Doing business in Mexico as a foreign owner is more accessible than most people expect: the Foreign Investment Law allows up to 100 percent foreign ownership in the great majority of sectors, and a U.S. or other foreign investor can form and control a Mexican company without a local partner.1Ministry of Economy. Foreign Investment Law The tradeoff for that access, plus duty-free reach across North America under the USMCA,2United States Trade Representative. Agreement Between the United States of America, the United Mexican States, and Canada Text is a dense compliance load covering entity formation, labor law, electronic invoicing, anti-money-laundering rules, and customs registration. What follows walks through the decisions and filings in the order you’ll actually face them.
How Much of a Mexican Company a Foreigner Can Own
The default rule under the Foreign Investment Law is permissive. Foreign investors can participate in any proportion in Mexican companies, buy assets, open establishments, and start new lines of business unless a specific restriction applies.3Government of Mexico. Regime of Foreign Direct Investment in Mexico
The restrictions cluster in three groups. A short list of strategic activities is reserved to the Mexican state, including oil and gas exploration, nuclear energy, postal services, minting of currency, and control of ports, airports, and heliports. A second tier is reserved for Mexican nationals or companies with a foreigners-exclusion clause, covering domestic passenger land transportation, development banking, and certain professional services. A third group allows foreign participation only up to a set percentage or requires prior approval from the National Foreign Investment Commission. Everything outside those categories is open, and for most commercial businesses no special authorization is needed to hold 100 percent of a Mexican entity.1Ministry of Economy. Foreign Investment Law
Which Entity to Form
The General Law of Commercial Companies recognizes several entity types, but two carry almost all the foreign-owned business: the Sociedad Anónima (S.A.) and the Sociedad de Responsabilidad Limitada (S. de R.L.).4Government of Mexico. Corporations A third option, the Simplified Stock Company (S.A.S.), exists mostly for very small domestic operators.
Sociedad Anónima (S.A.)
The S.A. requires at least two shareholders and issues freely transferable shares, which makes it the usual choice for larger ventures or companies expecting outside investors. The minimum capital is 50,000 pesos. Most foreign-owned S.A. entities operate as an “S.A. de C.V.,” where the “C.V.” for capital variable lets the company raise or lower its capital without amending its bylaws each time. Management sits with either a board of directors or a sole administrator.
Sociedad de Responsabilidad Limitada (S. de R.L.)
The S. de R.L. suits closely held businesses, joint ventures, and family operations. It also requires at least two partners but caps membership at fifty. Equity interests cannot be freely transferred; existing members must consent to any new one, which keeps ownership tightly controlled. Minimum capital is only 3,000 pesos. U.S. parents forming Mexican subsidiaries often pick this structure because its governance flexibility maps more cleanly onto an American LLC.
Simplified Stock Company (S.A.S.)
Introduced in 2016 and formed online by a single person, the S.A.S. carries a hard annual income cap of five million pesos; above that, the company must convert. Shareholders cannot be controlling shareholders of another Mexican company, and other companies cannot hold shares. Those constraints rule out most foreign investment scenarios.
In all three, participant liability is limited to the amount contributed to capital. That protection is the main reason foreign investors form an entity rather than operating as a branch or sole proprietor.
Incorporating and Getting Registered
Formation runs in a set sequence, and skipping ahead usually means redoing steps.
Start by reserving a corporate name through the Secretariat of Economy’s online portal, submitting up to five options for a duplication check against companies and trademarks.5Secretariat of Economy. Formalities Before the Secretariat of Economy The authorization has a limited validity window, so it pays to have the remaining paperwork ready before filing the reservation.
Next comes drafting the bylaws, which define the business purpose, registered address, duration, capital structure, and governance rules. Each shareholder must supply identification, usually a valid passport, proof of home address, and a foreign tax ID number, and the shareholder registry records each participant’s full legal name, nationality, and tax ID. Shareholders who cannot travel to Mexico for signing must grant a power of attorney to a local representative. Because Mexico is a party to the Hague Convention, that power of attorney needs an apostille from the issuing country to be recognized here.6Secretaría de Relaciones Exteriores. Apostille Getting the apostille done early avoids a common bottleneck.
The shareholders or their attorneys-in-fact then appear before a Mexican notary public to execute the constitutive deed. The notary carries more authority than an American notary, verifying identities, confirming legal compliance of the bylaws, and formalizing the document. After that, three registrations follow:
- Public Registry of Commerce: filing the notarized deed here gives the entity legal standing against third parties.
- National Registry of Foreign Investments: any company with foreign shareholders must register within 40 business days of incorporation, disclosing the source of capital and the intended activities.7Government of Mexico. Inscription at the National Registry of Foreign Investments
- Federal Taxpayer Registry (RFC): the legal representative must appear in person at the Tax Administration Service (SAT) with the notarized deed and personal ID. SAT collects biometrics, including fingerprints and photographs, during that appointment.8Government of Mexico. Inscription at the Federal Taxpayer Registry
Without an RFC, the company cannot open a bank account, issue invoices, or trade. The bank account itself requires the constitutive deed, shareholder documentation, the RFC, and usually a legal representative with Mexican residency or citizenship. Bank experience with foreign-owned entities varies, so ask about specific requirements before choosing where to open.
Getting Work Authorization for Yourself
A U.S. citizen can enter Mexico for meetings, site visits, and market research on a tourist entry (FMM) allowing stays of up to 180 days, but no paid activity. Once you’re managing the Mexican company, signing contracts, or drawing a salary, you need a temporary resident visa with a work permit.
The application starts in Mexico. Your Mexican company, registered with the National Migration Institute (INM), files the petition; individuals cannot apply for a work permit on their own.9Secretaría de Relaciones Exteriores. Temporary Resident Visa With Work Permit After INM approval, you take the approval letter to a Mexican consulate outside the country to get the visa stamped in your passport, then enter Mexico and exchange it for a temporary resident card at the local INM office.
The card is valid for up to four years and permits paid work in Mexico. Family members who relocate need their own visas as dependents, with proof of relationship and of economic solvency; if the company is covering living costs, it must show sufficient average monthly bank balances over the prior twelve months. Drawing pay before authorization is in place creates immigration violations that can lead to fines, deportation, and problems with future visa applications.
Employment Costs and Mandatory Benefits
The Federal Labor Law applies to every worker on Mexican soil regardless of the employer’s nationality, and it is heavily protective of employees. Every worker must have a written individual labor contract stating salary, hours, and duties. If you don’t put terms in writing, the law presumes the employee’s version of the terms is true, including salary, schedule, and benefits.
Several benefits are non-negotiable:
- Vacation: after the 2023 reform, workers earn a minimum of 12 paid days in year one, rising by two days each year to 20, then more slowly after that.
- Vacation premium: at least 25 percent of salary on top of pay for the vacation days taken.
- Christmas bonus (Aguinaldo): at least 15 days of base pay, due by December 20.
- Profit sharing (PTU): 10 percent of annual taxable income distributed to employees, with each individual payout capped at either three months of salary or the average PTU received over the previous three years, whichever favors the employee.
Employees must be enrolled with the Mexican Social Security Institute (IMSS) from day one, covering healthcare, disability, maternity, and pension contributions. Employer IMSS contributions typically run 20 to 25 percent of the integrated daily salary, depending on the industry’s risk classification. On top of that, employers contribute 5 percent to INFONAVIT, the national housing fund, and 2 percent to the SAR retirement savings account. Total payroll cost routinely lands 30 percent or more above base salary, and all contributions run on the integrated daily wage, which includes base pay plus recurring items like commissions and regular bonuses.
Taxes, Electronic Invoicing, and Transfer Pricing
Corporate income tax is 30 percent of annual taxable profits. Companies also collect and remit a 16 percent value added tax (IVA) on most goods and services, reduced to 8 percent in the northern border zone on qualifying transactions.
Every business transaction must be documented through a digital tax receipt known as a CFDI (Comprobante Fiscal Digital por Internet), submitted through an authorized certification provider and transmitted to SAT in real time. Recent reforms added an explicit requirement that a CFDI reflect an actual delivery of goods or services; invoices that fail this test are presumed false. Without valid CFDIs, expenses are not deductible and revenue cannot be properly documented.
Provisional income tax payments are due by the 17th of each month for the prior month, and the annual corporate return is due by March 31 of the following year. Late or missed filings trigger fines under the Código Fiscal de la Federación that run from roughly 1,400 to over 17,000 pesos per omitted return and are adjusted annually. SAT can also freeze a company’s bank accounts where it detects persistent non-compliance or suspects fictitious operations.
Books must follow Mexico’s Financial Reporting Standards (NIF), issued by CINIF. NIF has converged significantly with IFRS but is not identical, so a company reporting to a foreign parent under IFRS still needs a NIF-compliant set for Mexican statutory purposes.
Any Mexican subsidiary of a foreign parent will have related-party transactions, and those trigger transfer pricing documentation. Mexico follows the OECD framework, with a master file, local file, and country-by-country report required for taxpayers above roughly 1,063 million pesos in revenue. The local file is due in Spanish by May 15 of the following year; the master file and country-by-country report are due by December 31. Smaller companies with business income below 13 million pesos, or below 3 million from professional services, are generally exempt, with narrow exceptions for transactions involving low-tax jurisdictions. Errors here are the most common source of cross-border tax disputes and can lead to adjustments, penalties, and double taxation.
Anti-Money-Laundering Compliance
Mexico’s Federal Law for the Prevention and Identification of Transactions with Illicit Resources (LFPIORPI) imposes duties on businesses engaged in “vulnerable activities,” a category that reaches well beyond financial services to include real estate, customs brokerage, high-value sales, and virtual asset exchange.
Businesses in scope must register in a government database, identify and directly know their clients and users, determine the ultimate beneficial owner behind each transaction, keep records (including correspondence) for ten years, and file notices with the Ministry of Finance for transactions over specified thresholds. Recent amendments require a notice within 24 hours whenever a transaction raises money-laundering suspicion.
All Mexican companies, whether or not they perform vulnerable activities, must also identify their controlling beneficial owners and register that information with the Secretariat of Economy. Notaries are required to file notices whenever they formalize an incorporation, a capital change, or a share transfer, regardless of amount. Penalties for LFPIORPI non-compliance run from administrative fines to criminal prosecution, and the law applies to foreign-owned companies the same way it applies to domestic ones.
If You Want to Own Real Estate in the Restricted Zone
Mexico’s constitution bars direct foreign ownership of land within 100 kilometers of an international border and 50 kilometers of any coastline. That “restricted zone” covers most of the country’s prime commercial and tourist real estate.10Consulado de México en el Reino Unido. Acquisition of Properties in Mexico
Foreign investors use a bank trust called a fideicomiso to work within the rule. A Mexican bank holds legal title as trustee, and the foreign buyer, as beneficiary, has full rights to use, improve, rent, sell, or bequeath the property. The trust runs in 50-year terms and can be renewed indefinitely, functioning as permanent ownership in practice. The bank charges an annual administration fee, typically a few hundred dollars.
For non-residential purposes, a Mexican company with foreign shareholders can acquire restricted-zone property directly by including the Calvo Clause in its bylaws, pledging not to invoke foreign government protection over the property, and notifying the Secretariat of Foreign Affairs within 60 business days of purchase.1Ministry of Economy. Foreign Investment Law Residential property in the restricted zone still requires the fideicomiso regardless of entity structure. Outside the restricted zone, foreigners can own directly after filing a statement with the Secretariat of Foreign Affairs accepting the same constitutional terms.
Importing Goods Into Mexico
Any company planning to import must first register in the Padrón de Importadores maintained by SAT; customs will not release shipments without it. Enrollment requires an active RFC with no outstanding tax obligations, a valid advanced electronic signature (e.firma), a verifiable fiscal address that SAT may inspect in person, a positive tax compliance opinion, and no listing on the government’s fictitious-operations taxpayer list. The general registry generally processes within 10 business days.
Certain sensitive product categories, including textiles, footwear, chemicals, steel, hydrocarbons, electronics, and automotive parts, require separate enrollment in a Specific Sector Importer Registry with added requirements that can include minimum capital, specialized personnel, and specific infrastructure. Processing runs up to 20 business days.
Goods that qualify under the USMCA receive duty-free treatment, but only with a valid certificate of origin carrying all nine required data elements. Rules of origin generally require a minimum percentage of value from within North America, or a specified change in tariff classification for non-originating inputs during manufacturing. Supporting documentation must be kept for five years, since customs can audit origin claims at any time and incomplete records mean denied claims, duty repayment with interest, and penalties. For companies assembling goods in Mexico with Chinese components, USMCA qualification is often the only route to reduced duty exposure on the U.S. side.