Doing Business

Doing Business in Mexico 2015

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33 Doing Business in Mexico 2015 Liberalization of foreign investment restrictions Over the last three decades, the rules governing foreign investment in Mexico, once somewhat restrictive, have been substantially liberalized. In line with the signing of the free-trade agreement with the United States and Canada and the general opening of the Mexican economy, a new foreign investment law was published in December 1993.Under this legislation, the rules governing foreign investment were further liberalized, especially in the following areas: • Elimination of the requirement to secure prior authorization to exceed 49% ownership in most areas, except those specifically restricted by the Constitution or specific legislation. • Elimination of certain commitments or performance requirements, such as the need to maintain a positive balance of foreign exchange, the requirement to make additional investments in fixed assets or export a certain volume of products. Fast track approval The Foreign Investment Law and its regulations provide expeditious application processing procedures by requiring that an application for authorization by the Foreign Investment Commission must be approved or rejected within 45 business days after it is filed. If no reply is received within this period, the application will be considered as automatically approved. Penalties and foreign investment Violations of the Foreign Investment Law and its regulations are penalized with fines ranging from 30 to 5,000 times the general minimum salary in effect in Mexico City at the time the violation takes place. In cases of violations relating to the use of real estate in the restricted zones, the fine could be up to the amount of the transaction involved. In certain cases the SE is empowered to declare null and void any transaction made in violation of the foreign investment law. In the case of fines, the authorities take into consideration the nature of the violation, the economic capacity of the offender, the time elapsed between the time when the obligation should have been satisfied and the time of compliance or regularization and the total value of the transaction. Exchange controls The Mexican peso is freely convertible into all other currencies, and there are no restrictions on the remittance of profits abroad or the repatriation of capital. Foreign currency liabilities payable in Mexico Obligations specified in foreign currency but payable within Mexico, whether contracted in a foreign country or in Mexico, may be repaid in pesos at the exchange rate published by the bank of Mexico in the Official Federal Gazette on the day preceding the date of payment. Registration of foreign capital There are no requirements for registering direct investment in Mexico when made with foreign currency. Accordingly, no proof of registration or of having brought foreign currency to Mexico is necessary at the time of purchasing foreign currency with pesos for repatriation purposes. 5

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