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Taxes in Mexico: An Introduction
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Word to the Wise This guide to taxes in Mexico has been prepared to assist those interested in doing business in Mexico, or those whose professional activity brings them to this country, and for whom knowledge about taxes and taxation in Mexico would prove to be very beneficial. It does not pretend to fully cover the subjects it treats, but is intended to answer some of the important, broad questions that often arise. In order to deal with specific problems, it is necessary to refer to the laws and regulations of the country and to obtain appropriate accounting and legal advice.
Introduction The Mexican tax system has been subject to comprehensive tax reform legislation. This legislation, enacted principally in 1986, 1988 and 1994, has dramatically changed the tax laws in an attempt to make the system competitive with the tax systems of Mexico's most important trading and investment partners as well as with the systems of countries competing with Mexico for foreign investment. Principal Taxes in Mexico The principal taxes payable by individuals and by corporations operating in Mexico and, in certain cases, by foreign companies, are those levied by the federal government. State and municipal governments have more limited taxing powers and until now have never levied general corporate income taxes; some states tax employers on salaries and professional fees paid by them. The principal taxes are as follows: Federal Taxes:Taxes on income, including a minimum tax based on assets held; Value-added tax; Import and export taxes; and Payroll taxes, social security premiums, mandatory retirement savings system, and contributions to the National Workers' Housing Fund.
There are some special federal taxes on a few specific products and services, such as alcoholic beverages, cigarettes, gasoline, telephone service, automobiles, etc. Local taxes:On real property; On salaries; and On acquisitions of real property.
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Business in Mexico: Types of Companies in Mexico
The Ley General de Sociedades Mercantiles (Corporate Law) recognizes as business entities the general partnership (sociedad de nombre colectivo), the limited liability partnership (sociedad en comandita simple), the limited liability company (sociedad de responsabilidad limitada), the stock corporation (sociedad anónima), the limited liability stock partnership (sociedad en comandita por acciones), and the cooperative (sociedad cooperativa). The LGSM regulates the operations of the above-mentioned companies, except for the cooperative which, due to its nature, is governed by a special law.
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| | Invest in Mexico: Neutral Investment
Neutral investment is a mechanism through which foreign investment can participate in certain reserved or specially regulated activities.
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The LIE defines neutral investment as investment in Mexican companies or in authorized trusts that will not be taken into consideration for determining the percentage of foreign investment in the capital stock of Mexican companies.
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| | Economic Activities in Mexico Subject to Restriction
As a general rule, there are no legal restrictions on foreign individuals and entities engaging in economic activities in Mexico, either directly or as partners or shareholders in Mexican companies.
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However, the LIE (Ley de Inversión Extranjera or Foreign Investment Law) specifies certain activities in which foreign investment is not allowed and others in which it is limited.
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Here we will discuss the activities that are reserved or subject to a specific regulation. We will also refer to the concept, regulation, and scope of neutral investment, a mechanism through which foreign investment can participate in certain reserved or specially regulated activities.
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| Canadian Chamber of Commerce in Mexico
The Canadian Chamber of Commerce in Mexico (CCCM) is a non-profit organization founded in 1982 by a prominent group of Canadian and Mexican companies. The mission of the CCCM is to promote and strengthen the commercial, financial and investment relationships between Canada and Mexico. The primary aim of the CCCM is to serve as a home for Canadian businesspersons in Mexico.
| | British Chamber of Commerce in Mexico
The BritCham represents not only British business interests but other European chambers of commerce as well, and is the perfect connection when it comes to facilitating business in Mexico. Their extensive network is also the best way to get into contact with other British and European nationals living, working and doing business in the country. Below we've presented an introduction and information on how to get in touch with the BritCham.
| | Business Practices in Mexico: The Basics
Are you conducting business in Mexico? Are you aware of the most significant cultural differences? Refer to this page for a quick education in Mexican dress code, negotiations and business lunches.
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