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Open a Business in Mexico | 2022 Guide

Open a Business in Mexico

Updated on Tuesday 02nd August 2022

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Mexico is an important financial center on an international level and a country that sustains foreign direct investments in most of the important industries. Opening a business in Mexico in 2022 as a foreign entrepreneur requires complete knowledge about the legislation and also about the business culture which is different from European or Asian countries. Most of the company requirements respect the international standards, but for a better understanding of how you can open a business in Mexico, we recommend you get in touch with our team of lawyers in Mexico.
 
 Quick Facts  
Types of companies which can be started by foreigners  

Corporations
Limited Liability Company
Mexican Investment Promotion Company

Minimum share capital

for LTD Company and paid in requirement (Yes/No)

Fifty thousand Mexican pesos
Yes

Minimum number of

shareholders for Limited Company 

 2
Time frame for the incorporation 

3-5 weeks

Corporate tax rate  30%
Dividend tax rate 

10% 

VAT Rate 

16%

No. of double taxation treaties (approx.) 59 tax treaties
Do you supply a Registered Address/Virtual Office?   Yes 
Local Director Required   Yes
Annual Meeting Required  Yes
Redomiciliation Permitted  Yes 
Electronic Signature  Electronic signatures are legally recognized in Mexico.
Is Accounting/Annual Return Required?  Yes 
Foreign-Ownership Allowed  Yes 
 Any tax exemption available? (offshore income, dividend income, etc.)  Income exempt 
 Any tax incentives (if applicable)  Yes
 

Establishing a business in Mexico

 
There are several types of companies available to foreign investors who wish to open a company in Mexico in 2022. These are the Joint Stock Company (S.A.), the Limited Liability Company (S de R.L.) and the Stock Investment Promotion. In practice, most foreign investors will choose one of the first two business forms. They are suited for small and medium-companies (the limited liability company) as well as for large corporations (the joint-stock). The costs for incorporation differ, however, there is no mandatory minimum prescribed capital. We invite you to get in touch with our law firm in Mexico and find out complete information about how to open a business and the legal aspects involved.
 
We can also assist you if you are interested in the process to immigrate to Mexico for the purpose of starting a business. 
 

Key considerations for establishing a business in Mexico

 
Many foreigners plan to open a business in Mexico due to the low labor costs and business-friendly ecosystem. So, here are some key considerations that individuals should keep in mind when they start a company in Mexico:
  • Find business opportunities: before initiating a business in a foreign country, an individual must identify chances of succeeding there. It is recommended not to enter a foreign market without any legal assistance. If you want to open a business in Mexico, you are welcomed to get in touch with our local lawyers. They will also help you in the procedure of obtaining business licenses in Mexico.
  • Business form: you must select the type of company that suits your business needs. Please remember that the tax burden and other corporate requirements may vary depending upon the kind of company you pick;
  • Expert move: if you want to excel in your business, it is necessary to identify and define the main economic activity of your legal entity, which is also a requirement set by Mexican authorities;
  • Legal representative: once you start a company in Mexico, you must hire a legal representative. Our Mexican attorneys can do this job for you; they will help you with legal documents to carry out business transactions with clients and partners;
  • Corporate tax: when you open a business in Mexico or anywhere else in the world, you need to deal with the corporate tax obligations. However, it is hard to understand the tax regulations of foreign countries, so our lawyers in Mexico will provide you with legal backing in navigating your taxes in this country. In addition, their assistance will help you to maintain your good standing status with the local authorities. 
 
Besides the legal assistance in all the above matters, you can also rely on the legal services of our lawyers for the renewal of the commercial register before the Undersecretariat of Industry, employee payroll, commerce, competitiveness, and the management of accounting books, etc. Finally, if you require any services regarding debt collection in Mexico, you can trust the services of our local lawyers. We are also at your service if you are interested in immigration to Mexico.
 

How can I open a company in Mexico in 2022?

 
According to the Investment Law in Mexico, foreigners can set up limited liability companies, joint stock companies, can act as sole traders or can enter into partnerships. The LLC or S.R.L. is the preferred business type in Mexico for residents and foreigners. In the case of foreign entrepreneurs, the company registration starts with the approvals of the Ministry of Foreign Affairs and the following matters:
 
  • the Articles of Association need to contain information about the owners, the activities, the minimum share capital, information about the legal representative;
  • the incorporation is made by the Registry of Foreign Investments in Mexico;
  • the application for tax purposes is the next step for registered companies in Mexico;
  • all the documents need to be translated in Spanish and notarized at the Public Notary.
 
Our team of attorneys in Mexico can help you register your business with respect to the requirements imposed by the authorities. We do encourage investors to reach out to us if they wish to start a business in 2022. Obtaining updated information is important in all business fields. Also, in case you want to immigrate to Mexico from US, our immigration lawyers are at your disposal. 
 
Our immigration lawyers in Mexico can offer support in various relocation matters.
 

Can I open a branch in Mexico?

 
Yes, large companies from abroad can establish and run branches in Mexico, also known as a sucursal. The National Commission of Foreign Investment issue the approvals for branches in Mexico. You can also direct your attention to subsidiary registration in Mexico which is subject to fewer formalities.
 

Taxes in Mexico

 
In Mexico, corporate income tax (C.I.T.) applies to all resident taxpayers’ income from worldwide resources and foreign residents. 30% is the federal corporate income tax rate, and all corporate entities are subject to the tax rules applicable to Mexican corporations. Non-profit organizations are assessed as non-taxpayers. In Mexico, taxpayers who are involved in activities like forestry, fishing, agriculture, and livestock are subject to a specific tax treatment that may reduce their tax obligations. Real estate acquisitions are subject to taxation at the municipal or state level; property taxes and payroll taxes are also imposed at the municipal or state level. In contrast, other taxes are imposed at the federal level. For 2020, the maximum income tax rate for a Mexican resident is 35%. 
 
If you face any difficulties regarding compliance with the Mexican tax obligations, you can get legal advice from our lawyers. The experienced lawyers at our law firm in Mexico will help you understand different tax implications in this country.
 
They will also assist you to open a business through immigration in Mexico. Furthermore, if you need the services of a certified public accountant (C.P.A.), you can get in touch with our law firm. 
 

Foreign direct investment (FDI) in Mexico

 
Mexico is the world’s ninth-largest FDI recipient, and it is one of the emerging countries that are open to foreign direct investment. Due to the friendly business atmosphere, foreigners trust the country and invest in different sectors of Mexico. Please find below the FDI percentage made by various countries in Mexico in 2020:
 
  • In Mexico, the total stock of foreign direct investment was estimated at USD 597 billion in 2020;
  • The United States invested 39.1% as a top investing country in Mexico’s investment sectors; 
  • Germany invested 3.5%, which is also a significant investor; 
  • Canada made an investment of 14.5% in the investment sectors of Mexico;
  • Japan, as another leading investing country, invested 4.2% in this country.
 
Contact our law firm in Mexico if you want to invest in this country. They will legally guide you to each step that is necessary to open a business. Feel free to address our immigration lawyers in Mexico for guidance in moving here.