Nearshoring in Mexico

With the second-largest economy in Latin America, Mexico is projected to surpass the GDP of most European countries by 2050.

Globally, it ranks 60th in terms of ease of doing business, second only to Chile in Latin America. Geographically strategic, it is located close to the world's largest consumer market, the United States, while its own consumer population amounts to around 120 million.

Through commercial companies or directly by establishing a branch.

Commercial companies are recommended for long-term investment projects, requiring two or more people to join forces and resources to carry out a commercial activity with the goal of making a profit. These companies are governed by legal regulations and must be registered with the corresponding authorities. There are various types of commercial companies, each with specific characteristics.

Establishing a branch is possible and recommended for short-term businesses. A third option is through a trust.

With the second-largest economy in Latin America, Mexico is projected to surpass the GDP of most European countries by 2050. Globally, it ranks 60th in terms of ease of doing business, second only to Chile in Latin America. Geographically strategic, it is close to the world's largest consumer market, the United States, while its own consumer population amounts to around 120 million.

The main types of commercial companies are:

- Limited liability company: This is a company in which partners are only liable for the amount of their contributions, and their shares cannot be represented by negotiable securities.

- Public limited company: This is a company in which the share capital is divided into shares, and partners are only liable for the value of the shares they own.

- Simplified joint-stock company: This is a company formed by one or more individuals, who are only liable for the amount of their contributions represented in shares.

These are some of the most common tax and accounting obligations for a foreign company wishing to do business in Mexico, but they may vary depending on the type of activity, tax regime, etc.

Register with the Federal Taxpayer Registry (RFC) and obtain your Electronic Signature.
Issue electronic invoices (CFDI) for transactions carried out in Mexico, complying with the requirements established by the Tax Administration Service (SAT).
Keep electronic accounting records of your income, expenses, assets, liabilities, and capital, as well as applicable taxes, and submit them monthly to the SAT.
File monthly and annual federal tax returns, such as Income Tax (ISR), Value Added Tax (VAT), and Special Tax on Production and Services (IEPS), as well as pay any applicable taxes.
File informative returns for transactions carried out with residents abroad, such as payments of dividends, interest, royalties, services, among others.
Withhold and pay to the SAT the taxes owed by individuals or legal entities residing in Mexico or abroad, for payments made to them for salaries, fees, rent, dividends, interest, royalties, services, among others.

To learn more about the specific obligations you must comply with, contact us for personalized advice.

When hiring staff for a nearshoring business in Mexico, the following aspects must be considered:

Compliance with Mexican labor laws, which establish rights and obligations for workers and employers, such as minimum wage, social benefits, work hours, vacation time, Christmas bonuses, profit sharing, social security, among others.
Payroll management and the payment of taxes and contributions, which may vary depending on the company's tax regime.
Training and development of staff competencies and skills, which are essential to ensuring the quality and productivity of outsourced processes or services.

Adaptation to the Mexican work culture.

*Compliance with the Federal Law on the Protection of Personal Data Held by Private Parties (LFPDPPP), which regulates the processing of personal data collected, used, stored, or transferred by private individuals or legal entities. This law establishes principles, duties, and rights to guarantee respect for privacy, informational self-determination, and the security of personal data.

*Compliance with the Federal Copyright Law (LFDA), which protects literary, artistic, or scientific works that are the product of human creativity, as well as the related rights of artists, performers, producers, publishers, and broadcasting organizations. This law establishes the requirements, modalities, limitations, and sanctions for the exercise of copyright and related rights.

*Compliance with the Industrial Property Law (LPI), which protects inventions, industrial designs, trademarks, commercial signs, trade names, and designations of origin that are the product of industrial or commercial activity. This law establishes the requirements, modalities, limitations, and sanctions for the exercise of industrial property rights.

* The implementation of physical and logical security measures to prevent unauthorized access, use, modification, disclosure, or destruction of personal data and intellectual property. These measures may include the use of passwords, encryption, firewalls, antivirus software, backups, among others.

* The execution of contracts or agreements that establish the conditions, scope, responsibilities, and obligations of the parties involved in the processing of personal data and intellectual property, as well as confidentiality, transfer of rights, licensing, and indemnity clauses, among others.

To establish a business in Mexico, it is recommended to hire legal and tax advisors with the experience, knowledge, and ability to provide a comprehensive and personalized service that meets the needs and objectives of each company. Some of the aspects to consider are:

Specialization in the sector or industry to which the company belongs, as well as in the type of operation or service to be outsourced. This will allow advisors to understand the specifics, challenges, and opportunities presented in each case, as well as the best practices and most appropriate solutions.
Experience in the Mexican market, as well as in the company's home market. This will allow advisors to have a global and local view of the legal and tax aspects that must be complied with, as well as the differences and similarities that exist between the two markets.
Communication and negotiation skills, both in Spanish and in the company's language. This will allow advisors to establish a relationship of trust and understanding with the company, as well as with authorities, suppliers, clients, and other stakeholders involved in the business.

Hiring a specialized firm to launch nearshoring operations in Mexico offers several advantages, including:

Saving time and resources by delegating legal and tax procedures to a team of experts who will handle the procedures, registrations, declarations, audits, consultations, defenses, and other services efficiently and timely.
Compliance with current standards and obligations by relying on the advice and guidance of professionals familiar with the laws and regulations applicable to the business, as well as any changes and updates that occur in the legal and tax fields.
Conflict prevention and resolution by relying on the support of specialists who can anticipate and avoid potential risks, contingencies, or sanctions, as well as represent and defend the company's interests in any claim, lawsuit, or litigation.
Personalized consulting, including the implementation of legal and tax strategies tailored to the company's characteristics and objectives, as well as the opportunities and incentives offered by the Mexican market.

The Business Coordinating Council highlighted the importance of the USMCA as a fundamental instrument for fostering economic growth and competitiveness in the North American region, and providing security for investments directed toward nearshoring.

The main benefit for companies wishing to invest in Mexico is the elimination or reduction of tariffs, quotas, and non-tariff barriers to the exchange of goods and services, which facilitates trade and reduces operating costs.

Several states offer incentives such as exemption from some local taxes and registration discounts.

Beyond knowing the laws and regulations, it is essential to understand Mexican business values ​​and culture.

Cultural Adaptation: Integrity and sincerity are valued values, and leaders are expected to display an autocratic, top-down leadership style, different from that practiced in other business cultures.

Personal Relationships: The importance of family and friends can influence the priorities of Mexican workers. Building strong personal relationships with partners and colleagues is critical to business success.

Negotiation and Flexibility: Business negotiations require cultural sensitivity. Hierarchical structures are important, as are status signals. Conversations often begin with small talk to establish trust. Mexicans tend to be indirect in their responses and value flexibility regarding timing and rules.

There are significant opportunities and favorable trends in Mexico thanks to Nearshoring. Some of these are:

The incorporation of 453 new companies into Mexico's industrial parks is anticipated between 2024 and 2025, with significant interest from Chinese companies.

The reconfiguration of global supply chains, which will motivate the search for closer, more reliable, and more competitive suppliers, especially in the advanced manufacturing, automotive, aerospace, electrical, and electronics sectors, among others.

Digital transformation and innovation, which will foster the development of technological solutions.

At RMR Abogados, we are a firm specializing in tax defense, business consulting, corporate law, and tax and accounting services, with over 20 years of experience in the market. We offer comprehensive and personalized services that cover all the needs and objectives of each company, from planning, incorporation, and operations to business expansion and consolidation.

We have a team of highly qualified and up-to-date professionals fluent in Spanish and English, with extensive knowledge and skills in the legal, tax, accounting, financial, and administrative fields, among others.

We guarantee the satisfaction and trust of our clients by providing friendly, respectful, and transparent treatment, as well as successful, secure, and profitable results.