Doing Business

Doing Business in Mexico 2015

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70 Tax and Legal Services - PwC Mexico Repatriation of funds There is no restriction on remittance of profits or on the repatriation of initial or subsequent investments. The sale, exchange or transfer of shares issued by a Mexican corporation is generally treated as a taxable event, and any resulting gain is considered as from Mexican sources, irrespective of the residence of the selling shareholders or where the transfer takes place. Applicable tax treaties reduce or eliminate the capital gains tax. Tax considerations No Mexican companies are considered as transparent for income tax purposes in Mexico, even if they are classified as partnerships or flow-through entities for foreign purposes. However, certain Mexican trusts are considered transparent for income tax purposes (see Chapter 21). All Mexican resident companies are taxed in the same manner and must use the calendar year for legal and tax purposes. Intercorporate dividends are not taxed twice, although if the recipient corporation has employees, its dividend income would again be subject to mandatory profit sharing. Per recent amendments to the Income Tax Law, as of January 1, 2014, Mexican individuals and residents abroad (whether individuals or legal entities) are taxed with 10% withholding with respect to the dividends distributed in their favour by Mexican business entities. Said Mexican entities are obliged to withhold and pay such tax to the Mexican federal tax authority (Secretaría de Hacienda y Crédito Público). Professional advice Legal and tax advisers should be retained early in the planning stages to secure the necessary government approval and design the most flexible and desirable corporate structure best suited for the particular global group, as well as to ensure a smooth setup and regulatory compliance. Forms of business enterprise The main different forms of organization of business entities in Mexico are regulated by the General Law of Mercantile Companies (Ley General de Sociedades Mercantiles), Securities Market Exchange Law (Ley del Mercado de Valores) the Commercial Code (Código de Comercio) or the Civil Code (Código Civil). Some of these forms are summarized in Table VI below and are discussed in more detail later in this chapter.

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