Mexico is one of the most competitive countries in the world for productive investment due to its:

Mexico is an open economy that guarantees access to international markets through a network of free trade agreements (FTAs). The country boasts a strategic geographical location and competitive costs to service global markets, as well as a highly skilled, young workforce.

Some general characteristics of the Mexican economy are:

Some of Mexico's biggest industries are:

Mexico is the tenth most populated country in the world with a population of 127 million people in 2021. It is the most populous Spanish-speaking country and the third most populous country in the Americas after the United States and Brazil.

Mexico's proximity to and strong trade ties with the United States has seen its business culture evolve to meet the demands of the modern business world. Nevertheless, Mexicans still prefer to conduct business with people they know so it is important for foreign investors to cultivate personal relationships with their Mexican counterparts.

Decision-making powers do not typically filter much below senior management level so no input is expected from junior employees who normally exercise very limited negotiating powers, if any.

Mexicans prefer to negotiate in a social environment and usually opt for business lunches or dinners over formal boardroom meetings. Typically, business matters are not raised until towards the close of the meeting.

The typical Mexican Business Day lasts from 9 am to 7 pm with a two-hour lunchbreak from 2 pm to 4 pm.

Mexican national holidays include:

Long weekends or long periods of national holiday are called "puentes".

The impact of the Covid-19 pandemic resulted in an 8.5% drop in Mexico's GDP in 2020, the greatest fall its economy has suffered in recent years. The International Monetary Fund and other financial commentators have forecast that the Mexican economy will rebound by around 5% in 2021, which should potentially be strengthened by the government's economic development strategy. It includes:

Mexico's midterm elections were held on 6 June 2021. Voters elected 500 members to sit in the Chamber of Deputies as well as various state governors and one senator. It is hoped that President López Obrador's third year of government will have more stability than the first two years. He has had enough time to improve governmental projects, and the programmes implemented by his cabinet have shown positive results. However, the lack of stability caused by the pandemic has made it hard to improve the economic and socio-political state of the country, and poor advice by different members of his cabinet have also contributed negatively in terms of the administration and co-ordination of the country. Before the midterm elections, members of President Lopez Obrador's party occupied the majority of the Chamber of Senators and the Chamber of Deputies, making the approval and rejection of laws and amendment thereto a single-handed decision. After the midterm elections, President Lopez Obrador's party has lost this majority thus balancing the occupancy and decision taking in both Chambers.

The new free trade agreement, the United States-Mexico-Canada Agreement (USMCA), was executed and ratified by Mexico, the US and Canada and came into force on 1 July 2020. It replaces NAFTA as the primary trilateral free trade agreement in North America and has given Mexico the legal certainty required to continue developing its automotive manufacturing industry.

One development continuing to attract controversy is the Mayan Train, a proposed 950-mile railway that will carry tourists throughout the Mayan heartland. The highly anticipated plan has been met with much resistance from local communities because it may damage the environment and potentially displace thousands of indigenous people. Advocates of the Mayan Train argue that it will connect numerous remote and picturesque locations in the southern states of Mexico, opening them up for development and creating thousands of jobs in the process.

Following the cancellation of the Texcoco International Airport, another controversial project is the new Santa Lucía International Airport, located to the north of Mexico City. The new airport is set to open in 2022 and it is hoped that the project will help develop the Santa Lucía area as well as solve the problem of overcrowded terminals and delays in Benito Juárez International Airport.

The new Santa Lucía International Airport has been highly criticised because of the advanced stage of the development of the Texcoco International Airport and the fact that it was supposed to have modern facilities. The Santa Lucía International Airport does not have the necessary capacity and authorisations to operate as an international airport. The cost of its construction has surpassed that of the Texcoco International Airport, despite not yet being completed. It will be operated by the Ministry of National Defense (SEDENA). The controversiality revolves around the reasons behind the cancellation of the Texcoco International Airport, which mainly involve corruption matters. To date, no evidence supporting the corruption claims have been presented and the new Santa Lucía International Airport does not comply with the regulations requested by the various international aviation boards, making it ineffective and inoperative.

The minimum wage has increased by 15% from MXN123.22 to MXN141.70.

Mexico has a civil law system, with a federal Civil Code, and each state has its own local Civil Code. Decisions may be challenged by unitary and/or collegiate courts up to the Mexican Supreme Court of Justice. There are no trials by jury in Mexico.

Mexico has a federal system of government, divided into three branches:

Mexico is open to foreign direct investment (FDI) in most economic sectors and has consistently been one of the largest emerging market recipients of FDI. Mexico's Foreign Investment Law 1993 and its regulations (FIL) govern the sector. They operate on the basis that FDI is allowed unless expressly restricted or excluded. Where sector restrictions do exist, FDI is limited to 10% or 49%, depending on the industry (see below, Specific Industries).

The entity in charge of regulating FDI is the Foreign Investment Commission. It is responsible for decision-making regarding FDI and the promotion of FDI in accordance with the FIL.

A favourable resolution by the Commission is required:

See below, Restrictions on Acquisition of Shares.

In a limited number of cases, an authorisation from the Ministry of Economy via the Commission may be required for the establishment of a foreign branch and representative office, although most countries do not need to apply for this permit.

Unless otherwise provided in the FIL, foreign investors can:

(Article 4, FIL.)

A favourable resolution from the Commission is required where investors wish to acquire more than a 49% participation in:

(Article 8, FIL.)

An authorisation from the Commission is also required where FDI exceeds 49% of the capital stock of a Mexican company with an aggregate value of assets higher than an amount determined by the Commission (Article 9, FIL). The current threshold is MXN20,184,671,346.26 (about USD948.827 million, as at 6 December 2021).

In accordance with the FIL, there are certain activities reserved exclusively for:

There are also sectors that are governed by specific regulations restricting FDI to 49%.

Sectors reserved for the State. These are:

(Article 5, FIL.)

Sectors reserved for Mexicans or Mexican companies. Sectors reserved exclusively for Mexicans and Mexican companies that use a foreign exclusion clause are:

(Article 6, FIL.)

Sectors subject to specific regulations. FDI is capped at 49% in the following sectors:

FDI in producers' co-operatives is permitted up to 10%.

There are no restrictions or prohibitions on doing business with certain countries, jurisdictions, organisations or individuals, so long as the bye-laws of foreign companies are not contrary to the rules of public order established by Mexican laws.

There are no exchange control or currency regulations in Mexico.

The Federal Law for the Prevention and Identification of Operations with Resources of Illicit Origin (Ley Federal para la Prevención e Identificación de Operaciones con Recursos de Procedencia Ilícita) (AML Law) entered into force on 17 July 2013. It aims to protect the financial system and the national economy, establishing measures and procedures to prevent and detect acts or operations involving resources of illicit origin.

The AML Law imposes several obligations on corporations. One of these obligations is the registration and filing of operational notices for carrying out activities considered as "vulnerable" in terms of this law. A great number of commercial activities (for example, gaming and sweepstakes, lottery draws, and the issuing of credit and prepaid cards and traveller's checks) are subject to restrictions that must be met in order to avoid possible sanctions. However, the currency exchange is not deemed as a vulnerable activity under this law.

The Mexican Government has taken various steps to offer tax, labour and trade incentives to foreign investors. For example:

Mexican legislation contemplates four ways in which foreign companies may participate in Mexican markets:

The General Corporation Law (GCL) recognises six types of commercial structures:

In addition, the Securities Law (Ley del Mercado de Valores) recognises investment promotion companies (Sociedad Anónima Promotora de Inversión).

SAs followed by S. de R.L.s are the most commonly used structures because they both provide limited liability to the partners/shareholders (up to the amount of their contributions).

To register a new SA, a permit must be obtained from the Ministry of Economy to be able to use the proposed corporate name. The Ministry keeps a list of approved names to ensure they are not used twice. However, companies already dissolved or liquidated are not on record.

Once the company is incorporated before a Mexican notary, it must:

The board of directors/board of managers must submit an annual report to the partners' or shareholders' meeting containing details of:

Companies with FDI must file an application for registration with the Foreign Investment Registry (Registry) within 40 business days of either of:

(FIL.)

They must maintain their corporate information with the Registry by updating their financial information and any announcements quarterly. Quarterly announcements are only required when the total assets, liabilities, incomes or expenses of a company with FDI exceed an amount fixed by the Commission (currently MXN20 million).

Registration at the Registry must be renewed each year, only when the total assets, liabilities, incomes or expenses of a company with FDI exceed an amount fixed by the Commission (currently MXN110 million), it must also submit an annual report to the Registry. The annual report must be submitted by April or May of each year (determined by whether the company's name falls in the first or second half of the alphabet) detailing its accounting, financial, employment and production information for the previous financial year.

If a new company decides to import any products (not restricted by law), it must apply for an import and export permit.

A minimum of two shareholders is required to incorporate an SA. The authorised capital must be fully subscribed within one year. There are no minimum or maximum capital requirements.

The day-to-day management of an SA is usually entrusted to a sole director or a board of directors (who can be shareholders or third parties). Their position is not permanent and can be revoked.

SA shareholders exercise their powers at general shareholders' meetings (GSMs). Directors may be appointed or removed at GSMs by those holding 25% of the company's stock. Shareholders can determine the scope of, and limit to, the duties of the directors/managers by the provisions agreed in the bye-laws.

At GSMs, shareholders can agree to ratify all acts and operations of the company (Article 178, GCL).

Under the Immigration Law and General Population Law Regulations, foreign nationals or expatriates can render services as managers of Mexican entities, provided that the National Immigration Institute issues the proper immigration form. Before performing any activity in Mexico, companies, as well as foreign nationals, must notify the immigration authorities in order to obtain approval.

A person who is disqualified from engaging in trade and commerce cannot hold board member positions (Article 151, GCL). The bye-laws of the company can state that board members must provide a personal guarantee for the carrying out of their corporate obligations. Similarly, board members must declare any conflict of interest prior to participating, or voting in, conflicted matters (Articles 151, 152 and 156, GCL).

The liability of directors and officers is usually set out in a company's bye-laws. The GCL provides that the rights and duties of board members include:

Managers and directors are:

Parent companies are not liable for their subsidiaries' liabilities. A parent company's liability is limited to the total amount of its capital contribution to the subsidiary.

In Mexico, environmental laws are regulated at federal, state and municipal level. Each tier works in partnership with the others through an integrated system, and the specific activity or project will determine the applicable jurisdiction to regulate it (that is, certain projects may have activities that due to their nature, are of federal jurisdiction and other activities will be regulated by the local and/or municipal jurisdiction).

At federal level, the main environmental laws that foreign investors should be aware of are the:

At the local level, the main regulations that investors should be aware of in states where most of the industry is located are:

Furthermore, at a federal level the most relevant environmental authorities are:

There are various environmental considerations that a business must take into account when setting up and doing business in Mexico. Permits may need to be obtained from either, federal, local and/or municipal authorities.

The Mexican Constitution recognises the polluter pays principle which enshrines that the Mexican environmental authority is empowered to claim the remediation of the site from the polluter, or the owner/possessor (even if the pollution of the site was not caused by them). This obligation is provided by provision of law and cannot be modified or limited by means of a private contract.

Additional obligations arising from international treaties must be consider when developing a project in Mexico within indigenous territories, and indigenous communities must be consulted before the initiation of the project.

Finally, water availability has become a factor to be evaluated in both the short and long term when selecting the site where an industrial facility is to be located. This is because there are areas in the country where it is not possible to obtain a water concession directly from CONAGUA due to legal restrictions caused by the scarcity of the resource.

For further details please see: Water Availability: what Companies Must Consider before Investing in Mexico.

The main laws that regulate employment relationships are the:

Every employee must enter into a written individual employment agreement that sets out the terms and conditions of employment. The absence of an employment contract does not alter the existence of an employment relationship, or the employment rights granted by law to the employee.

Foreign nationals must have a visa to do business of any kind or work in Mexico. Those who want to live and work in Mexico must obtain a valid work permit or residence card. A temporary residence card to perform gainful activities is most appropriate for non-Mexicans who intend to work in Mexico but not live there permanently.

Employees are not entitled to management representation or to be consulted in relation to corporate transactions. There is only a duty of notice in the case of a change of control.

Articles 47, 51 and 53 of the FLL govern the termination of individual employment contracts and labour relationships.

There is no employment at will in Mexico so there must be a justified cause for dismissal to be able to terminate an individual's employment without liability for the employer.

The following conducts are considered as just cause for dismissal (among others):

Under Mexican Federal Labour Law, a collective redundancy occurs if the company (permanently) either:

In these circumstances, Federal Labour Law provides that an employer must negotiate with trade unions if it plans to make union employees redundant or introduce any amendments to a collective bargaining agreement (CBA). After negotiations, an agreement must be signed and registered with the Labour Board before terminating employment contracts. The CBA must also be terminated so that the employer can freely dispose of its real estate and movable property.

If an employee is a Mexican resident, or an employee is a foreign resident but earns income from a source located in Mexico, they must pay tax in Mexico.

Tax residency is normally established if:

Tax resident employees must pay income tax and their share of social security contributions on their total income, regardless of its source. Income tax is payable at the rate applicable for the bracket in which the employee's income falls.

Social security contributions at the following rates apply on the employees' consolidated income and are withheld by the employer:

(Article 11, SSL.)

Non-tax resident employees are exempt from income tax if both of the following requirements are met:

If a non-tax resident employee remains in Mexico for more than 183 days or their salary is paid by a Mexican resident, no tax is payable for income up to MXN125,000. After that, employees must pay income tax on Mexico-sourced income at:

These rates are different from the rates payable by Mexican tax residents (see above, Tax Resident Employees).

In most states, employers must pay a payroll tax, generally between 1.5% to 3% of their total payroll.

For employers' social security contributions, see Tax Resident Employees.

A business vehicle is subject to tax if it is a:

The Federal Fiscal Code provides that a company is deemed to be a Mexican resident for tax purposes if its main administration or the seat of its effective management is in Mexico.

Non-tax resident companies are subject to income tax at 30% on net income if they have a permanent establishment in Mexico. In general, a permanent establishment is a place of business where the activities of an entity are totally or partially carried on. This includes offices, branches and mining sites.

If a non-tax resident company does not have a permanent establishment in Mexico, income from Mexican sources is taxed, although rates vary. Generally, the rate is 25%, applied on a gross basis and usually withheld by the payer if the payer is either a Mexican tax resident or a foreign resident with a permanent establishment in Mexico.

Mexican Income Tax Law provides that income tax is levied at 30% on a company's net income (gross income less deductions, workers' profit sharing and net operating losses).

Losses can be carried forward up to ten years. No carry back is allowed. Assets can be depreciated using the straight-line method by applying the corresponding depreciation rate.

Under the Value Added Tax Law, VAT is levied on the:

VAT is paid at the rate of 16%. A zero rate can apply, as well as certain exemptions, in some cases.

Mexico uses a credit system so that VAT charged by others may be used to offset VAT owing.

Excise tax is levied on the sale or importation of certain specific goods, such as alcoholic beverages, tobacco, fuels, energy drinks, flavoured drinks, among others, as well as the provision of certain services, such as performing games with bets and raffles.

The Special Tax Law on Production and Services establishes the goods and services that are subject to this tax and the different rates apply depending on the type of product or services rendered.

The applicable tax depends on the good or service and is established by rates or fees.

According to the Federal Government Fees and Charges Law, mining tax is levied for holders of mining concessions, equal to 7.5% of net income from mining activity. Certain deductions are allowed although many items that are deductible for income tax purposes are not for the purposes of this levy, for example, investments.

In addition, tax is levied at 0.5% on the gross sales of gold, silver and platinum.

Payroll. In most states, payroll tax is levied on the total amount of salary payments (see Question 19). In general, the 3% tax rate applies.

Real estate tax. This annual tax is calculated using the value of the real estate and is paid by the owner of the property. The tax range varies depending on the state.

Transfer tax. This tax is payable on the transfer of real estate and is paid by the acquirer of the property. In general, this tax is subject to a 2% rate. However, in some states like Mexico City it is used a progressive rate over the estate value.

The Mexican Income Tax Law provides that an additional 10% tax is levied on dividend distributions to individuals and foreign residents if the distribution corresponds to after-tax earnings (obtained from 2014 onwards, since only the income which was originated as of 2014 will be subject to the additional 10% tax), although tax treaties may reduce or eliminate this tax.

Mexico has a comprehensive net of more than 70 double tax treaties mainly based in the OECD Model (with some United Nations Model features). These treaties include all OECD partner (including the US, Canada and the UK).

US and Mexico have a tax treaty currently in force and under this tax treaty dividends are subject to a 5% withholding tax if the beneficial owner is a company which owns directly at least 10% of the voting stock of the company paying the dividends, and interest must not exceed 15% of the gross amount of the total interest.

According to Mexican Income Tax Law, dividends received from a foreign company by a Mexican tax resident must be included in the recipient's gross income and the relevant tax paid. The taxpayer may then credit income tax paid abroad on those dividends.

Mexican Income Tax Law provides that interest paid is subject to withholding tax, the rate of which varies depending on various factors, which rates varies between 4.9% and the maximum rate of 35%. Double tax treaties can reduce or eliminate this tax.

Interest paid to shareholders (either Mexican or foreign residents) can be deemed a profit distribution, if certain requirements are not met.

According to the Income Tax Law, these are subject to withholding tax at various rates, depending on various factors, with the maximum rate being 35%. Double tax treaties can reduce taxation for royalties to 10%.

Thin capitalisation rules apply to any debt incurred with a foreign-related party. The limits must not exceed a 3:1 debt-to-net equity ratio, otherwise interest associated with the excess is not deductible. This restriction only applies to transactions entered by and among related parties.

Mexico has controlled foreign company (CFC) rules for investments in jurisdictions where either:

Under the CFC rules, income derived from these investments must be taxed in Mexico when accrued in the foreign jurisdiction, even if it has not been distributed to the investor.

Investments falling under the CFC rules must also meet special reporting obligations.

Certain exceptions apply to indirect participations in investments, which do not allow the participant to control the investment.

Mexican transfer pricing rules are based on the arm's-length standard. These rules have adopted most of the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations 2001.

Mexican transfer pricing rules apply to business transactions entered by and among related parties. For these purposes, companies are required to document their transactions in order to evidence that they agreed prices under fair market rules. There are six methods for applying transfer pricing in Mexico, but the Method of Comparable Uncontrolled Price (CUP) is the first approach.

VAT must be paid at 16% of the value of the product. In addition, there are certain items that are VAT exempted when imported, such as those that under customs law are:

To calculate VAT on imported tangible goods, the value used for general import tax purposes is considered, adding to the value, the amount of the latter tax and other taxes payable. When intangible goods are imported, each case must be analysed to determine the applicable taxable base.

Exports are subject to zero-rated VAT.

Mexico currently has over 60 double tax treaties in force with other countries, including the US, the UK, Canada, Japan, Germany, Spain, France and Switzerland.

Restrictive agreements and unilateral conduct are regulated by Articles 54, 55 and 56 of the Federal Economic Competition Law of 2014 (FECL) as relative monopolistic practices (abuses of dominance).

The competition authorities in Mexico are the:

Competition laws in Mexico include the:

The FECL regulates:

Some unilateral conduct may be classified as a relative monopolistic practice, for example predatory pricing or offering discounts subject to exclusivity.

There are no criminal penalties regarding mergers or acquisitions. Criminal penalties only arise in relation to absolute monopolistic practices, which range from fines of up to USD45,000 to ten years in prison (Article 254 Bis, Federal Criminal Code).

Concentrations must be notified to and approved by the FEC Commission when the transaction fulfils one or more of the following thresholds:

Rules regarding concentrations apply to all transactions in which any of the thresholds are met, regardless of whether the parties are Mexican or foreign entities.

If a transaction should have been notified and the parties fail to do so, the FEC Commission may begin an investigation procedure, which could conclude with one or more of the following sanctions:

There are no criminal penalties regarding mergers and acquisitions (see Question 28).

Control acquisition. The FECL does not define when control or presumed control is acquired. However, the FEC Commission has a broad interpretation of control and explains that the control acquisition may take place in two ways: de facto (for instance when a minor shareholder may have a majority due to financial or family relationships) or de iure (for instance by means of the direct or indirect acquisition of shares, or control rights derived from a contractual relationship) (section 2.2, Merger Guidelines).

Merger analysis test. The FEC Commission's main substantive test for a merger analysis is the hypothetical monopolist test, according to in the Technical Criteria for the Calculation and Application of a Quantitative Index for Measuring Market Concentration issued in 2015.

The Commission considers the:

Foreign acquisitions are subject to merger control if the transactions have legal or material effects in Mexico. There are no foreign exceptions provided for in the FECL (Article 87, FECL).

The IFT is the antitrust authority in the telecommunications and broadcasting industries. In these two sectors, the IFT can exercise merger clearance and supervision authorities, as well as investigate and prosecute absolute and relative monopolistic practices.

There are also special procedures established in the FECL that can trigger antitrust reviews in as the transportation, ports, aviation and energy sectors.

The General Law of Administrative Responsibilities of 2016 governs bribery and corruption acts carried out by private individuals in Mexico. The law regulates all acts or procedures in which private individuals and authorities are involved. In this regard, the law establishes responsibilities for authorities and private individuals who participate in the following acts:

Definition and legal requirements. An invention is patentable if it:

(Article 45, Industrial Property Law (IPL).)

Registration. To protect an invention, an application must be filed before the Mexican Institute of Industrial Property (Instituto Mexicano de la Propiedad Industrial) (MIIP) (www.impi.gob.mx).

Enforcement and remedies. The patent holder can file before the MIIP:

Length of protection. Protection is for a maximum of 20 years from the international filing date, provided that the annual fees are paid.

Definition and legal requirements. A trade mark is any sign perceptible by the senses and capable of being represented in a way that allows to determine the clear and precise object of protection, which differentiates products or services from others of the same species or class in the market.

Registration. A registered trade mark holder has the exclusive right to use the mark. Use of an unregistered trade mark may create certain rights. The owner of a trade mark can file an application requesting the MIIP declare the trade mark famous or well-known. Well-known trademarks are those known by a certain sector of the public or commercial groups of the country, while a famous trademark is one known by most consumers. Currently, under the IPL, a prior registration with the MIIP is not necessary to request the declaration of a notorious or famous trade mark.

Protection. A trade mark must be registered with the MIIP to be protected.

Enforcement and remedies. The right holder can file with the MIIP:

Definition. A design can be registered if it:

(Article 31, IPL.)

Registered designs are divided into industrial models and industrial drawings.

The holder of the registered design has the exclusive right to use the design and prevent others from using or reproducing it.

Registration. To protect a design, it must be registered before the MIIP (ILP).

Enforcement and remedies. Design rights are enforced in the same way as patents (see above).

Length of protection and renewability. Protection is granted for five years from the filing date. This term is renewable for equal periods up to a maximum of 25 years.

Unregistered designs are protected as either:

Definition and legal requirements. Copyright is the recognition of protection that the State makes in favour of any author of literary and artistic works, so that the author enjoys exclusive rights of a moral and patrimonial nature over their works.

In addition, a special type of protection, called Reservation of Rights, can be given to:

The copyright holder can prevent others from reproducing the work without consent or a licence.

The Federal Copyright Law of 1996 recognises both the moral and economic rights of authors.

Works for hire are also regulated by the Federal Copyright Law. The entity or person that hires an author to perform a work may be entitled to the economic rights in the work and therefore, the right to exploit the work.

Cultural expressions of indigenous people are also protected under Copyright Law. Therefore, works or advertising materials, that comprise a cultural expression, must require a special authorisation for its use and registration.

Protection. Copyright need not be registered to be protected; protection arises on the creation of works and its fixation on a tangible medium. Registration has only a declaratory effect and can be obtained by filing an application with the Copyright Office (Instituto Nacional del Derecho de Autor) (INDAUTOR).

Enforcement and remedies. There are two types of infringements:

Length of protection and renewability. Protection of the work is for the life of the author plus 100 years after their death. This term is not renewable.

Titles of publications are protected for one year, while characters, names of individuals or groups carrying out artistic activities and names and original operation characteristics of advertising promotions are protected for five years. These terms are renewable indefinitely, provided they are in use.

Commercial transactions are broadly governed by the Code of Commerce and acts of commercial agency generally fall under this description.

While certain forms of broker and insurance agents are referenced in Mexican legislation, agency agreements themselves are not expressly regulated.

Distribution agreements are not specifically regulated in Mexico and so the general principles of contract law apply to them.

The IPL regulates franchises. They must be in writing and state the:

For the franchise agreement to be binding on third parties, it must be recorded with the MIIP. A summary of the agreement suffices for this purpose.

There is no specific legislation in Mexico that governs doing business over the internet. Mexico does not have a system of IT law, which means that transactions made on the internet are regulated in accordance with:

The Code of Commerce generally applies to all business transactions regardless the parties’ condition and FCPL provisions regulate transactions between suppliers and consumers.

There is data protection legislation that must be observed regarding the processing of personal data in e-commerce transactions (see below and Question 37).

The Mexican Standard NMX-COE-001-SCFI-2018 for e-commerce (NMX) (the Standard) compliments the legal framework, establishing best practices to be followed by e-commerce providers to guarantee consumer rights although compliance is not mandatory.

The NMX in Spanish may be consulted at the following link, www.economia-nmx.gob.mx/normas/nmx/2010/NMX-COE-001-SCFI-2018.pdf (no official version in English is available).

See also Practice Note, Digital Business in Mexico: Overview.

The FCPL includes mandatory provisions for e-commerce transactions. It provides consumers with certain protections and imposes obligations on suppliers and service providers, including:

On February 26, 2021, the E-commerce Code of Ethics was published to standardise e-commerce transactions. It seeks to protect consumer rights and promote a culture of self-regulation and ethical and responsible digital advertising. Like the Standard, its adoption is voluntary.

Online platforms are not expressly regulated in relation to their use for marketing and sale purposes.

Advertising is largely regulated by the:

The information and advertising of goods, products and services by any means must be:

(Article 32, FCPL).

The FCPL grants consumers the right to demand that they are not contacted by specific suppliers and marketing companies at home, in their workplace or by email as well as the right not to be contacted for advertising purposes at all. The Federal Consumer Agency keeps a public registry of consumers who do not wish their information to be used for marketing or advertising purposes.

(Article 17, FCPL)

Additional obligations must be observed if advertising is directly sent to individuals (see Data Protection).

See also Practice Note, Direct Marketing Q&A: Mexico.

Comparative advertising is allowed in Mexico provided that the information about the products or services being compared is not "deceptive" or "abusive". "Deceptive" or "abusive" information is defined in law as that which misleads or causes confusion due to the inexact, false, exaggerated, artificial or tendentious form in which the information is presented (Article 32, FCPL).

According to FCPL regulation, comparative advertising is understood as the one which compares or confronts two or more goods, products or services similar or identical to each other, whether or not they are of the same brand.

The criteria and guidelines to be followed by the Federal Consumer Protection Agency when analysing and verifying information and advertising materials are set out in the Ruling setting forth the Guidelines to Analyse and Verify Consumer Information and Advertising Material dated 24 July 2012, and FCPL regulation. These are designed to protect consumers from deceitful and abusive practices.

Legislation on Data Protection must be observed whenever advertising is sent directly to individuals. A privacy notice must be provided to recipients before collecting their personal data and options to "opt-out" must be available to them.

The General Health Law (Ley General de Salud) (GHL) and its regulations establish the requirements that must be fulfilled to advertise healthcare products and services. Authorisations and permits must be obtained from the Federal Commission for the Protection Against Health Risks (Cofepris) to advertise:

The General Law on the Rights of Children and Adolescents (Ley General de los Derechos de Niñas, Niños y Adolescentes) regulates advertising directed at children and adolescents. It is designed to protect young people from advertising which promotes violence or bullying or otherwise offends national or family values.

Sales promotions are regulated in the FCPL. They are defined as trade practices wherein goods or services are offered to the public:

(Article 46 of FCPL.)

The main data protection laws are the:

Liability arising out of an illicit action is regulated by a variety of laws, such as the civil codes of the different states and the FCPL. In this sense, the concept of product liability did not exist in Mexico until the amendments to the FCPL on 4 May 2004. The concept is still vague and imprecise.

Products or services which could pose a potential danger to consumers or be harmful to the environment, must include consumer warnings and instructions clearly explaining their recommended use or application, as well as the potential side effects of their use or application outside the recommended guidelines. Suppliers are liable for damages caused to consumers.

Consumers can submit claims against suppliers where the product or service:

Claims can elect to submit claims against the seller, manufacturer or importer, at their discretion.

Civil actions arising from defective products are based on the general principles of law set out in federal and state civil codes, which establish that when loss or damage is caused to another, damages are payable unless the damage was due to the fault or negligence of the victim.

To be liable for payment of damages, the loss or damage (including lost profits) must be a direct and immediate consequence of the illicit action or the breach of an obligation.

The injured party can request that the offender does one of the following:

Class actions may be filed by:

The federal courts have exclusive jurisdiction to process class actions related to:

Depending on the type of business, investors should consider the extent to which they are regulated by federal, state and/or municipal authorities. Contact with municipal authorities will almost always be required, as well as dealings with environmental, health and other authorities.

Some of the main governmental entities that investors may deal with are as follows:

There are no other major considerations to doing business in Mexico.