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Establishing a Business - Chapter 6 - Doing Business in Mexico - 2nd Edition
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Originally from: Doing Business in Mexico - 2nd Edition - Hardcover
Doing Business in Mexico - 2nd Edition - Electronic
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Establishing a Business
I. INTERNATIONAL ASPECTS OF DOING BUSINESS IN
MEXICO
A. Agency and Representation Agreements
The first question most often raised by a prospective investor is whether
one can do business in Mexico through a mere agent or representative, or
whether to do so one must establish a physical presence in Mexico through
a branch or a subsidiary.
Conducting operations through an agent or representative is certainly a
possibility and would not generally trigger Mexican tax consequences for
the foreign principal.
We must note, however, that a true agent has a limited scope of activity.
A foreign principal can typically have a purchasing agent, an agent to locate
prospective purchasers, a sales representative to promote the sale of
products and send purchase orders to the principal, a buy-sell distributor, or
perhaps an agent to render services on the principal’s behalf. But a foreign
company would not usually act through an agent if it desired to engage, for
instance, in manufacturing.
Certain activities of an agent can create a permanent establishment in
Mexico for the principal. Namely, a permanent establishment will exist
when the agent is vested with, and exercises, the authority to contract or to
possess and deliver a stock of goods on behalf of the principal. Similarly, a
permanent establishment will exist whenever the agent does not have an
independent status. Mexican tax law provides that an agent is not
independent when he assumes risks on behalf of his principal, performs acts
subject to detailed instructions and the comprehensive control of his
principal, performs activities which economically belong to the principal, or
receives compensation regardless of the outcome of his activities.
Luis Carbajo-Martínez, Admitted to Bar: 1993, Mexico. Education:
Universidad de Guanajuato (J.D.); Harvard University (LL.M.).
Languages: Spanish and English. Practice Areas: General Tax Planning,
Transfer Pricing, VAT/Indirect Tax, Tax Controversy and Litigation, State
and Local Tax.
Graciela M. Diedrich, Admitted to Bar: 1981, Mexico. Education: Escuela
Libre de Derecho (J.D.); Arizona State University (LL.M.). Languages:
Spanish and English. Practice Areas: General Tax Planning, VAT/Indirect
Tax, State and Local Tax
Jaime González-Bendiksen, Admitted to Bar: 1970, Mexico; 1983,
Colombia. Education: National Autonomous University of Mexico (J.D.);
New York University School of Law (LL.M). Languages: Spanish, English
and Italian. Practice Areas: Tax Planning, Global Tax Minimization, Tax
Advice for M & A, VAT/Indirect Tax, Tax Controversy and Litigation
Max Salazar-Quintana, Admitted to Bar: 1992, Mexico. Education:
Universidad Autónoma de Chihuahua (J.D.). University of Michigan Law
School (LL.M). Languages: Spanish and English. Practice Areas:
Mexican General Corporate, Mergers & Acquisitions, Commercial Law.
David Santoyo-Amador, Admitted to Bar: 1999, Mexico. Education:
Universidad de Las Americas - Puebla (J.D.); Harvard Law School (LL.M.).
Languages: Spanish, English, French and Italian. Practice Areas: General
Tax Planning, Transfer Pricing, VAT/Indirect Tax, E-Commerce Tax,
Global Tax Minimization.
Revised and Updated by:
Luis Carbajo-Martínez, Admitted to Bar: 1993, Mexico. Education:
Universidad de Guanajuato (J.D.); Harvard University (LL.M.).
Languages: Spanish and English. Practice Areas: General Tax Planning,
Transfer Pricing, VAT/Indirect Tax, Tax Controversy and Litigation, State
and Local Tax.
David Santoyo-Amador, Admitted to Bar: 1999, Mexico. Education:
Universidad de Las Americas - Puebla (J.D.); Harvard Law School (LL.M.).
Languages: Spanish, English, French and Italian. Practice Areas: General
Tax Planning, Transfer Pricing, VAT/Indirect Tax, E-Commerce Tax,
Global Tax Minimization.
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