So many Americans in strategic positions believe that in almost all circumstances, the phrase “80% of the Solution is in 20% of the Problem”. In fact, many Americans might correct this and say that it is more like 90-10. Americans in logistics or more technical and operational positions, may think along those lines but are more likely to appreciate that often, “The Devil is in the Details”.
Without a doubt, whether strategic or operational, challenges in Mexico are defined by “The Devil is in the Details” in 90% of the situations that present themselves. As an attorney and a consultant, I find that at least 50% of my time is spent on simply making things happen for my clients, things that in the US are not issues or taken for granted. You can come up with the best of strategies but the real key is in the implementation, or in sizing up the implementation realities adequately before deciding on a strategy.
As a result, you would think that Mexicans are better at recognizing this problem and addressing it, that is, recognizing the importance of details and therefore sacrificing conciseness for preciseness. However, Mexican tolerance for ambiguity and their decision-making processes tend to be focused, ironically and tradegicly, too often on gut feels and proceeding without defining important details. This happens for two reasons. First, it is the culture and business culture to tolerate ambiguity. Second, Mexicans are accustomed to not having access to good market information (or it simply does not exist) and therefore they have had to learn to make decisions often without it.
This dichotomy is something that frustrates a lot of foreigners who try to do business in Mexico, and is probably one of the major reasons why clients look for legal and accounting services from firms like SDL Consulting that understand that “The Devil is in the Details” and dedicate themselves to ensuring that they don`t overlook the details when helping their clients operate in Mexico.
This spring, the Mexican National Water Commission México (Conagua) presented additional details about it´s 2030 Water Agenda, a program that establishes the water related objectives that they hope and expect to meet during the next 20 years to create a sustainable water strategy and to ensure that future administrations recognize the water sector as a strategic priority. This agenda will have as its pillars: rivers free from trash, universal potable water coverage, 100% treated wastewaters, and adequate protection and long term plans for all populations vulnerable to flooding.
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The negative press about security issues that Mexico has been receiving has more than overshadowed the relatively strong economic growth and activity in 2009 and 2010, so that many companies might feel that Mexico, from a business point of view, should just be avoided for now and perhaps revisited in the second half of 2011 or perhaps even 2012. As a result, we feel that it is important if not vital to provide you with some information about just how vibrant the Mexican economy (4.5% growth in 2010) and import dynamic (US exports to Mexico up 32%) has been so far this year – positive growth and dynamic that is supposed to continue and expand further in 2011.
Earlier this year, SDL Consulting posted an article on its blog side about how most economists wrongly wrote off the 2009 Mexican economy. The first paragraph of the above article reads:
“Mexico, without a doubt, took a very hard hit in 2009. Virtually everyone north of the border wrote off Mexico in 2009 and pretty much for the next couple of years. Brazil and most of the rest of Latin America were supposedly already recuperating from the crisis and growing again in the black, even in the last quarter of 2009. Therefore, both Latin America and the BRIC markets (Brazil, Russia, India, and China) were supposed to greatly out pace Mexico in trade during the next few years, and therefore they were supposed to be better markets for US products and services.”
This very negative absolute and relative perspective about the Mexican economy was untrue for 2009 and is further borne out for the first half of 2010 when one analyzes the Mexican economy and Mexican import figures for that period. And, these half year trends should only get better and stronger in the second half of 2010 and 2011. This article, on the 2010 Mexican economic situation thus far, will be an effective update of the analysis of these same 2009 parameters which should help us understand to what extent the Mexican economy has improved since 2008, prior to the arrival of the economic crisis in Mexico, and since 2009 during the worst of the crisis.
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SDL Consulting has translated the two wastewater discharge standards in Mexico: NOM 001 (for discharges into federal bodies of water) and NOM 002 (for discharges into municipal bodies of water). If you would like a copy of the Spanish and/or English versions of these standards, please contact our offices.
On June 15th, the Mexican government announced that it will restrict the ability of companies and individuals to change CASH dollars into Pesos. This effort is in an attempt to try to better control money laundering related to drug trafficking which reportedly represents close to $10 billion US a year. However, it is important to note that this restriction is only on changing cash dollars into pesos and does not affect or limit in any way the transfer of dollars in US bank accounts to Mexican peso accounts in Mexico.
The last time these types of restrictions were imposed, in 1982, it was done by President Lopez Portillo during a desperate, unpopular attempt to stem historic devaluation and financial destabilization with radical financial policies. Since that time, Mexico has moved in a completely different progressive fiscal and monetary direction which has allowed Mexico to go from a country where it was dangerous to maintain funds. This most recent effort should not be characterized as a departure from current policies or a return to the restrictive policies of the early 1980s.
Those people who will be most affected by these new measures, apart from the drug cartels, will be Mexican and foreign individuals receiving funds from abroad for personal reasons. Tourists and Mexicans without bank accounts will be limited to changing a maximum of $1500 US into Pesos each month. Also, this same limit will be imposed on individuals depositing dollars into dollar accounts at Mexican banks. However, how the Mexican government hopes to enforce the restriction on the changing of dollars into Pesos is unclear at best. Said measures will go into effect in a transitional manner during the 90 days following the June 15th announcement.
Tags: Exchange Rate, Taxes
Foreigners doing business in Mexico are often confused about when they need resident or non-resident permits/VISAs to carry out different activities in Mexico. This article will try to address and clarify these issues.
In many cases, non-resident foreigners wishing to carry out commercial activities in Mexico can do so with a simple FMN VISA document, that can be filled out when entering the country and does not have a cost or fee. However, when carrying out commercial activities, non-resident foreigners, need to obtain a non-resident FM3 VISA from their local Mexican consulate, or via Mexican Immigration Offices in Mexico City and in each state.
Foreigners living more than 180 days in Mexico are considered residents in Mexico for tax and immigration purposes. All resident foreigners, employees and their family members, must obtain VISAs to work and reside in Mexico. And, these VISAs can only be requested by these foreigners` Mexican-based employers. For resident foreign business persons, the Regulation of the Mexican General Population Law (Ley General de Población) recognizes three different immigration statuses: non-immigrant, immigrant, and immigrated.
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Tags: FM2 worker, FM3 worker, foreign worker Mexico, immigrant work visa, Mexican Immigration Offices, Mexican work visa
CONAGUA General Director Jose Luis Luege Tamargo announced a stronger commitment by the Mexican federal water commission to develop new and better water usage norms or standards that will allow for an improved balance between human and environmental water needs. He specifically discussed a new norm to establish the minimum flow levels for river basins to ensure their preservation and allow for the recuperation of caudal ecosystems.
Eight other water norms that will be insitituted sometime during 2010 include: (more…)
It’s no small task for manufacturers to locate manufacturers’ representatives in any territory they’re looking to impact. The difficulty of that task is multiplied, however, when considering how to meet that challenge in Mexico.
That’s one of the major points made by MANA associate member Vince Lencioni, LGA Consulting, Mexico City, Mexico. As a matter of fact, the very existence of that challenge is one of the major reasons Lencioni and his company have joined MANA.
According to Lencioni, who also is an attorney, “There is no MANA in Mexico, and I think there needs to be one. We don’t have very sophisticated rep networks in Mexico. Generally, whatever exists has been very informally created. For instance, you’ll have an individual who formerly was an employee of a manufacturer. He’ll leave the employ of that company, taking his knowledge of the industry, and go out on his own to sell similar products or products that his former employer needed but weren´t readily available in the market.”
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Mexican Companies have to comply with a number of the tax obligations established in Mexican tax laws and regulations, based on the fiscal income generated from company commercial activity. The Mexican VAT tax, known as IVA, is applied to all transactions except on basic food products, including the importation of goods and most services. Corporate income tax is declared and paid on a monthly basis with the company paying the higher of two income tax options: ISR (traditional income tax) or IETU (unique, alternative tax). Details on these three applicable corporate taxes are below.
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Incorporation Options in Mexico & the US
While incorporation options in Mexico are somewhat similar to those in the US, there are some important differences. In the US, the most common types of corporations, in order of limited liability status, are:
- C Corporation (taxed as a Corporation)
- LLC (Limited Liability Corporation)
- S Corporation (taxed as a Partnership)
- LLP (Limited Liability Partnership)
- Partnership
In Mexico, the three most common types of incorporation, also in order of their limited liability status, are the following:
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