Our fifth chapter of Doing Business in Mexico, Creating a Company in Mexico, will provide a general overview of the process to incorporate a company as well as information on company types in Mexico, including some tax-related comments. Furthermore, other business legal structures are explained.
This Chapters includes the following sections:
In recent years, Mexico has changed its Company Law to facilitate the creation of a company. As a result, Mexico relaxed requirements, reduced the days as well as the number of procedures to start a business, and, thus, has improved its Starting a Business indicator of the World Bank’s Doing Business 2020.
According to this study, 8 steps are necessary to create a company in Mexico, but under the assumption that only Mexicans are involved. In that sense, a company with foreign capital is subject to additional steps as noted below.
Before reading this chapter, we strongly suggest reviewing our Foreign Investment Chapter because Mexico prohibits or restricts foreign capital in certain activities or economic sectors. Needless to say, most economic sectors are not subject to foreign investment controls and, thus, we will focus on the “all other” activities or economic sectors that do not have foreign investment restrictions.
We will first outline the steps that a foreign investor must take to incorporate a company or opening a business. Then, we will provide a general picture of the type of companies as well as other business structures suitable for foreign investors.
The steps to create a traditional company do not vary as to the type of company, such as a stock company or limited liability company.
The intervention of a Notary Public or Public Broker is necessary to incorporate a company in Mexico. Due to the limited legal powers of a Public Broker, entrepreneurs normally prefer to retain the services of a Notary Public.
Are you planning to “shake hands” with your business partners in Mexico or will you delegate the tasks to your trusted advisor?
If a foreign investor, as an individual, is not planning to sign the corporate deed personally, the foreign investor must sign a Power-of-Attorney (POA) in his country, naming his Mexican attorney or attorneys and listing their powers. Once signed the POA, the foreign investor must either apostille or legalize his POA and, of course, send by express packaging services the document.
If the investor is a foreign legal entity, said entity may have to provide additional documentation depending on their residence to prove its legal existence as well as the powers of the legal representative signing the POA. The additional documentation has to be apostilled or legalized. This is normally the case with Asian legal entities.
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 Mexico Starting a Business rank in the Doing Business is 107th out of 190 economies.
Susana Muñoz, director of the VTZ Chinese Desk and former government official of the Mexican Ministry of Economy, prepared a text on the decoupling of the global economy and its implications for Mexico. Taking into account that the 2020 US presidential election approaches, she addresses the growing tension between the US and China and describes recent events affecting the relationship between the two largest economies in the world.
Our partner highlights the complexity involved in untangling the two largest economies in the world because the global economic restructuring is yet to come. While China is expanding and looking to develop new markets, China is opposed to US policies, which will mean both the destruction of business models and the reconstruction of entire industries, as well as geopolitical consequences.
In this regard, Susana Muñoz reflects on the China-US trade tension and its impact on Mexico by answering the following questions:
What do these changes in the geopolitical paradigm mean for Mexican companies? What are the risks to consider?
On the one hand, Susana recognizes that the trade tension will impact in the short and medium-term the Mexican investment promotion strategy as an attractive destination for the manufacturing sector that seeks to export to the North American markets.
On the other hand, our partner highlights that:
“…it is very necessary to update our approach strategy towards Chinese companies and investors, not only positioning the benefits of the USMCA, but also doing an in-depth job of identifying complementation opportunities in commercial, industrial, technological, and investment projects.
Check the full text of the article here.
We consider relevant to note that the National Institute of Statistic and Geography (INEGI, Spanish acronym) on Mexico’s Trade Balance during June 2020 reports that annual growth rate of exports continues to decline when compared with the 2019 figures. In the same sense, imports of capital goods, which entail goods that will serve to produce, have registered a strong decline of (-) 12.3 % compared to last year’s data.
Here is the link to the report.
Last Friday, July 24, 2020, modifications to the General Rules of International Trade were published in the Official Gazette. Some modifications consist of the elimination of benefits and the addition of obligations for manufacturing/maquiladorasI IMMEX companies with VAT Certification. Some of these benefits were transferred to Authorized Economic Operators.
One of the benefits that were eliminated to VAT certified companies is, for example, the 36 months period of legal stay for goods imported temporarily, instead of the 18 months provided in the Customs Law. Regarding the addition of obligations, VAT certified companies, for example, will have to ensure that all their domestic suppliers are up to date with their tax obligations. We prepared an alert in Spanish, which is available here, but if you have any questions do not hesitate to contact us.
Given their relevance and impact to the manufacturing industry, VTZ is organizing a webinar that will take place today at 8:30 am (Mexico City Time), you can register in the following link.
If you cannot or could not attend, contact us so we can send you the link to the video in due course.
On Wednesday, June 29, Adrián Vázquez was appointed member of the Alliott Group Latin American Regional Advisory Committee. Our partner’s role will be to help develop and monitor the implementation of Alliott’s strategic plans in the region. This appointment comes at a key moment of Alliott’s growth in the Latin American Region.
More information here.
Today, the 13th of February, Chambers & Partners Global Guide 2020 was released and Vázquez Tercero & Zepeda appeared in Band 1 in the International Trade / WTO Law practice in Mexico. Over the past eight years, our firm has appeared in this important legal guide, consolidating itself as one of the leading law firms in international trade matters in Mexico.
The Chambers & Partners Global Guide 2020 defines our firm and team as:
“the team is known for Pace-setting player in international trade matters, routinely singled out for its anti-dumping and countervailing duties expertise. Regularly receives mandates from acclaimed clients in the metal, chemical and consumer products sectors, with particular strength in representing clients from Asian markets. NAFTA verifications of origin, customs compliance advice and representation before the Mexican tax authorities are additional areas of expertise.”
An interviewed source described Adrián Vázquez as “an expert in international law and is bright and experienced in this field.” Another source adds that “He’s always sharp and has been in the field for a long time with a steady practice.“.
As for Eduardo Zepeda, Chambers & Partners described him as a lawyer with a “solid knowledge of Mexico’s maquiladora industry, he often advises clients on the interactions between tax and customs laws in Mexico.”
Susana Muñoz is the head of VTZ’s Chinese Desk, and she resides in Hong Kong, China, promoting bilateral trade and investment projects. Ms. Muñoz has prepared the following economic report regarding the Coronavirus outbreak. Download the report in PDF in the following link: Update Coronavirus 05022020
With a population of more than 10 million inhabitants and a GDP per capita above $ 17,000, Wuhan is one of the most important cities in central China. As the hometown of the outbreak of Coronavirus 2019-nCoV, which today has reached a figure of more than 24 thousand infected and more than 490 deaths, Wuhan remains since January 23 in quarantine and expecting a significant reduction of new cases that allow tracing the peak of the epidemic.
It was on January 26 that the Chinese authorities made the decision to extend the Chinese New Year holidays in order to reduce the movement of people and prevent contagion. Days later, this holiday period lasted until February 10, with some companies in China that have decided to start operations until February 17. The beginning of the semester in schools and universities is still to be determined, while the research centers are temporarily closed. The main centers of attraction (parks, theaters, cinemas, etc.) are focused on the public and only supermarkets, markets, and service stores are operating with reduced hours. In addition, the main trade fairs and February events throughout the country have been canceled.
In the city of Hong Kong, the situation is similar. The government is operating only some services until February 10, while it has asked public officials to work from home. Companies have also adopted this policy, and they are expected to resume operations until February 17.
In the case of schools and universities, they will remain closed until February 29.
Several airlines have suspended their flights to and from China, and the entry of Chinese nationals (including Hong Kong and Macao) and foreigners who have been in China for the past 15 days to several countries has been banned or restricted. Among the countries that have implemented these measures are the Philippines, Singapore, Australia, Israel, Italy, Mauritius, Burma, New Zealand, Sri Lanka, Taiwan, Vietnam, and the USA.
The Hong Kong government announced this week the closure of several border points and will impose a 14-day quarantine on anyone arriving from mainland China as of Saturday. For its part, Macao has announced the closure of casinos and entertainment centers for the next 15 days, in order to reduce the flow of tourists to the city.
The number of cases is expected to continue to increase until March when experts predict it will be the peak of the epidemic. It is also possible that in the next two weeks the number of cases abroad will increase, derived from the flow of Chinese tourists abroad during the past month.
Meanwhile, lower economic growth is forecast, at least during the first half of the year. Chinese authorities and companies are taking steps to keep GDP above 5%, such as extensions to credit card payments, subsidies to companies that use online platforms to market their products, exemptions of taxes and social security payments, and economic support for national airlines to continue offering national and international routes. However, a difficult start to the year is expected, mainly due to export irruptions, lower investment in the most affected cities, and lower consumption.
The Chinese Desk of VTZ will continue to work normally during these days, contacting our customers by email and answering questions.
Since the experience of Acute Respiratory Syndrome (SARS) in 2003, China has taken enormous steps in the development of medical services and research, and the inhabitants are also more prepared to face such an epidemic. Therefore, the country is in a better position than 17 years ago, and specialists predict better containment of damages.
Vázquez Tercero & Zepeda aims to consolidate and strengthen our tax law practice this decade. In order to do so, we were aware that we needed to join forces with a recognized international network. We found the ideal association, Alliott Group: Alliance of Accountants & Lawyers Worldwide, and Vázquez Tercero & Zepeda is honored to have been accepted.
With our membership, we are now even better prepared to support and advise foreign clients investing in Mexico and our clients who are doing business internationally.
Founded in 1979, and with 160 member firms in 66 countries, Alliott Group is an award-winning international association (‘alliance’) of independent accounting and law firms that need deeper levels of cross border resources to develop reputation, visibility and new business. Alliott Group provides services to help its member firms to position themselves as the ‘go to’ firms in their local markets for businesses and private individuals with multi-market business interests.
Alliott Group is expanding fast, with 19 firms having joined in 2019. The alliance has its sights set firmly on growing its legal and accounting membership to 100 countries. Opportunities are available to independent professional firms in specific countries in Central and Eastern Europe, but also in the key markets of Africa, China and the ASEAN countries, Australasia, the Gulf Cooperation Council region, Central and South America and the United States and Canada.
Established in 1973, the leading law firm is headed up by Managing Partner Mr. Adrian Vazquez. The firm has two additional equity partners, nine local partners and 27 associates and support staff, and therefore a total team of 39 people who offer exceptional legal services in Spanish, English, French, Portuguese and Chinese.
With over 45 years of experience, the Chambers & Partners and Legal 500 legal, among others, have ranked VTZ consistently over the last decade as one of Mexico’s most specialized law firms in international and customs law.
Adrian Vazquez comments:
“Our services are intended to be a strategic tool for the success of our clients’ business, particularly, in their international trade-related operations. Companies, trade associations and governments rely on our experience in trade and international matters. Our strategy for the new decade is to strengthen our tax law practice by having acquired a tax boutique firm in late 2019.
“This level of expertise positions us perfectly to help clients to master the inherent complexities of Mexico’s regulatory landscape. With our Alliott Group membership, we are now even better prepared to support and advise foreign clients investing in Mexico and our clients who are doing business internationally.”
Do not hesitate to contact us at: info[@] vtz.mx
It also provides an overview of the rules governing storage of goods.
On June 23, 2017, the Inter-Ministerial Commission approved the creation of five SEZ, namely those that will be located in the states of Chiapas (Puerto Chiapas), Veracruz (Coatzacoalcos), Michoacán (Lázaro Cárdenas), Guerrero (Puerto Unión), Yucatán (Progreso) and Oaxaca (Salina Cruz).
Now, the next step is for the President to issue the Decrees that will officially create each SEZ. It is expected that in the upcoming months, or even weeks, Decrees will start being published in the Official Gazette. The Mexican States also play an important role in the development of a SEZ.
Therefore, the purpose of this update is to inform which are the economic sectors that are being targeted by the Mexican government to invest in the SEZ, as well as the significant legal developments regarding the implementation of the Mexican SEZ at the state level.
To access our update, please download it from the following link: Update-SEZ-17082017
Economic Sectors, featured, Income Tax, Investing in Mexico, Lazaro Cardenas, Mexican Lawyers, Mexican SEZ, Puerto Chiapas, Puerto progreso, Puerto Unión, Salina Cruz–Coatzacoalcos, Special Economic Zones, Tax Incentives, VAT
Our Managing Partner, Adrián Vázquez, as well as our associates, Mariana Malvaez and Emilio Arteaga, have contributed to Thomson Reuters‘ International Trade and Commercial Transactions Global Guide, in which they responded to a Q&A guide concerning the International Trade in Goods and Services in Mexico.
This Q&A covers key matters relating to the regulation of international trade in Mexico, including recent trends, trade agreements, trade negotiations, rules relating to the supply of services, imports and exports requirements, trade remedies, and international trade restrictions.
To access the guide, click the following link: International Trade in Goods and Services in Mexico.
Customs Law, export requirements, featured, Free Trade Agreements, import requirements, international sanctions, International Trade, international trade restrictions, Mexican Lawyers, Mexico, Thomson Reuters, Trade Law, trade negotiations, trade remedies
Vázquez Tercero & Zepeda (VTZ) is listed, again, in Band 1 in Chambers & Partners Global Guide. For five consecutive years, VTZ has been recognized as a leading Mexican Law firm in the field of Trade/WTO Law and, thus, proving to be a trustworthy, top-notch Law Firm.
VTZ and its members are viewed as a widely esteemed international trade and customs practice with recognized sector expertise, that is constantly involved in high-profile trade disputes and anti-dumping cases.