Doing Business

Doing Business in Mexico 2015

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20 Tax and Legal Services - PwC Mexico Investment climate Government attitude toward foreign investment In general, the government's attitude is to encourage foreign investment, particularly when new skills or manufacturing techniques are brought in, except in the few remaining fields reserved to the government or Mexican nationals as noted in Chapter 5. Foreign investors receive the same treatment under Mexican law as domestic investors. Prior foreign investment law imposed performance commitments, including a requirement to maintain a positive balance of payments. These requirements generally no longer apply, and entities established under prior law can request a waiver of the commitments from the Foreign Investment Commission. The foreign investment law in force (Ley de Inversión Extranjera) specifies which activities are reserved or restricted and, in the latter case, the maximum percentage of foreign investment allowed (see Appendix IV). It also specifies those activities that require prior authorization from the Foreign Investment Commission to increase foreign participation above the levels approved. Currently, for example, the automotive and construction industries are not considered to be restricted activities; therefore, 100% foreign investment is permitted in companies engaged in such activities. Any company, regardless of the nationality of its owners, must obtain written permission from the Ministry of Economics in order to use a specific corporate name. On the other hand, companies with foreign investment have the obligation to register with the National Foreign Investments Registry regardless of the foreign investment percentage. The administration has recognized the need for substantial private capital investment to provide additional employment opportunities and to increase industrial production in Mexico for local consumption and for export. In general, foreigners may operate in Mexico in many ways, including through licensing agreements, by exporting goods to Mexico or through local manufacturing. Joint venture contracts can also be used for minority investments in short-term projects. See Chapter 9 for a discussion of corporate vehicles available. Trade policy Mexico has kept a progressive trade policy and has made substantial reductions in import duties and trade barriers. This trend has continued toward more-nearly free trade to facilitate the export of Mexican manufactured products, as evidenced by the signing of free-trade agreements with many countries and by ongoing negotiations to conclude free-trade agreements with other nations. Mexico was a founding member of the Latin American Free Trade Association (LAFTA) and its successor organization, the Latin American Integration Association (LAIA), in accordance with this and the many other trade agreements under which many Mexican- source products can often be shipped to other member countries at reduced import duties. Taxation policy The Mexican tax system has been significantly reformed and, as from 2014, corporations are taxed at the rate of 30% on taxable income, while foreign investors and resident individuals are subject to tax on their dividend income at the rate of 10% (or lower tax treaty rate).

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