Business entry into Mexico
A. BUSINESS VISITOR:
A business visitor is a person who is involved in any of the following:
- research and design - market research
- business transactions for manufacturing and production (management & personnel)
- sales and purchasing for an enterprise located in the U.S. or Canada (other than direct sales)
- distribution and after sales services (general services)
A professional is a person working in one of the professional business such as: Accountant, Engineer, Medical, Teacher etc. (a chart of eligible professions is available through the Mexican Embassy or Consulate in your area). Other professions are added to the list from time to time. For most professions, the minimum education requirement is a bachelor's degree.
C. INTRA-COMPANY TRANSFERS:
An intra-company transferee is a person, employed by a business (corporation, firm, an affiliate or subsidiary) who is a manager, executive or has specialized knowledge and skills. The transferee must have worked as an employee of that company for at least one year within the last three years, prior to making the application for admission.
D. TRADER OR INVESTOR:
A trader is a person who carries on substantial trade in goods or services. The trader must be acting in a supervisory or executive capacity or have essential skills. An investor is a person who is entering Mexico to establish, develop, administer or provide advice or key technical services to the operations of an enterprise in which that business person has invested, or is actively in the process of investing.
E. HOW DO I APPLY TO ENTER MEXICO UNDER NAFTA?
You may enter for up to 30 days with an "FMN" permit. This is the simplest permit to obtain. It can be obtained at the Mexican border by providing proof of citizenship (passport or birth certificate).
A "FM3" permit is required for business entry to Mexico for up to one year. You must apply for it at the Mexican consulate in your area. You must present:
- a completed application
- a valid passport with two passport photos
- a letter from your employer specifying what your activities will be while in the country and by
- whom you will be remunerated.
- You must pay a permit fee, which will vary depending on the purpose of entry. The "FM3" permit allows for multiple entries for the duration of the permit.
- If you are planning to stay longer than one year, you must apply for a "FM2" permit. It must be formally requested by your employer at the Secretaria de Gobernacion (the Secretariat of the Interior) in Mexico.
You must present:
- a letter from your employer stating your position and salary;
- a certified copy of the employer company's certificate of incorporation, official registration in the national foreign investment register or registration in a Mexican Chamber of Commerce;
- a copy of the most recent corporate tax return or, for companies with less than 100 employees, a
- full list of all personnel working in Mexico, including their nationalities, salaries and positions within the company
F. REMUNERATION FROM A MEXICAN COMPANY
If you will be paid in Mexico by a Mexican firm, the firm will need to apply for a "FM3" or "FM2" work permit for you, depending on the length of your stay. A "FM3" can be renewed upon expiry, while a "FM2" must be renewed annually.
G. LABOR LAW:
Labor law is highly regulated in Mexico. The Mexican Federal Labor Law (FLL) regulates employment standards for all employees in Mexico. Employees must be paid the minimum wage set by the National Wage Commission. The minimum wage differs, depending on which economic region an employee works in. As well, hours worked over 48 hours per week are considered overtime and must be paid for by stipulated overtime pay. Employee dismissal is also governed by the FLL and the amount of severance pay required is legislated. Mandatory employee benefits include:
- profit sharing
- year end bonus
- nine days of paid holidays
- vacation days premiums
- training and maternity leave
- retirement Savings System
- federal Workers Housing Fund (INFONAVIT) contribution
Employers must register with the Mexican Social Security Institute and must make social security contributions, along with an employee contribution withheld from salary. Finally, Mexican law allows any firm of more than 20 employees the right to unionize.
The majority of taxes paid by businesses operating in Mexico are federal taxes, income taxes, value added taxes and payroll taxes. The federal corporate tax rate is currently 34% and is paid on worldwide net income. There is no withholding tax on dividends. Mexico has a Value Added Tax (IVA) on all purchases and services in Mexico of 15%.
I. REGULATION OF BUSINESS ACTIVITIES:
The sectors in which foreigners can do business are regulated by the Foreign Investment Law of Mexico. The Investment Law divides the Mexican economy into "classified" and "unclassified" economic activities. "Unclassified activities" are economic sectors of the Mexican economy which do not prohibit or limit the amount of foreign ownership in individual businesses operating in those sectors. Approximately two-thirds of the Mexican economy is unclassified.
"Classified activities" are sectors of the Mexican economy in which the Investment Law prohibits the amount of foreign ownership permitted in a business operating in those activities. Non-Mexicans who wish to be involved in the classified activities, where permitted, may have to obtain government approval. For further information please contact the Secretariat for Commerce and Industrial Promotion (SECOFI) office in your area or in Mexico.
This article is electronically reproduced
with permission from the
Mexico 2000 Business Directory .
Your Passport to Mexican Business.