprises in one year may be carried forward and deducted from the income of the ten subsequent years.

Losses carried over may be increased by the percentage increase in the NCPI between the seventh and twelfth months of the fiscal year in which they were incurred, thereafter up to December 31 of the year prior to that in which they are applied, and thereafter up to the sixth month of the fiscal year in which they are applied

Back

Payments to Foreign Affiliates – Payments of a pro rata portion of expenses of nonresidents (i.e. allocations) are not deductible by Mexican corporations. Additionally, authorized deductions and taxable income must be determined on the standard of the prices agreed to with independent parties in comparable transactions. For this purpose, taxpayers must take care in securing and holding documentation supporting operations with related parties residing abroad, provided that income and deductions were based on market values. Payments made to residents in low-tax jurisdictions are considered to be nondeductible, unless it can be demonstrated that the price of the transaction is the same as if it had been made between or among unrelated parties in comparable operations.

Unless the contrary is demonstrated, it is assumed that operations with companies, entities or trusts resident in low-tax jurisdictions are carried out between or among related parties, and that prices are not set as they would be in comparable operations between or among independent parties.

Payments of technical assistance fees and for transfers of technology or royalties must be made directly to companies having the required technical capabilities and be for services actually received in order to be deductible by the tax payer.

Back

Taxes – In general, all federal, state and local taxes levied on the company (not including those required to be held from others) represent deductible expenses, with the following exceptions.
Federal Income Tax
Federal Minimum Tax on Assets
Federal Value-added Tax and Federal Production and Services Excise Tax when the company has the right to credit tax against the same tax on its own income.
Taxes on acquisitions of fixed assets, which must be capitalized and deducted as part of the total cost of such assets.
Group Taxation – The Income Tax Law contains a chapter that allows certain holding companies to file a consolidated income tax return for themselves and their majority-owned subsidiaries in addition to the normal income tax returns that each subsidiary company must file separately.

Back

Tax Incentives:

Inward Investment – Tax incentives available for inward investment are as follows:
Tax Credit for Investment Purposes - A tax credit of up 20 % of the amount of investment in technological research and development which pertains to business activity and exceeds the amounts invested in previous years. Certain requirements must be met.
Duty-Free Imports – Exemption from duties, under specific conditions and programs, is also authorized for equipment and merchandise to be re-exported or for materials for the production of exports. Duty-free imports are widely used by manufacturers and the labor-intensive in-bond processing companies, many of which have are located just south of the U.S. border but which can also operate further into the interior where labor costs are lower. These companies may be 100% foreign-owned.
Capital Investment – There are no specific tax incentives for capital investment. However, investing through equity instead of debt reduces or eliminates the inclusion in income of inflationary gain.

Back

Immigration and Licensing

Immigration:

Current Rules and Regulations - The Immigration Act of January 7, 1974 and the Regulations of the Immigration Act of August 31, 1992, as published in the Official Federal Gazette (Diario Oficial de la Federación) on their corresponding dates, rule in all cases on the immigration of foreigners into Mexico.

In accordance with these acts, in order for a foreign citizen to enter Mexico, he or she must have permission from the Ministry of the Interior upon or before entry into Mexico. Foreigners may enter Mexico as either “Non-immigrants” on a temporary basis or as “Immigrants” when it is the intention of the foreign citizen to live in Mexico indefinitely, through the proper legal means of obtaining citizenship or residency.

Non-immigrant – Foreign citizens may enter Mexico under the temporary migratory status of Non-immigrants as tourists (travel, health), visitors (business, investment, scientific, technical, artistic, athletic activities, or to work for a Mexican company), or as directors or members of a board to a Mexican company. The length of time granted to foreigners maintaining non-immigrant status completely depends upon the activities the foreign citizen will be partaking in during his or her time in Mexico. The following is a more detailed description of the options available to the foreign citizen who wishes to enter Mexico under a non-immigrant status.

Tourist – Far and beyond the most common method of entry into Mexico is through the tourist status. This status is achieved through the completion of the tourist card (FM-T), which is available at Mexican Consulates’ offices, Tourist Offices, and most airlines. The tourist card grants a foreign citizen six (6) non-extendable months in Mexico. In the case of illness or any other duly proven exceptional circumstance, the foreigner may be granted an extension until he or she is able to leave.
Back
Visitor – Foreign citizens may enter Mexico under the temporary migratory status of visitor (FM-3) for a time period of up to one (1) year, to conduct business, to participate in scientific, investment, technical, professional, artistic, academic or athletic activities or to work for a Mexican company. Foreign citizens under the visitor status are permitted multiple entries and exits and may extend their stay in Mexico for four (4) additional one (1) year periods.

Foreign citizens may work in Mexico as “Non-immigrant visitors” if they demonstrate to the Mexican authorities that: (i) a Mexican company, person or institution is requesting his or her services; and (ii) his or her capacity to provide such services. In all such cases the foreign citizen must demonstrate to the Mexican authorities that he or she maintains the sufficient economic resources to support him/her while in Mexico. This can be accomplished through providing a copy of a recent bank statement or a notarized letter by a bank accounting for the fact that the foreign citizen shall have enough monthly income to sustain him/her in Mexico. Ultimately the Ministry of the Interior will make the final decision whether or not such proof of income is sufficient.

When applying for the Non-immigrant visitor card, it is advisable to solicit the services of a Mexican attorney or another immigration expert to submit the application to the Ministry of the Interior.

Back

Director/Member of Board – Foreign citizens who are directors or members of a board to a Mexican company may obtain the migratory status of non-immigrant director/board member, and may enter Mexico in order to attend shareholder’s and or board of director’s meetings. Such cards are issued for periods up to one (1) year and renewable for four (4) additional one (1) year terms. Multiple exits and entries to and from Mexico are permitted, however with this card the maximum stay for each visit must be no longer than thirty (30) days.

Immigrant– Foreign citizens who intend to reside in Mexico on a permanent basis and obtain the necessary resident rights should first obtain the migratory status of “Immigrant” (FM-2). After living in Mexico for five (5) years and complying with the conditions of terms by which their migratory status was granted, the foreign citizen may then apply to have the their migratory status changed to permanent resident, after which they may reside in Mexico permanently.

In order for a foreign citizen to obtain Immigrant status, they must meet the requisites applicable to the migratory status for which they apply. The different migratory statuses available are explained in more detail below.

Retiree – For a foreign citizen to obtain retiree immigrant status he or she must prove the ability to live off of his or her own resources from abroad; either via an employment pension or alternative income derived from capital investments, securities, etc. or any other permanent income from abroad. The Ministry of the Interior shall grant this card given that the monthly income from abroad is enough to support the foreign citizen as well as his or her family when applicable.
Investor – For a foreign citizen to obtain investor immigrant status he or she must invest in Mexico’s industry, commerce or services in accordance to applicable laws. Such investment may consist of stocks, participation certificates, shares, fixed assets or trust beneficiary rights. The amount of investment shall be set by the Ministry of the Interior and such amount shall be adjusted periodically over time. The investor immigrant status card shall be granted provided that the investments made by the applicant contribute to the overall economic development of Mexico and the amount established by the Ministry of the Interior remains invested throughout the time the investor resides in Mexico.
Back
Position of Trust – The position of trust migratory status card must be requested by an established Mexican company or institution, which shall be responsible for the activities of the foreign citizen beneficiary before the Ministry of the Interior. A foreign citizen in a position of trust must assume managerial duties which have been deemed by the Ministry of the Interior as not being duplicative and of merit for the entry of the foreign citizen into Mexico.
Professional – Foreign citizens may obtain permission to enter Mexico to practice their profession under extremely limited circumstances. A foreign professional must have his or her professional degree registered with the Mexican authorities and obtain the corresponding credentials (“cedula”) to practice his or her profession in Mexico.
Scientist – For a foreign citizen to obtain a scientist immigrant status card he/she must be a scientist that leads or performs scientific studies or tests, teaches his/her scientific knowledge, trains others involved in his/her field of study, provided that such activities foster educational development in Mexico. The foreign citizen must prove before the Ministry of the Interior that he or she has sufficient experience and expertise in the area of practice under which they are intending to work with in Mexico. The Ministry of the Interior, shall it deem appropriate, may require the training by the scientist of three Mexican nationals in the field of study for which the foreign scientist is in Mexico.
Back
Technician – A foreign citizen with a specialized skill-set or knowledge applicable to production which can not, as to be determined by the Ministry of the Interior, be performed by a Mexican national, may be granted a technician immigrant status card. The application for this card must demonstrate the need for the specialized skill of the applicant as well as have the services contract or transfer of technology agreement from the sponsoring Mexican company attached. As with the scientist card, applicants for the technician immigrant status card may be requested by the Ministry of the Interior to train a minimum of three Mexican nationals in his/her field of expertise.
Dependent – If a foreign citizen is economically dependent upon a direct blood relative whether an Immigrant, Permanent Resident or Mexican national, that person may apply for a dependent migratory status card. The application for this card shall be presented by the person who will support the dependent party. This person must also prove his/her Immigrant status, Permanent Residency, or Mexican citizenship as well as his/her economic ability to support the dependents in question, which ultimately shall be determined by the Ministry of the Interior.
Artist of Athlete – For a foreign citizen to obtain artist or athlete immigrant status he or she must perform artistic or athletic activities which contribute to the artistic creativity and/or the diffusion of athletics, and are thus beneficial to the country, as determined by the Ministry of the Interior. This card may be requested by any company, institution or association or by the foreign artist or athlete him/herself.

Back

During the initial year of Immigrant migratory status, foreign citizens are entitled to bring into Mexico free of duties all normal household belongings. Only foreign citizens with the migratory characteristic of Retiree may bring automobiles into Mexico without posting a bond to guarantee payment of import duties, but are subject to restrictions similar to those imposed on tourists (e.g., they cannot sell the car).

Immigrants may buy real estate in Mexico with the prior written permission from the Ministry of Foreign Affairs. As opposed to the application for non-immigrant status, the application for Immigrant status should be made while in Mexico by going to the Ministry of the Interior and following the proper procedures. The applicant should expect to wait at least six (6) to eight (8) weeks once the file is completed with all the necessary documents submitted at the Ministry of the Interior. Immigrant status must be renewed annually.

Within six (6) months after the completion of (5) years with the Immigrant migratory status, the foreign citizen may apply for the change of his/her migratory status in Mexico to Permanent Residency (“Inmigrado”). As a Permanent Resident, the foreigner is no longer required to obtain annual renewals of his/her immigration status. If the Permanent Resident so chooses they may work in any position open to foreigners, provided that the foreign citizen relays the proper notices to the Ministry of the Interior. In short, a permanent resident is free to do nearly anything that a Mexican national can do, with a few narrow exceptions, such as running for political office or buying property in the restricted zone. A permanent resident may be outside of Mexico for up to 3 (three) consecutive years, or five out of any ten years, without losing his/her Resident status.

Back

NAFTA Chapter 16 – NAFTA nations have agreed to establish expedited and transparent procedures to facilitate on a reciprocal basis, the temporary entry of business persons. In compliance with the provisions of NAFTA, the National Institute of Migratory Services of Mexico created a business visa called “FM-N.” This migratory form allows business people from Canada and the USA to stay in Mexico for up to 30 calendar days to perform business activities, without obtaining any other permit or migratory form. If the business people need to stay longer or will stay in Mexico for more than a year, they can apply for an FM-3 as explained above.

With the FM-N migratory form, the FM-3 will be granted in a shorter period of time (around 5 working days) if all of the requirements are met. The beneficiaries of this FM-N are described in more detail below.

Four Categories of Business Persons – “Business Persons”, in accordance with NAFTA’s Chapter 16, are nationals of the three NAFTA countries who trade goods or services or carry out investment activities. NAFTA divides Business Persons into 4 (four) categories of individuals whom the participating
Business Visitors – A business visitor is a person engaged in international business activities, such as research and design; cultivation, manufacture, and production; marketing; sales; after-sales service; distribution; and various other general services (see Appendix 1603.A.1 of NAFTA). Most business travelers will fall into this category, as it applies to persons who enter for a limited time to oversee business operations, attend meetings, sell products or services, or service products sold in the country. The visitor’s salary must come from outside the country visited.

Under terms of NAFTA’s Chapter 16, all participating nations are required to admit business visitors provided that the visitor provides proof of their nationality of a participating NAFTA country.
Back
Traders and Investors – Business Persons will be allowed temporary entry to trade in substantial amounts of goods or services between their home country and the country they wish to enter. This category also allows the entry of persons who have invested, or are in the process of investing, substantial amounts of capital in the country they wish to enter, applicable so long such business person complies with all necessary immigration measures applicable to temporary entry.

Intra-company Transfers – Each of the three NAFTA participating countries will permit the entry into their country of transfers who are managers, executives, or other persons with specialized knowledge, and are employed by a company that has a branch, subsidiary, or affiliate in the host country and in another NAFTA participating country. The transferee must be a citizen of a NAFTA participating country and must have worked for the company for at least a year prior to being transferred.

While expedited border processing is available to intra-company transfers between Canada and the U.S. under the FM-N, Mexico may still require a visa. It is expected that eventually Mexico will also establish procedures for expedited border processing of intra-company transfers from Canada and the U.S.

Back

Professionals – The provisions of NAFTA’s Chapter 16 also provide for temporary entry of business persons who wish to perform activities at a professional level provided that they satisfy minimum educational and/or experience requirements. Such temporary entry will also be permissible for so long as such business person complies with the existing immigration measures applicable to temporary entry.

Licensing:

Environmental License – Federal jurisdiction covers the prevention and regulation of pollutant levels permitted to enter the atmosphere. The Environmental License, (LAU), is a direct Federal regulation instrument that permits the coordination of the process of the evaluation, judgment, and follow-up of the environmental obligations of industrial ventures. The National Ecology Institute, (INE), is responsible for the environmental impact and risk assessment procedures, whereas the following shall be taken into consideration: any and all emissions into the atmosphere, dangerous residue treatments MORE. In issues dealing with water quality and water services, the National Water Commision, (CNA), shall maintain any and all responsibility.

The LAU is issued once only, and its terms are definitive as to the specifically permitted activities of the industrial establishment being considered. The license must be renewed if the industrial procedures change or in the case of a change in location of the industrial operations it covers.

Doing Business in Mexico By: Resendiz Wong Abogados, Corporate & Business Lawyers in Mexico

Doing Business in Mexico
By: Resendiz Wong Abogados, Corporate & Business Lawyers in Mexico