If you are interested in starting a business in Mexico, you will need to decide which type of entity best suits your needs. If you have an established brand elsewhere and would be keen to avoid going through full company formation, an attractive option is to register a branch in Mexico.
Because as well as it being quicker to form a branch in Mexico than a separate company, you retain broad control over the entity, while being able to count on the weight of a brand you have built up elsewhere to make a quick impression on the new market.
This North American country with a population of 128 million is the second-largest economy in Latin America, with a gross domestic product (GDP) that hit $1.27 trillion in 2019 (all figures in USD). Mexico is a major producer of oil, computers, garments, and fresh produce, among others, with major ports providing access to both the Pacific and Atlantic Oceans.
The country also benefits from a strategic location, as the gateway between the rest of Latin America and the major economies of the United States and Canada, and businesses based in the country enjoy preferential access to those two markets via the US-Mexico-Canada Agreement (USMCA). Mexico is also a member of regional economic integration the Pacific Alliance, which includes Chile, Colombia, and Peru, and has ambitions to expand beyond the region.
While an estimated 76% of Mexican exports go to the United States, other major destinations for goods include Canada, Germany, China, and Japan.
If you are considering doing business in the country, read on to learn about the advantages on offer if you register a branch in Mexico, as well as the steps involved in doing so. Or go ahead and reach out to us now to discuss your market entry options.
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Main advantages of registering a branch
Some of the advantages of choosing to register a branch in Mexico include:
Processing time: The process to register a branch in Mexico is fairly straightforward and faster than establishing most other entity types, allowing you to enter the market quickly.
Cost Saving: When you register a branch in Mexico it is generally a less costly process than full company formation, while you can also share resources between that branch and different related entities.
Broader control: By establishing an entity that is linked to a company elsewhere, you retain broad control over the new branch in terms of its finances, processes, and day-to-day running.
Brand recognition: Your branch in Mexico will benefit from the brand recognition that your company enjoys in your home market, as well as being able to count on resources you have developed to promote it.
Key considerations when you register a branch
Some aspects of branch formation that are worth keeping in mind when doing business in Mexico include:
Legal liability: It is worth considering that the parent company will be fully responsible for the liabilities of the branch and, as such, its representatives may be held liable for any debts.
Taxes: Although the branch is subject to the supervision and administration of the parent firm, it must comply with tax obligations like any other entity in Mexico. You will need to register for a local tax ID number.
Representation: If you are going to register a branch in Mexico that you intend to control from elsewhere, you will need a good local legal representative to act on your behalf and oversee the process for you.
How to register a branch in Mexico ?
You will have to go through two important steps to register your branch in Mexico:
1. Request authorization from the Mexican Ministry of Economy
This step involves proving that your company is legally incorporated in its country of origin and that its bylaws respect Mexican corporate regulations. As part of the process, your local legal representative will need to present the following documents:
- Bylaws and articles of incorporation duly legalized and officially translated into Spanish
- Power of attorney granted to the legal representative who must reside in Mexico and have a Tax Identification Card (CIF)
- Proof of payment of the legal fee for this procedure
A response from the authority about your request should be forthcoming within around 15 days.
2. Register your branch in Mexico with the National Registry of Foreign Investments (RNIE)
Once the authorization from the Ministry of Economy is obtained, you will have to register your branch with the National Registry of Foreign Investments (RNIE). As part of this process, you will have to present the following documents:
- Power of attorney granted to the legal representative
- Copy of the identification of the representative
- Official form indicating the economic activities you will carry in Mexico
- Local tax identification (RFC)
Processing your registration will generally take around 10 days, during which more documents or information can be requested.
Register a Branch in Mexico with the help of Biz latin hub
At Biz Latin Hub, our multilingual team of company formation experts can help you register a branch in Mexico to take advantage of business opportunities in the country. With our full suite of accounting, recruitment, legal, and tax advisory services, we can be your single point of contact to register and manage any type of legal entity in Mexico, or any of the other 15 countries across Latin America and the Caribbean where we are present.
Contact us now to find out how we can assist your business.
Or learn more about our team of expert authors.