1. What role does the government of Mexico play in approving and regulating foreign direct investment?

The regulation and approval of Foreign Direct Investment (“FDI”) in Mexico is entrusted to the federal government. Various governmental agencies, mainly the Ministry of Economy and its specific directorates: the General Department of Foreign Investments; the National Registry of Foreign Investments; and the National Foreign Investment Commission review and monitor FDI into Mexico. Additionally, Mexico is a party to various investment treaties and free trade agreements to facilitate the participation of foreign individuals and companies in the economic activities of the country.

Mexico’s strategies regarding FDI have evolved over time, shaped by the economic policies and the development of laws in accordance with the priorities of the government. The main legal framework of FDI is contained in (i) the Constitution; (ii) the Foreign Investment Law; and (iii) its regulations. FDI is an activity reserved to be legislated by the federation. Recent government policies have included conservative measures and amendments to specific laws, restricting or prohibiting FDI in certain strategic economic sectors such as electricity production, oil extraction, or gasoline production. However, despite controversy and legal challenges, the Foreign Investment

Law generally promotes open access to foreign investment across most commercial activities.

The government, through the Ministry of Economy and the Ministry of Finance and Public Credit, tends to issue tax and administrative incentives to potential investors for the promotion and development of FDI in the country, acknowledging the importance of the FDI for employment and economic progress in the country. A recent example is the issuance of incentives in 2023 to carry out economic activities in the south of the country near the Isthmus of Tehuantepec, supporting the development of communities residing near the route of the Transisthmian railway, which is a prioritized infrastructure project for the executive branch, which will be in office until October of this year (2024).

Due to the nearshoring opportunities for Mexico, as a strategic neighbor of the United States, M&A transactions have been importantly active and rising in Mexico. The trending targets in Mexico are manufacturing companies, agro-industries, pharmaceutical, electronic, automotive, financial, digital industries, telecommunications, logistics, and infrastructure.

According to Bloomberg, in the year 2023, Mexico surpassed China in the number of exportations into the United States of America, and Mexico became the second largest recipient of foreign direct investment in Latin America. FDI has consolidated as one of the primary resources to finance the economic growth of the country, representing the source of jobs and transfer of technology aiding such positive results in a globalized economy.

2.Can foreign investors conduct business in Mexico without a local partner? If so, how does the Mexican government regulate commercial joint ventures between foreign investors and local firms (include information on common corporate structures)?

As a general rule (excepting some economic activities contemplated by foreign investment laws), foreign investors are allowed to conduct business in Mexico without a local partner, either through a: i) branch (sucursal), ii) representative office (oficina de representación), or iii) a subsidiary (Mexican entity). The principal characteristics of such vehicles are the following:

REPRESENTATIVE OFFICES & BRANCHES

Both branches and representative offices do not require foreign investors to incorporate a new legal entity in Mexico and can carry out certain activities through their corporate entities incorporated abroad.

To conduct business in Mexico through a branch and representative offices, it is required to obtain authorization from the Directorate General of Foreign Investment.

Representative offices do not engage in commercial transactions and generally aim to provide information, promotion, and advisory services regarding the activities, products, or services offered by the foreign parent company. For foreign investors, and from a tax perspective, such a vehicle has interesting outcomes, as it solely acts as a link between the foreign company and their Mexican clients without engaging in commercial activities and is not subject to Mexican tax obligations.

Branches do not have independent legal personality from the entity that establishes it; therefore, the foreign entity will be directly responsible for all the obligations and commitments of its branch in Mexico. Since branches create a permanent establishment (establecimiento permanente), such entity shall pay taxes for any income attributable to the permanent establishment in accordance with the Income Tax Law; hence, foreign investors avoid choosing such vehicle. Also, the permanent establishment may be subject to other taxes such as the value-added tax law.

For a foreign entity to conduct business acts in Mexico, it must:

i. Obtain authorization from the Ministry of Economy to register its bylaws and notarize such authorization.

ii. Notarize the foreign company’s incorporation documents.

iii. Register the notarized instrument before the Public Registry of Commerce.

MEXICAN SUBSIDIARY WITH FOREIGN EQUITY

To incorporate a new company (“NewCo”) in Mexico, investors must consider the following steps: i) the NewCo’s name must be approved by the Ministry of Economy; ii) NewCo’s bylaws must include a clause admitting foreigners; iii) your local legal advisors will confirm if the economic activity intended to be performed in Mexico is not subject to foreign investment restrictions or limited percentages of participation; iv) the NewCo’s bylaws must be notarized and registered before the Public Registry of Commerce; and v) the NewCo must be registered before the Federal Taxpayer Registry and the National Registry of Foreign Investment.

Under the Mexican Constitution, foreign investors will be considered as Mexicans in connection with any participation, goods, rights, and concessions they may hold in the NewCo, and any rights and obligations arising from agreements of which NewCo is a part.

The three most commonly used vehicles for incorporating a NewCo are:

i) a Sociedad Anónima, comparable to U.S. corporations and incorporated by shareholders whose liabilities are limited to their capital stock contributions; ii) a Sociedad de Responsabilidad Limitada, compared to a Limited Liability Company in the U.S. whose liabilities are limited to their capital contributions; and iii) a Sociedad Anónima Promotora de Inversión, which is a Sociedad Anónima with some specific rules provided in the Securities Market Law.

In connection with private joint venture agreements, it is important to note that there is no specific Mexican regulation about their terms, except for certain joint ventures that operate as participation associations under certain commercial and tax rules. In case of public joint venture agreements (where private companies and the government participate in turnkey infrastructure projects), there are specific statutory regulations, requirements and procedures that should be observed. Additionally, for the case of acquisition of ongoing businesses or certain joint ventures or strategic transactions, it is also important to consider antitrust law provisions to evaluate the need of a merger control filing to obtain clearance prior to closing.

In conclusion, the Mexican laws allow foreign investors to conduct business in Mexico without a local partner; however, there are certain limitations and regulations that should be considered by the investors, depending on the activities to be performed in Mexico.

3.What laws influence the relationship between local agents and distributors and foreign companies?

The relationship of agents, distributors, and foreign companies must be analyzed considering the following legal aspects:

  • Business considerations: The contractual and business structure regarding territory, exclusivity, volumes and sales goals, prices, market, delivery terms, and product warranties, among other business terms.

  • Employment: Special provisions to delimit the independent relationship between the parties and avoid that a party becomes jointly liable with respect to the employment and social security liabilities of the other party in connection with its own relationships with employees, agents, and subcontractors.

  • Intellectual Property: Determine whether there will be trademarks, trade secrets, or other IP rights involved and the need of granting licenses; access to know-how or good-will; marketing strategies; development of new brands, products, or designs.

  • Foreign trade: In connection to import/export transactions, determine the liabilities and responsibilities of each of the parties; importer/ exporter of records; permits and licenses; duties and taxes; terms of delivery (possible use of Incoterms); and insurance, transportation, compliance with non-tariff regulations and restrictions (such as labeling requirements), among others.

  • Regulatory: Assess those permits and licenses applicable to the products and activities to be performed and clearly identify the party that will be responsible to obtain and maintain each of them.

  • Foreign investment: Review of any possible restriction or limitation to foreign investment.

  • Tax: Analysis and assessment of tax impacts at all levels (federal, state, and municipal); tax invoicing; tax deductions of expenses; tax joint liabilities; with holdings.

  • Anti-corruption: Verify compliance and acceptance of anti-corruption policies.
  • Antitrust: Evaluate if exclusivity, non-compete, and other vertical restrictions are compliant with economic competition laws.

  • Consumer protection: The applicability of consumer protection laws should be considered. Parties should address these in the warranty policies.

4.How does the Mexican government regulate proposed merger and acquisition activities by foreign investors, and are there any areas of the economy where they are prohibited (e.g., natural resources, energy or

telecommunications)?

In Mexico, the main regulatory framework that is relevant for merger and acquisitions (M&A) by foreign investors is composed by the Foreign Investment Law, the Federal Economic Competition Law, the General Law of Business Entities, the Securities Market Law, and the industry-regulatory laws that may be applicable. The Mexican government welcomes foreign investment and encourages M&A activities as a means of fostering economic growth and development. However, as classified below, certain economically strategic activities are subject to restrictions or prohibitions to safeguard national interests and security; therefore, foreign investment in such cases is either restricted or not permitted at all.

Strategic activities that are forbidden to foreign investment participation:

i. Exploration and extraction of oil and/or other hydrocarbons,

ii. Postal service, telegraphy, and radiotelegraphy,

iii. Control of national electricity system, transmission and/or distribution of

electricity,

iv. Radioactive minerals extraction or any activity related to these,

v. Coinage, and

vi. Supervision, control, and surveillance of ports, airports, and heliports.

Strategic activities where foreign investment is restricted:

i. Cooperative companies for production are limited to receive 10% of

equity from foreign investment.

ii. The following activities are capped with a limit of not more than 49% of foreign investment:

  • Firearm and explosives industries,

  • Printing and publishing of national newspapers,

  • Equity representing agrarian land or for agricultural use,

  • Freshwater fishing and fishing within the coastal and economic exclusion zone,
  • Port administration,

  • Port piloting services of vessels to perform inland navigation transactions,

  • Shipping companies dedicated to commercial exploitation of vessels for inland navigation and coastal shipping, except for cruises,

  • Supply of fuels and lubricants for vessels, aircraft, and railway equipment,

  • Broadcasting, and

  • Domestic air transportation and specialized air transportation.

In addition to sector-specific regulations to be considered upon the target

company to be acquired (banking, tourism, aeronautic market companies), foreign investors engaging in M&A activities in Mexico must comply with antitrust laws and regulations enforced by the Federal Economic Competition Commission (“COFECE” by its acronym in Spanish) and the Federal Telecommunications Institute (“IFT” by its acronym in Spanish). The competent antitrust authority assesses the potential impact of certain mergers and acquisitions based on certain economic thresholds. In case the transaction requires to be notified for antitrust clearance, the parties cannot close the transaction until a favorable resolution (conditioned or unconditioned) is issued. Also, competition compliance measures and safeguards must be considered, especially regarding the information exchange among the parties during the negotiation phases of the transaction and the avoidance of “gun-jumping” clauses that could grant the acquirer certain control prior to antitrust clearance.

Overall, while Mexico welcomes foreign investment, particularly in sectors crucial for economic development, certain industries are subject to oversight or certain restrictions to protect national interests and promote fair competition. Investors considering M&A activities in Mexico should carefully review applicable laws and regulations to ensure compliance and mitigate potential risks.

5. How do labour statutes regulate the treatment of local employees and expatriate workers?

Labor and employment laws and regulations in Mexico provide foreign investors with clarity when assessing salary levels and employment conditions offered within a particular industry or region, enabling them to maintain competitiveness. For foreign investors operating in Mexico, comprehension of the Federal Labor Law (FLL) and its special regulations is material. These laws are not merely administrative formalities but are deeply rooted in public order, designed to uphold the constitutional rights

of both workers and employers. The FLL also regulates the dynamics of potential conflicts between employees and employers, whether individual or collective disputes.

The FLL seeks to foster equality and safeguard the interests of all parties involved,

emphasizing the conciliatory phase as a pivotal mechanism for dispute resolution.

An amendment to the FLL, passed on April 23rd, 2021, has brought significant changes to corporate structures and commercial relationships, particularly concerning the widespread practice of outsourcing as a means of hiring employees. This amendment entails a general prohibition on employers engaging subcontractors to provide services related or identical to the stated corporate purpose of the legal entity, as well as its economic activities. However, the Federal Government has approved exceptions to this rule, allowing for the utilization of specialized service providers that are required to be registered and compliant with quarterly obligations and reporting.

Foreign and local employers must respect statutory benefits provided by the FLL and must be included in employment agreements, based on the following requirements:

  • The daily salary must not be lower than the minimum wage stated in the FLL with an inflationary annual increase.

  • A year-end bonus equivalent to at least 15 days of daily salary shall be paid to the employees.

  • Employees are entitled to 12 mandatory vacation days annually, with an additional two-day increment related to the anniversary of their employment for the first six years. After this period, the same number of days will increment every five years.

  • Vacation Premium of 25% related to the salaries to be received on their vacations.

  • 10% profit sharing benefit, calculated with the taxable income of the employer. The profit-sharing amount payable to each employee is capped to the most favorable result for the employee of the following two options: (i) three months of the employee’s salary, or (ii) the average of the profit sharing received during the preceding three years.

  • Official holidays such as Labor Day, Independence Day, Christmas, and New Year’s Eve are among those recognized in the FLL.

  • A maximum 48-hour weekly shift and overtime system compensation.

  • Registration to the Mexican Social Security, Housing Found and the National Workers’ Welfare Fund Institute.

It is important to mention that these are minimum rights, although employers have the ability to grant additional or higher benefits and better working conditions to become more attractive and competitive in their own

respective industries.

Regarding employees that are to be relocated to Mexico, the FLL refers to the Immigration Law to provide clarity on the requirements employers must fulfill. These requirements include:

  • An employer must not have more than 10% of foreign employees in its workforce; this excludes general managers, directors, and manager- level officers.

  • The employer must be registered and receive an employer certification from the National Immigration Institute.

  • Expatriates should have an appropriate working visa; and

  • The employer and the foreign employee must closely keep control of the due renewal of the worker visas and of the filing of notices to the National Immigration Institute.

A secondment agreement must be settled between the host Mexican entity

and the foreign entity in case of hiring of expatriates. This agreement includes, among other provisions:

  • Expatriate’s conditions.
  • Nomination of entity that will assume tax costs.
  • Benefits that the expatriate will maintain with the original employer.

Expatriates working for a Mexican subsidiary must be directly hired with the same conditions as national employees.

Tax effects applicable to the salaries and benefits paid to the expatriates must be analyzed on a case-by-case basis, considering international tax treaties and the employee’s tax residency.

In 2019, two very crucial amendments were made to Mexico’s Federal Labor Law which is pivotal for foreign investors to take into consideration when moving into our country. The first amendment is the transformation of the traditional justice system under the government’s executive branch to the oral justice system under the judicial branch. This amendment to the FLL introduces guiding principles that are the foundation of the Mexican oral trials system and applies them to the FLL to create a more efficient and equal system differing from the bureaucratic system which, in some cases, was unable to provide adequate protection to employers.

The second amendment to the FLL arises from the International Labor Organization’s 87th and 98th Conventions and as a condition to join the new USMCA. This induced the Mexican Government to make changes regarding the employee’s freedom of association and collective bargaining, as well as the procedures to follow for the employee’s right to elect, through an established voting procedure, their workers union representative.

The 2020 Covid pandemic in many ways induced countries to look at work in a different manner. In 2021, Mexico officially introduced remote working as a condition into the FLL in which new obligations were raised for employers, such as assuming the proportional cost of the electricity bill, as well as the Internet bill for those employees that are in remote working conditions.

6.How do local banks and government regulators deal with the treatment and conversion of local currency, repatriation of funds overseas, letters of credit, and other basic financial transactions?

The Mexican Central Bank (Banco de Mexico) regulates the Mexican banking system and is responsible for implementing monetary policies to ensure the effective payment system. Mexican banking institutions are privately owned, and foreign investment is allowed.

The National Banking and Securities Commission (CNBV) is a government agency that reports to the Ministry of Finance and Public Credit (SHCP, for its acronym in Spanish) in charge of supervising and regulating banks and financial institutions and their legal performance in accordance with the financial regulations.

The Mexican Central Bank also sets and publishes the official exchange rate for the payment of the legal obligations specified in foreign currency but payable within Mexico. The Mexican local currency (Peso) is freely convertible into all other currencies with no restrictions on remittance of profits or the repatriation of capital abroad. All currencies may be freely transported or traded. However, certain reporting requirements apply to travelers and financial transactions.

REPATRIATION OF FUNDS OVERSEAS

Mexico does not have any exchange control or limitations on remittances in foreign currency when a repatriation of funds is made overseas, including repatriation of capital investments, payments of intercompany loans or payment of dividends.

The General Law for Business Entities in Mexico states that these entities must form a legal reserve fund setting aside at least 5% of yearly profits until an amount equal to 20% of the capital stock of the entity is reached.

BASIC FINANCIAL TRANSACTIONS

Mexican banks offer different types of credit oriented toward consumption and productive activities. The basic financial transactions offered by the banking institutions for households are credit cards, mortgage loans, credits for the purchase of durable consumer goods, and automobile loans. Meanwhile, companies apply for credits, working capital loans (crédito de habilitación o avío), fixed asset loans (crédito refaccionario), revolving credits, and asset-based lending facilities, among others. The common securities requested for the banking institutions can be constituted through mortgages, pledges (including the modality of non-possessory, a.k.a. floating-lien pledge), corporate guaranties, or guaranty

trusts.

LETTERS OF CREDIT

Letters of Credit are commonly used in Mexico. Its purpose is to facilitate foreign and domestic trade, eliminating mistrust and risk between the buyer and the seller.

The most common Letters of Credit are:

  • Import: a typical payment instrument in foreign trade.

  • Domestic: a payment instrument in commercial transactions.

  • Export: a payment instrument received by the exporter/seller/beneficiary through a confirming bank with the commitment to honor the payment in its favor, against the presentation of documents related to the sale of goods or services.

  • Stand-by: to guarantee different obligations (commercial, financial, or services obligations) in which the applicant might not fulfill the commitments acquired.

  • Contractual Guarantees (bonds): the bank guarantees and supports the participation of companies in international public tenders, or tenders for the award of contracts, sale of goods, or provision of services.

Demand Guarantees and other financial figures under the International Chamber of Commerce (ICC) rules are also implemented in sophisticated transactions.

7.What types of taxes, duties, and levies should a foreign investment in Mexico expect to encounter?

Mexico has proven great openness to foreign investors through several mechanisms and incentives established to attract foreign direct investment.

However, when investing in Mexico, investors must take into consideration some aspects and regulations to have a successful landing.

Mexico has different levels of taxation which will apply to branches and Mexican companies: (i) Federal taxes; (ii) State taxes; and (iii) Municipal taxes, as well as local regulations, incentives, and legal framework which shall be considered when choosing a location in Mexico. In general terms, a resident in Mexico for tax purposes shall comply with: (i) issuance of tax receipts; (ii) accounting records; (iii) tax returns; and (iv) the tax registration before the taxpayer’s registry. The general taxes on the federal level are the following: (i) income tax; (ii) value-added tax; and (iii) special tax on products and services. However, it is important to mention that in some cases the rates may vary and other taxes may apply; therefore, it is important to analyze the particular situation and determine the applicable taxes.

  • Corporate income tax – 30%.

  • Distribution of dividends income tax – 10% to individuals and foreign entities (assuming the profits to be distributed have already paid the corporate income tax). Notwithstanding the foregoing, depending on the nationality of the shareholder, it is important to consider if a tax treaty may apply.

  • Value-Added tax – 16% (or 8% within the border region in case the required certification is obtained).

  • Regarding taxes applicable on the State and Municipal level, their applicability should be assessed on a case-by-case basis, depending on the location where the operations are to be carried out and where the company registers its tax address.

Income Tax: The income is attributable to the operations in Mexico, Mexican permanent establishments, and sources of income. The tax basis is the profit obtained in the fiscal year, which is calculated by subtracting the authorized deductions from the taxable income of the entity. The profit-sharing contributions to employees have a deductible effect in the annual profit, among several other activities. The tax rate is 30% under the general regime. The annual tax return shall be filed within three months after year-end.

Value-Added Tax: The activities performed in Mexico will be subject matter of such tax, such as: (i) transfer of goods, (ii) render of independent services, (iii) grant the use or enjoyment of goods, and (iv) import of goods or services. The Value Added Tax triggers on a cash flow basis, except in some cases. The general tax rate is 16%; nonetheless, exports of goods and certain services are taxed with the 0% rate, as well as other specific taxable acts/activities through the obtention of specific authorizations. Some other activities are exempted, and entities located on the border may apply for the reduced rate of 8%.

Also, Mexican entities may comply with several procedures of related to tax compliance, such as filings and notices before tax authorities. One of the most recent and important obligations to comply with is related to the identification of the controlling beneficiary (ultimate beneficiary owner). All Mexican entities must gather and file-- upon request-- certain information about the ultimate beneficiary owner(s) of the Mexican entity. Such information may be requested (i) by tax authorities during an audit or as an independent procedure, (ii) by a notary public during an incorporation procedure, mergers, or other contractual structures, etc., or (iii) by financial institutions (i.e., for the opening of bank accounts).

8. How comprehensive are the intellectual property laws of Mexico, and do the local courts and tribunals enforce these laws regardless of the nationality of the parties?

Mexico has a comprehensive set of intellectual property laws that cover several aspects of intellectual property rights, including patents, trademarks, copyrights, trade secrets, and plat varieties. These laws are intended to protect the rights of inventors and innovators, and to promote innovation,creativity, and economic development.

The main Intellectual Property laws in Mexico are the following:

i. The Federal Law for the Protection of Industrial Property and its Regulation.

ii. The Federal Copyright Law and its Regulation.

iii. The Federal Law of Plant Varieties and its Regulation.

The Intellectual Property legal system in Mexico follows the general international rules. Mexico has subscribed and adhered to the main international treaties on this subject matter, such as:

  • The Paris Convention for the Protection of Industrial Property.

  • The Universal Copyright Convention.

  • The Lisbon Agreement for the Protection of Appellations of Origin.

  • The Berne Convention for the Protection of Literary and Artistic Works.

  • The Patent Cooperation Treaty (PCT).

  • The Vienna Agreement Establishing an International Classification of the Figurative Elements of Marks.

  • The Strasbourg Agreement Concerning the International Patent Classification.

  • The Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks.

  • The Geneva Act of the Hague Agreement Concerning the International Registration of Industrial Designs.

  • The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement).

  • The United States–Mexico–Canada Agreement (USMCA).

In connection with enforcement of intellectual property, Mexican laws offer several procedures and remedies for the prosecution of intellectual property rights, including administrative, civil, and criminal penalties for infringement. The enforcement is not only vested in the Mexican Institute of Intellectual Property, but also in specialized courts, such as the Federal Court on Administrative Affairs and Jurisdictional Federal Courts (District and Circuit Courts). The intellectual property rights holders can seek injunctions, damages, and other remedies through the court system to enforce their rights and legitimate interests.

Under the Mexican legal framework, intellectual property rights are enforced regardless of the nationality of the parties involved. The origin of intellectual property rights does not impact the impartiality of the authorities that resolve the disputes.

Nowadays, the percentage of foreign entities that register and protect some intellectual property rights in Mexico, such as patents, are far greater than Mexican entities or individuals, so Mexican tribunals enforce intellectual property laws without discrimination based on the nationality of the parties involved.

Therefore, whether it is a Mexican or foreign entity, or individual person, the Mexican courts are committed to endorse intellectual property rights and provide impartial resolutions in cases involving infringement or disputes over intellectual property.

9.If a commercial dispute arises, will local courts or will international arbitration offer a more beneficial forum for dispute resolution to foreign inventors?

Regarding international M&A and sophisticated commercial or multi-jurisdictional transactions, it is usually advisable to elect arbitration as the dispute resolution process. It is important to verify that all parties involved are located or do business in countries that recognize the validity and enforcement of arbitral awards. For other types of commercial disputes, several topics must be analyzed to determine if an arbitration provision is the best choice, and if the type of dispute can be subject to arbitration (in Mexico, for example, trademark and patent disputes must be resolved by governmental authorities). Contracts involving credit instruments or

securities on financial transactions will generally require the use of local laws and courts for enforcement.

Mexico is a party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, also known as the “New York Convention” and the Inter-American Convention on International Commercial Arbitration.

Based on the above, the parties on a commercial agreement can validly introduce an arbitration clause either following the rules of an arbitral institution (such as ICDR, ICC, among others) or electing an ad hoc procedure.

Some advantages of electing arbitration for the resolution of potential disputes arising or relating to an international commercial transaction are:

  • Flexibility and broader alternatives for interim measures that may be required during the arbitration process,

  • Possibility to elect arbitrators with reputation, expertise, and knowledge of the type of dispute, who must fulfill independency, impartiality, and ethical principles,

  • Possibility to agree on confidentiality terms of the arbitration process and arbitral award,

  • Less formalities for the enforcement of an arbitral award compared to the formalities required for the enforcement of a foreign court judgment,

  • Rich experience with international and national arbitral institutions and arbitrators on M&A disputes, and

  • Mexico recognizes the enforce ability of national and foreign arbitral awards.

The arbitration experience has become more sophisticated over time. It is not necessarily true that an arbitration process will be highly expeditious and inexpensive, but the advantages and the usual complexity of M&A or certain commercial disputes make the election for arbitration worthwhile.

10.What advice can you provide for how best to negotiate or conduct business in Mexico?

It is always important to understand the customs, cultural traits, and particular economic and social conditions of the location where a business is intended to be carried out. In this sense, having references or the support of reliable consultants (such as financial, tax, and legal advisors) who know and have experience on how to do business in Mexico and its different regions, could be decisive to getting a soft-landing or the best of a negotiation, especially in joint ventures with other partners. A reputable brokerage firm will be of high relevance for searching real estate for acquisition or lease.

It should also be considered that the timeframe to accomplish certain milestones, such as incorporation of Mexican entities, registration for tax purposes, opening of bank accounts, obtaining governmental permits and approvals, and anti-money laundering regulatory requirements, among other procedures, do not always occur with the same speed as in other countries. This circumstance must be taken into account when working on the business plan and project schedule. Nevertheless, the Mexican government often makes sustained efforts to improve and speed up processes.

Mexico will continue to be privileged by its proximity to the United States market, its framework of multiple trade treaties, and the nearshoring trends of the most recent years. Financial and business analysts anticipate that despite the typical uncertainties due to federal elections of year 2024, there is familiarity with the political options in Mexico and, therefore, stable scenarios are expected for investment opportunities in the country.