Investors can open an e-commerce company in Mexico following the standard registration procedure. In Mexico, the e-commerce industry is expanding, just like in other countries as well, therefore investing it in can provide many business opportunities. In this article, our Mexico company formation advisors explain a few aspects related to opening an e-commerce business in Mexico.
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Setting up a company in Mexico
The most popular type of business vehicle in Mexico is the limited liability company (LLC). To set up such a legal entity, the entrepreneur has to go through a certain incorporation process which consists of several steps, from getting the required authorizations to registering with the appropriate local authorities.
| Quick Facts | |
|---|---|
| How to register an e-commerce company | Investors can open an e-commerce company in Mexico following the same steps applicable to any other business activities (drawing incorporation documents, selecting a legal entity, having a registered address, obtaining a tax number, etc.). |
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Taxation obligations for e-commerce operators |
E-commerce businesses are liable to the payment of taxes stipulates by the Mexican law. |
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Types of taxes charged to e-commerce businesses |
Corporate income tax (30%), tariffs (0% to 50%), VAT (16%), customs processing fee (0.8%). |
| Main strategies to enter the e-commerce market in Mexico | In order to open an e-commerce company in Mexico, investors may opt for: cross-border e-commerce, distributor partnership, direct-to-consumer model. |
| Import due diligence |
Those who want to import products into Mexico must be aware of possible tarrifs, product classification requirements, import restrictions, product certification requirements. |
| Labeling requirements according to the Mexican standards |
An imported product must include the following elements on its label: the name of the product, the importer’s name and address, the quantity, the country of origin, the product model, the instruction for the usage of the product. |
| Legislation applicable to e-commerce industry |
the Federal Law on Consumer Protection, the Mexican Official Standards, the Commercial Code. |
| Are companies operating outside Mexico required to have a Mexican tax number? |
Yes, they need to apply for a Mexican tax number (RFC ID), which is mandatory for selling goods in Mexico. |
| Official standard for e-commerce operators |
The Mexican e-Commerce Standard |
| Can e-commerce operators sell on marketplaces in Mexico? | Yes, those who want to open an e-commerce company in Mexico have the opportunity of selling their products through various marketplaces. |
| Country code top-level domain |
“.mx” (introduced in 1989). |
| How can investors purchase a country code top-level domain in Mexico? |
By having a local company |
| The validity of a domain name purchased in Mexico |
It can vary from 1 to 5 years. Upon expiry, the domain can be renewed. |
| The advantages of e-commerce businesses |
There aren’t any opening hours, clients can purchase products at any given moment of the day and from any location, there are lower operating costs, the company can reach a larger consumer market. |
| Online payment systems |
Although Mexico is a country with an economy based on cash payments, in the last years, the consumer’s interest in using online payment systems has increased. Outside of this, consumers use credit/debit cards (MasterCard, Visa) and use online payment gateways such as PayPal or PayU. |
Also, setting up an e-commerce business in Mexico requires having a website for this type of activity. If you have more questions about e-commerce businesses in Mexico, or for assistance in setting up a company in Mexico, please get in touch with our friendly staff.
During this stage, investors should secure an office space for their business, a step mandatory during the process of company formation in Mexico. The office where the company has its registered address can also be a virtual office. Our team can help investors select the most suitable services for their online businesses (these services can be modified on a regular basis, depending on one’s needs).
Taxation for e-commerce businesses in Mexico
Private persons and legal entities which activate in the e-commerce field can be subject to two main types of taxes in Mexico.
Firstly, they are taxed with the Mexican income tax if they qualify with a residency, permanent establishment or source-of-income obtained here, according to the local tax legislation. Our Mexico company registration agents can provide further details on what the income tax for e-commerce companies in this country is. We can also help you open a company in Mexico.
Secondly, they can also be taxed with an indirect tax through the VAT, which is calculated on where the actual transaction takes place. Since there are specific regulations according to the local legislation in connection to e-commerce, the general income tax in Mexico and VAT legislation apply to e-commerce businesses, as well.
Key aspects for the import of goods into Mexico
Companies that sell goods on the internet to Mexican consumers must adhere to certain standards and they can have specific tax or import obligations, if they import their products.
Prior to engaging in selling products on the Mexican market, it is necessary to select the correct class for the products sold. The classification of the product has a direct effect on the taxes or duties that the company may be required to pay.
Goods may be imposed with tariffs as well and for this, it is necessary to determine the product’s usage, the country of origin, the product’s sheet and many others. Mexico also applies import restrictions, which can vary based on the industry, the merchandise usage and the compliance with the Mexican standards for safety.
Thus, investors who want to open a company in Mexico may need to observe these requirements as well. Our consultants in company formation in Mexico can advise on the current legislation.
E-commerce market trends in Mexico
Apparel and accessories have been leading the categories of online purchases which were reported in Mexico, followed by digital downloads, tickets for events and video games. PayPal, debit cards and personal credit cards were the most used methods of payment.
Because of a low rate of financial inclusion, though, a lot of retailers provide alternative payment methods, like cash payments at convenience stores. The top motivations for online consumers are secure payment options, free shipping and a guaranteed return possibility.
In Mexico, there is an increasing trend related to buying through mobile phones. Our company formation consultants in Mexico can help investors who are interested in setting up an e-commerce company in Mexico.
The e-commerce sector in Mexico
It can be a very good decision to start the process of company incorporation in Mexico for an e-commerce business as this country is one of the most developed in its region. The market penetration increases rapidly from one year to another and some of the highlights of the industry are:
- by 2020, a total of 39% of the Mexican consumers purchased goods from the internet (in comparison, in 2017, the market share did not reach 30%);
- by 2025, the estimates show that the market penetration will reach 52%;
- the pandemic had a positive impact on the consumers’ purchasing habits (in the period of March-April 2020, compared to the same period of the previous year, the revenue in the e-commerce industry increased by 500%);
- 64,5% of the consumers (age group of 16 to 64) purchase online at least 1 time a week;
- 72% of the consumers prefer to purchase food through food delivery apps.
Please mind that if you set up an e-commerce business, you will have tax obligations and accounting obligations just like any other legal entity operating here. For this, you can rely on the services of our CPA in Mexico. Our accountant can present the obligations you will have as an e-commerce operator and how to submit tax returns in Mexico for the transactions carried out here.
Please contact our team for consultancy and assistance in setting up an e-commerce company in Mexico.