Services

Foreign Investment in Mexico

General Information

Capital	Mexico City
Language	Spanish
Area	1.96 million sq km
Population	128.46 million
Currency	Mexican Peso (MXN)
Harbor	Manzanillo

　　The major industries in Mexico include car manufacturing, electronics, footwear, and alcohol production. Mexico has signed numerous free trade agreements with over 50 countries, the most significant of which is the US-Mexico-Canada Agreement (USMCA), replacing the North American Free Trade Agreement (NAFTA).

Major Types of Entity
　　According to the Foreign Investment Law of Mexico, most manufacturing and service industries are open to 100% foreign investment. The types of business entities that can be established in Mexico include:

1.	Sociedad Anónima (S.A.): requires a minimum of 2 shareholders, and at least 20% of the capital must be paid in upon establishment, which can be in the form of fixed capital (S.A.) or variable capital (S.A. de C.V.). S.A. de C.V. is more flexible and convenient to increase or decrease capital.
2.	Limited Liability Company (S. de R.L. de C.V.): at least 2 shareholders and a maximum of 50 shareholders. 50% of the capital must be paid in after establishment, which has fewer legal requirements than S.A.
3.	Branch: cannot bear direct responsibilities, the establishment procedures are relatively cumbersome, and there are no additional tax benefits. Except for commercial activities such as airlines and the performance of government contracts, generally foreign investors will not operate business in Mexico in the form of a branch.
4.	Representative Office (RO): for non-commercial purposes only, the foreign parent company shall be fully responsible for the decision-making, and local taxes of the RO.

Major Taxes in Mexico
　　The corporate income tax (ISR) in Mexico's southern & northern border areas is 20%, and the VAT (IVA) is 8%. In order to encourage foreign investment, the Mexican government has offered a number of incentives, including tax incentives, and immediate tax reduction measures etc.

Tax	Rate	Scope
CIT	30%	Standard rate
VAT	0%	Export goods/specific food/medicine/agricultural services
	8%	Southern/northern border
	16%	Standard rate
PIT	1.92%-35%	Tax resident(183-days)
Excise Duties	6%-160%	Pesticides/energy drinks/beer/cigarettes
Social Insurance	16.75%	Including: Provident Fund, Pension Plan, Insurance Scheme, and National Insurance.
WHT	10%	Dividend
	4.9%-35%	Interest
	25%/35%	Royalties (Copyright/Patents & Trademarks)

Employment

　　The working hours in Mexico are 8 hours per day or 48 hours in one week. From 2024, Mexico increase daily wages, which translates to a monthly salary of approximately 7,468 Mexican Pesos (US$440), and the northern border is approximately 11,247 Mexican Pesos (US$663).

　　Employees have worked 1 year are entitled to 6 vacation days, with an additional 2 days each year, up to 12 days. From the 5th year, the employees are entitled to 14 vacation days, with an additional 2 days for every 5 years.

　　There is a paid leave bonus of 25% of the employees’ salary. A Christmas bonus must be paid to employees before December 20 of each year, which shall be at least 15 days ‘wage. Employers must pay for employees’ social insurance, housing funds, retirement and unemployment old-age funds.

Land Ownership

　　In Mexico foreigners can purchase non-residential real estate in controlled areas, but must register with the Ministry of Foreign Affairs first. Each state in Mexico has industrial zones, some managed by the economic development dept. of state, but most are privately developed industrial zones.

Foreign Investment in Mexico

動點管理公司POWER POINT MANAGEMENT LTD.