Country GuideMexico

From Global Connections

Foreign direct investment (FDI) inflows into Mexico amounted to USD28.38 billion in 2015; this represented an increase of 26 per cent from 2014. According to UNCTAD's World Investment Report 2015, Mexico is the world's tenth largest FDI recipient.

Mexico ranked 38th in the World Bank's 2016 Doing Business rankings, up four places from 42nd in the year prior. The rankings acknowledged a number of reforms that Mexico enacted over the past year to make doing business easier. This includes improved access to credit by implementing a decree allowing a general description of assets granted as collateral. Mexico also made paying taxes easier by abolishing the business flat tax. However, it also made paying taxes more costly by allowing only a portion of salaries to be deductible.

Key facts about starting a business in Mexico:

  • It takes six procedures and approximately six days to start a new business in Mexico; this process is detailed in the Doing Business in chapter
  • Foreign nationals wishing to work in Mexico must obtain a Temporary Residence Card which costs MXN3,130; employment regulations are discussed in detail in the Labour chapter
  • Companies operating in Mexico spend, on average, 286 hours per year paying taxes; the tax regime is outlined in the Tax chapter
  • Companies must use Mexican Financial Reporting Standards for financial reporting; further details can be found in the Audit chapter
  • Amongst other requirements, a company wishing to list as an LLC on the Mexican Stock Exchange must have reported profits for the previous three financial years; this is discussed further in the Finance chapter

Mexico's attractiveness as an investment location can be attributed to a number of factors, including openness to foreign investment and abundant natural resources. Nevertheless, in order to make an informed decision, it is critical to understand the nuances of any local regime. The manner in which people conduct business in Mexico may differ from the home countries of investors. Furthermore, variations on these distinctions may exist depending on the region and industry in which a company operates.

Mexico's official language is Spanish, although a number of Native American languages are still spoken in the country. Mexican society is highly stratified and this is reflected in business; hierarchy is important. Business attire is conservative.

Punctuality is expected when doing business in Mexico. A handshake is the typical business greeting. Business cards will usually be exchanged at the first meeting.

Those looking to establish a business in Mexico may look across South America for alternative options. However, Mexico can be differentiated on the following factors:

  • Mexico is part of the biggest economic bloc in the world (NAFTA) which is worth almost USD19.9 trillion
  • Strategically located between North and South America
  • Mexico’s network of free trade agreements gives it preferential access to 46 countries and over one billion people; trade policy discussed further in the Trade chapter
  • It is estimated that Mexico's working age population will continue to represent more than 60 per cent of the total population for the next two decades
  • The National Infrastructure Program for Transport and Communications 2014-2018 envisages an approximate investment of USD100 billion dollars by the federal government; further details can be found in the Infrastructure chapter

While Mexico offers significant investment opportunities, there are still a number of challenges for foreign businesses. Mexico ranks low on Transparency International's Corruption Perceptions Index (95th). Bribery is widespread in the country's judicial and state bodies; further information on judicial topics can be found in the Legal chapter. Furthermore, organised crime continues to be an issue for the country. Foreign investors should also remain aware that restrictions to foreign ownership are in place across a number of sectors.

This guide has been developed to provide businesses with an overview of Mexico, its legal regime, start-up and market entry considerations, tax and customs requirements and a general summary of the factors that may affect the decision to do business in Mexico. However, the information contained in this document is generic in nature and you should not act or rely on it without obtaining specific professional advice.

Please note that the Country Guides may only be available in English.

Useful Links

1 The National Business Information Registry
2 Mexican Tax Administration Service
3 Mexico Customs
4 National Institute of Migration
5 Mexican Institute of Industrial Property
6 National Institute for Transparency, Information Access and Personal Data Protection held by Individuals
7 Pro Mexico – Trade and Investment

 

Sources

1 FDI Statistics
2 UNCTAD World Investment Report
3 Doing Business Rankings
4 Temporary Residence Card - Used PracticalLaw which is a legal service Grant Thornton subscribes to
5 NAFTA Worth
6 Free Trade Agreements
7 Working Age Population
8 National Infrastructure Programme Investment
9 Corruption Perceptions Index

 

Download Country Guide - Mexico (1.1MB, PDF)

Disclaimer

This document is issued by HSBC México, S.A. Institución de Banca Múltiple, Grupo Financiero HSBC (the Bank). This guide is a joint project with Grant Thornton. It is not intended as an offer or solicitation for business to anyone in any jurisdiction. It is not intended for distribution to anyone located in or resident in jurisdictions which restrict the distribution of this document. It shall not be copied, reproduced, transmitted or further distributed by any recipient. The information contained in this document is of a general nature only. It is not meant to be comprehensive and does not constitute financial, legal, tax or other professional advice. You should not act upon the information contained in this document without obtaining specific professional advice. Whilst every care has been taken in preparing this document, the Bank and Grant Thornton makes no guarantee, representation or warranty (express or implied) as to its accuracy or completeness, and under no circumstances will the Bank or Grant Thornton be liable for any loss caused by reliance on any opinion or statement made in this document. Except as specifically indicated, the expressions of opinion are those of the Bank and are subject to change without notice. The materials contained in this document were assembled in January 2016 and were based on the law enforceable and information available at that time.

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HSBC retains all responsibility for the translation of the content of this guide. In the event of any discrepancy or inconsistency between the English and translated versions of this Guide, the English version shall apply and prevail.

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