Main Advantages of Mexico

Low taxes, proximity to the United States and low production and labor costs are just a few of the advantages to expand to Mexico.

No other countries than Mexico has signed more free trade agreements. At least 50 countries in North, Latin America, Europe and Asia allows free flow of goods and services.

1. Mexico's Competitive Advantage

2. Mexico Immex Program

3. Competitive Labor Costs

4. Proximity to the United States

5. 7th worldwide to start a business

6. Low energy costs

7. Mexico's general taxes

8. The manufacturing country

No other countries than Mexico has signed more free trade agreements. With a free flow of goods and services Mexico is very attractive to settle down your production, service or distribution center.

Due to the tense relationship between the United States and China, Mexico will become an even more important trade partner for the United States in the next years.

1. Mexico's Competitive Advantage

Thanks to Mexico’s 50 trade agreements, it is the 8th largest manufacturing economy worldwide and offer low costs in infrastructure, great labor skills and many years of manufacturing experience. This again turns into higher productivity and efficiencies, and ultimately more satisfied customers.

Also, their proximity to the United States is also another main advantage against other countries.

immex program mexico benefits

2. Mexico Immex Program

Mexico attracts thanks to its IMMEX program which is also known as “Maquiladora”, many foreign investment; international companies are allowed to import raw materials and components with a zero free tax – as long as it is processed there and the final good exported to other countries. In addition, also the imported machinery and equipment is tax free.

1. Mexico's Competitive Advantage

Thanks to Mexico’s 50 trade agreements, it is the 8th largest manufacturing economy worldwide and offer low costs in infrastructure, great labor skills and many years of manufacturing experience. This again turns into higher productivity and efficiencies, and ultimately more satisfied customers.

Also, their proximity to the United States is also another main advantage against other countries.

2. Mexico Immex Program

immex program mexico benefits

Mexico attracts thanks to its IMMEX program which is also known as “Maquiladora”, many foreign investment; international companies are allowed to import raw materials and components with a zero free tax – as long as it is processed there and the final good exported to other countries. In addition, also the imported machinery and equipment is tax free.

3. Trade Agreements

Mexico was the first country in Latin America to sign a partnership agreement with the European Union (1997). The “EU-Mexico Economic Partnership agreement” entered into force in 2000 and established a free trade area between the two parties.

Due to these FTAs, Mexico’s market is one of the most competitive and open in the world. They have removed several non-tariff barriers and reduced import duties on exports.

50 trade agreements mexico

3. Trade Agreements

50 trade agreements mexico

Mexico was the first country in Latin America to sign a partnership agreement with the European Union (1997). The “EU-Mexico Economic Partnership agreement” entered into force in 2000 and established a free trade area between the two parties.

Due to these FTAs, Mexico’s market is one of the most competitive and open in the world. They have removed several non-tariff barriers and reduced import duties on exports.

4. Competitive labor costs

In the North American region, the labor cost is up to 10 times lower than in the United States or Canada. Just to see the dimensions in numbers; the minimum wage in Mexico lies around $7 per day, compared to the United States it is around 60 dollars

Even compared with other Latin America countries like Argentina or Brazli, Mexico is cheaper. On average, clients can expect to save as much as over 50% on labor costs when operating in Mexico.

A business in Mexico can be registered within three weeks. To run the company, it will take around 3 months.

4. Competitive labor costs

A business in Mexico can be registered within three weeks. To run the company, it will take around 3 months.

In the North American region, the labor cost is up to 10 times lower than in the United States or Canada. Just to see the dimensions in numbers; the minimum wage in Mexico lies around $7 per day, compared to the United States it is around 60 dollars

Even compared with other Latin America countries like Argentina or Brazli, Mexico is cheaper. On average, clients can expect to save as much as over 50% on labor costs when operating in Mexico.

As China's supply chain got broken due to the corona virus, many companies are urged to overthink their strategy and diversify their portfolio. Thanks to Mexico's proximity to the United States, the excellent educated workforce with a competitive price, it is the perfect spot to settle down your production or service center.

As China's supply chain got broken due to the corona virus, many companies are urged to overthink their strategy and diversify their portfolio. Thanks to Mexico's proximity to the United States, the excellent educated workforce with a competitive price, it is the perfect spot to settle down your production or service center.

5. Proximity to the United States

United States with a population of over 320 million, Mexico has access to one of the largest markets in the world; therefore, they have a tremendous offshoring advantage as it takes only few hours to transport the goods by trucks.

start a business in mexico

6. 7th worldwide to start a business

A Mexican LLC (SRL) can be registered within three weeks with 2 shareholders and 1 director, who can be of any nationality. In addition they do not be required to travel to complete the founding process.

There I also no minimum paid-up capital required when incorporating a company and the firm can hold the capital in US dollars or Mexican Peso. More information can be found here.

5. Proximity to the United States

United States with a population of over 320 million, Mexico has access to one of the largest markets in the world; therefore, they have a tremendous offshoring advantage as it takes only few hours to transport the goods by trucks.

6. 7th worldwide to start a business

start a business in mexico

A Mexican LLC (SRL) can be registered within three weeks with 2 shareholders and 1 director, who can be of any nationality. In addition they do not be required to travel to complete the founding process.

There I also no minimum paid-up capital required when incorporating a company and the firm can hold the capital in US dollars or Mexican Peso. More information can be found here.

With over 64 international airports as well as large and modern infrastructure, Mexico ensures a cost efficient supply chain to all places over the world.

With over 64 international airports as well as large and modern infrastructure, Mexico ensures a cost efficient supply chain to all places over the world.

Low energy costs in Mexico

7. Low energy costs

Being close to the United States means that natural gas prices are tied down to the ones in the United States. In addition, the average gas prices are up to 60% lower and electricity costs 4% lower when compared to the prices in China.

A tax advantage in the manufacturing industry

8. Mexico's general taxes

Mexican resident taxpayers are subject to corporate income tax from worldwide sources and foreign residents are taxed on the income attributed to their permanent establishments in Mexico. Corporate income tax (CIT) is taxed at 30 percent in Mexico.

Foreign businesses established in Mexico are subject to the same tax system as national enterprises, though they do benefit from certain exemptions. Although various states have started to offer competing tax incentives to attract foreign investors, the majority of taxes in Mexico are levied at the federal level.

Indirect taxes such as value-added tax (VAT) are 16 percent. A zero percent VAT is also applicable to some items, such as magazines, newspapers, the export of certain goods and services, medicines, and agricultural goods.

Personal income tax (PIT) varies depending on earnings, deductions, and other factors and ranges from 1.92 percent to 35 percent. Non-residents pay between 15 percent to 30 percent. Residential individuals are subject to income tax on their worldwide income, while non-residents are taxed only on their Mexican sourced income.

7. Low energy costs

Low energy costs in Mexico

Being close to the United States means that natural gas prices are tied down to the ones in the United States. In addition, the average gas prices are up to 60% lower and electricity costs 4% lower when compared to the prices in China.

8. Mexico's general taxes

A tax advantage in the manufacturing industry

Mexican resident taxpayers are subject to corporate income tax from worldwide sources and foreign residents are taxed on the income attributed to their permanent establishments in Mexico. Corporate income tax (CIT) is taxed at 30 percent in Mexico.

Foreign businesses established in Mexico are subject to the same tax system as national enterprises, though they do benefit from certain exemptions. Although various states have started to offer competing tax incentives to attract foreign investors, the majority of taxes in Mexico are levied at the federal level.

Indirect taxes such as value-added tax (VAT) are 16 percent. A zero percent VAT is also applicable to some items, such as magazines, newspapers, the export of certain goods and services, medicines, and agricultural goods.

Personal income tax (PIT) varies depending on earnings, deductions, and other factors and ranges from 1.92 percent to 35 percent. Non-residents pay between 15 percent to 30 percent. Residential individuals are subject to income tax on their worldwide income, while non-residents are taxed only on their Mexican sourced income.

Some Interesting Numbers Of Mexico

low salary in mexico

$4 / day

Minimum Wage per Day

amount of holidays workers

6

Holidays after 1 year working

48

Working hours per week

rental prices for warehouses

$4.45 / m2

Rental costs in average

salaries in mexico

$770 / month

Average Wage

graduated engineers in mexico

11,000

Engineers graduate from a university each year

commercial contracts

50+

High propotion of qualified, english speaking employees

11 million camions pass border

11'000'000

camions pass each day the border between Mexico and USA

9. The manufacturing country

China has been known as the destiny of outsourcing or expansion country worldwide; it has an efficient operation, low cost labor and a large market potential.

In the last decades though, Mexico has become a manufacturing base too thanks to its open borders and trade policies. The nations’ proximity to the United States provides companies with a large market for exporting its products and services, especially in manufacturing.

Apart from that, Mexico also developed themselves as well to a competitive manufacturing partner because of the international agreements, as well as educated workforce and low costs.

In addition, due to recent events like the pandemic, the broken supply chain (sea freight blocked the river), or the tense relation between the United States and China, many companies have to overthink their strategy and diversify their portfolio.

9. The manufacturing country

China has been known as the destiny of outsourcing or expansion country worldwide; it has an efficient operation, low cost labor and a large market potential.

In the last decades though, Mexico has become a manufacturing base too thanks to its open borders and trade policies. The nations’ proximity to the United States provides companies with a large market for exporting its products and services, especially in manufacturing.

Apart from that, Mexico also developed themselves as well to a competitive manufacturing partner because of the international agreements, as well as educated workforce and low costs.

In addition, due to recent events like the pandemic, the broken supply chain (sea freight blocked the river), or the tense relation between the United States and China, many companies have to overthink their strategy and diversify their portfolio.

Manufacturing in the country continues to grow and Mexico remains the 12th largest exporter in the world. Major manufacturing industries in Mexico include automobiles, aviation, apparel and textile, consumer products, and medical devices with raw materials coming from the US, China, Japan, Germany, and South Korea among others.

Manufacturing in the country continues to grow and Mexico remains the 12th largest exporter in the world. Major manufacturing industries in Mexico include automobiles, aviation, apparel and textile, consumer products, and medical devices with raw materials coming from the US, China, Japan, Germany, and South Korea among others.

cars manufacturing in mexico

Mexico is attracting large and multinational manufacturers from all industries. The country has become the fourth largest automobile producer in the world. While Mexico still relies on the US and China for inputs, its supply chain is well established. Given the high concentration of manufacturing operations in several industries, businesses can make use of established infrastructure and supply chain networks.

cars manufacturing in mexico

Mexico is attracting large and multinational manufacturers from all industries. The country has become the fourth largest automobile producer in the world. While Mexico still relies on the US and China for inputs, its supply chain is well established. Given the high concentration of manufacturing operations in several industries, businesses can make use of established infrastructure and supply chain networks.