Foreign Investment

The Foreign Investment Law: open, with a short list of exceptions

The general rule of the Ley de Inversión Extranjera is that foreign capital may hold one hundred percent of a Mexican company. The exceptions are a closed list: a handful of activities reserved to the State, a handful reserved to Mexican nationals, and a set of activities where foreign participation is capped at a percentage unless the National Foreign Investment Commission authorizes more. Acquisitions above a monetary threshold that the authority updates periodically also require the Commission’s approval. Manufacturing, logistics, most services and power generation are not on any of those lists.

Two constitutional rules travel with every foreign-owned company. Its bylaws must contain the clause by which foreign shareholders agree to be treated as Mexican nationals with respect to their shares and not to invoke the protection of their governments. And in the restricted zone, one hundred kilometers from the borders and fifty from the coasts, a Mexican company with foreign shareholders may acquire non-residential property for its operations by giving notice to the Ministry of Foreign Affairs, while residential property in that zone requires a trust.

We check the sector, the vehicle and the location against those lists before the entity is incorporated, so that the structure does not have to be undone at the first acquisition.

RNIE: the registration and the reports nobody remembers

Every company with foreign capital must register with the National Registry of Foreign Investment at the Ministry of Economy within the statutory period after incorporation or after foreign capital enters. Registration is the visible obligation. The recurring ones are quarterly notices when specified movements in the company’s accounts exceed the thresholds the authority publishes, and an annual economic report for companies above the applicable size. Changes in corporate data, shareholders and share capital have to be reported too.

None of these filings is difficult. What the authority fines is the gap: the report that nobody filed because the accounting firm assumed the law firm was filing it. We run RNIE compliance as a recurring service on the same calendar as the company’s corporate and tax obligations.

IMMEX, VAT certification and the customs ecosystem

For an industrial operator the heart of the foreign-investment regime is not the Ley de Inversión Extranjera but the IMMEX decree of 2006 and the customs system around it. IMMEX allows a company established in Mexico to import raw materials, components and machinery temporarily, deferring the general import duty while the goods remain in the authorized process, on the condition of exporting. The program requires facilities where the process takes place, a minimum level of export sales, an automated inventory control system (the well-known Annex 24) and a clean standing before the tax authority.

Since the 2014 tax reform temporary imports are subject to VAT, which is neutralized only by obtaining and keeping the VAT and excise-tax certification. IMMEX combines with sector promotion programs (PROSEC) for goods that do pay duty, and with the rules of origin of the USMCA for goods that cross into North America. Mexico has also raised tariffs on goods from countries with which it has no trade agreement, which changes the sourcing arithmetic of plants that import inputs from Asia.

Most IMMEX problems are inventory problems: Annex 24 discrepancies, temporary imports that overstayed their period, transfers between plants that were not documented. Losing the VAT certification is expensive and program cancellation can trigger duties and penalties on everything imported under it. We design the program with the client’s customs broker and accounting team from the start, and we audit it before the authority does.

Merger control and sector approvals

An acquisition or joint venture in Mexico may require a pre-closing notification to the federal competition authority when the transaction exceeds the thresholds of the competition law, regardless of the sector. Mexico reorganized its competition authority in 2025, so the procedural route of a filing today is not the one described in older transaction memoranda; we confirm it at the moment of each deal. Sectors with their own regulator, such as energy, telecommunications and financial services, add their own authorizations and their own timelines.

The sequencing question is the one that matters: which approval conditions signing, which conditions closing, and how the purchase agreement allocates the risk that one of them arrives late. We build that map before the letter of intent is signed.

Structuring the entry: vehicle, capital and the beneficial-controller file

The choice between a sociedad anónima and a sociedad de responsabilidad limitada is usually driven by the parent’s tax classification abroad, not by Mexican corporate law. How the money comes in matters more than the vehicle: equity, intercompany debt or a mix, each with different consequences for withholding, thin-capitalization limits and the day dividends leave the country. Transfer pricing documentation and the applicable tax treaty define what it costs to move interest, royalties and dividends across the border.

Since 2022 every Mexican entity must maintain a beneficial-controller file identifying the individuals who ultimately own or control it, available to the tax authority on demand, with fines per omission that are high enough to notice. For a subsidiary of a listed or widely held group this file requires judgment about where the chain of control ends. We prepare it at incorporation, together with the RNIE registration and the banking know-your-customer file, because all three ask the same questions and should give the same answers.

Frequently asked questions

Can a foreign company own one hundred percent of a Mexican subsidiary?

In almost every sector, yes. The Foreign Investment Law only restricts a closed list of activities reserved to the State or to Mexican nationals, and a set of activities with percentage caps. Manufacturing, logistics, most services and power generation are fully open. The company still has to register with the National Registry of Foreign Investment and include the constitutional clause on foreign shareholders in its bylaws.

When is approval of the National Foreign Investment Commission required?

In two situations: when foreign capital wants to exceed forty-nine percent in an activity subject to that cap, and when foreigners acquire an existing Mexican company whose total assets exceed the monetary threshold the Commission updates periodically. Outside those cases no approval is needed, only registration and reporting.

Can our Mexican subsidiary own land near the border or the coast?

For non-residential use, yes. A Mexican company with foreign shareholders may acquire property in the restricted zone for industrial, commercial or other non-residential purposes by giving notice to the Ministry of Foreign Affairs. Residential property in that zone requires a bank trust. The distinction is about the use of the property, not about who the shareholders are.

How long does it take to incorporate and be able to operate?

Incorporating the entity, from name authorization to the notarial deed and the tax registration, is measured in weeks when the shareholders’ documents are ready and properly legalized. Being able to operate takes longer: the bank account, the employer registrations, the import registry and, for manufacturers, the IMMEX authorization each add their own period. We sequence them so that nothing waits on anything it did not have to.

Is a shelter better than obtaining our own IMMEX program?

For a first operation, often. Under the shelter modality a Mexican shelter company holds the program and employs the workforce while the foreign principal keeps ownership of machinery and inventory, which reduces the initial legal footprint and the time to first export. Many groups start under a shelter and migrate to their own IMMEX once volumes and headcount justify the administrative discipline the program demands.