deloitte mexico chinese services group · 2020-03-23 · • our advantage is the team’s...

Deloitte Mexico

2014

Chinese Services

Group

Our firm in Mexico 3

About Deloitte 5

Doing business in Mexico 12

Main clients 25

Contacts 30

Contents

©2014 Galaz, Yamazaki, Ruiz Urquiza, S.C. 2

Our firm in Mexico

© 2014 Galaz, Yamazaki, Ruiz Urquiza, S.C. 3

The member firm in Mexico is part of the international

organization of Deloitte Touch Tohmatsu Limited. It

has the largest number of professionals among the

private firms operating in Mexico, and its wide client

portfolio comprises leading companies in their

industries.


Our firm in Mexico

Deloitte Mexico:

• Is the largest professional services firm in the country.

• Has more than 5,400 professionals.

• Has over 250 partners.

• Has a wide geographical coverage: 23 cities in the country.

• Is a multidisciplinary service provider.

• Deloitte Mexico has been consistently recognized as a “Socially Responsible

Enterprise” by the Mexican Center of Philanthropy (CEMEFI), and as one of the

great places to work in the country by the Great Place to Work Institute Mexico.


About Deloitte


About Deloitte

Presence by service

7

60%

Audit

Universe: Top 100 Companies

Deloitte clients database and Expansión 500, 2013.

* Financial Estate Audit and other audit services included

36%

Financial

advisory

services

Tax & legal

services

68%

Enterprise

Risk Services

45%

Consulting

25%

© 2014 Galaz, Yamazaki, Ruiz Urquiza, S.C.

About Deloitte

Presence by industry

38% 62%

29%

71%

32%

68%

25%

75%




74%

Consumer

Business

83%

Energy &

Natural

Resources

Manufacturing

87%

TMT

100%

About Deloitte

Presence by industry

38% 62%

29%

71%

32%

68%

25%

75%




75%

Financial

sector

82%

Services

Public sector

100%

Real estate

100%

Deloitte Chinese Services Group in Mexico was

founded in 2006, by CSG Director David Chen

Chung. During 8 years CSG closely cooperates with

Deloitte colleagues and partners from all over the

world specially with USA, China, Singapore and

Taiwan.


• Our advantage is the team’s background, we understand both Asian and Latin

culture and speak fluently Chinese, English and Spanish.

• Currently, there are 1661 foreign contacts in our CSG-Mexico database.

• We advise 77 of the 100 most important

companies in Mexico which is equal to 70%

of the market in Mexico.

About Deloitte

Chinese Services Group

11 © 2014 Galaz, Yamazaki, Ruiz Urquiza, S.C.

77%

About Deloitte

Largest firm in the country

Celaya

México, D.F.

Puebla

Torreón

Ciudad Juárez

Hermosillo

Chihuahua

Monclova

Culiacán Reynosa

Monterrey

San Luis Potosí

León

Querétaro

Cancún

Tijuana Mexicali

Mazatlán

Aguascalientes

Guadalajara

Mérida

BPS has presence in Guadalajara,

Mexico City and Monterrey

24 offices in the most

important cities


Doing business

in Mexico


Mexico’s free-trade agreements have been key to

the development of the local automotive industry:

Doing business in Mexico

Structure

• The greatest proportion of the economic activity

is concentrated in Mexico City, Guadalajara and

Monterrey. Also the six northern border states

are home to much of the country’s

manufacturing, particularly maquiladoras (in –

bond assembly for re – export factories)

producing goods that are then sold mainly in the

U.S. and other countries.

• Mexico is a member of the World Trade

Organization (WTO) and has signed tax treaty

agreements with more than 40 countries to

avoid double taxation.

• Mexico has also signed 12 Free Trade

Agreements (FTAs) with more than 49 nations,

and has more than 32 commercial and

investment agreements among the world.

FTA

EL SALVADOR,

GUATEMALA

& HONDURA

NAFTA

FTA BOLIVIA

FTA CHILE

FTA COLOMBIA &

VENEZUELA

FTA COSTA

RICA

FTA

EU

FTA

ISRAEL

FTA NICARAGUA


26

39

65 58

53

67

29

38

75

53 48

61

0

10

20

30

40

50

60

70

80

China Thailand Vietnam Mexico Brazil Peru

2011-2012 2012-2013


What is Mexico

importing from

China?

What is Mexico

selling to China?

Around 50% of the

total bilateral trade

goes to electronic and

electrical industry

(semi finished

products –

machinery):

• TV-sets

• Mobiles

• DVD-CD players

• Circuits

• Printers

• Lasers

Exports from Mexico

to China mainly goes

to 3 specific industries:

• 60% to mining and

metallurgical

industry (Copper,

plumb, aluminum,

zinc, etc.)

• 14% to automotive

industry (axes,

vehicles)

• 7% to electronic and

electrical industry

Global Competitiveness Report 2012–2013

Rank/142

Source: World Economic Forum. The Global Competitiveness Report 2012–2013

Note: Ranks out of 144 economies and scores measured on a 1-to-7 scaleis.


• Foreign investment has been

simplified by amending the relevant

regulations, reducing legal and

administrative bureaucracy, reducing

local content requirements, modifying

ceilings on foreign equity, eliminating

some import license requirements

and overhauling intellectual property

legislation.

• Foreign investment is permitted in all

areas except those explicitly limited to

the Mexican Government.


Regulations


• There are no restrictions on domestic

or foreign currency held locally by

non-residents, and non-official

guarantees against inconvertibility.

• Mexico’s labor legislation regulates

labor contracts, minimum wages,

hours of work, legal holidays and paid

vacations, among other working

conditions, as well as trade unions,

strikes and dismissal compensation.


Regulations



Principal forms of doing business

Mexico has several forms of business organization, including the stock company

(SA) and the limited liability company (SRL), both of which can be forms of variable

capital and branches of a foreign corporation.

• A.1 Limited Liability Stock Corporation – Commonly well known a Sociedad

Anónima (S. A.)

• A.1.1 Fixed Capital (S. A.)

• A.1.2 Variable Capital (S. A. de C. V.)

• A.2 Limited Liability Company. Commonly well known “Sociedad de

Responsabilidad Limitada” or “S. de R.L.”

The permit for establishing a company requires inclusion of the “Calvo clause” in

the by laws and on share certificates. This clause waives the right to invoke foreign

diplomatic intervention and relinquishes any claim to treatment different from the

accorded to Mexican nationals. (Is this clause still relevant?)



Principal forms of doing business

Organizing a local corporation can take

four weeks or longer, depending on the

complexity of the project. A permit

must be secured from the Ministry of

Foreign Affairs. A minimum of two

shareholders must appear before a

notary to sign the deed of

incorporation. At least 20% of the

capital shares must be paid

immediately, and the remainder within

one year. Other requirements also

apply.



Business corporate taxation

Companies doing business in Mexico

typically are subject to corporate

income tax, flat tax, value added tax,

tax on real property, social security

contributions on behalf of their

employees and to distribute and pay

10% of their taxable income to

employees. Some taxes are levied at

the state and municipal levels.



Income tax

• A company is a resident in Mexico, if its place of effective management is in

Mexico. Residents are taxed on their worldwide income. Companies not

domiciled in Mexico are taxed only on their Mexican – sourced income.

• Corporate tax is imposed on a company’s profits. Normal business expenses

may be deducted in computing taxable income. The tax rate will be 30% until

2014. (Should there be a time limit?)

• Dividends received by a Mexican resident company from another Mexican

resident company are exempt from corporate tax. Dividends received from a

foreign company are subject to corporate tax.

• Mexican entities are not subject to special tax treatment on capital gains and the

use of capital losses is restricted in some cases.



Maquiladora concept

(now known as IMMEX)

• The company may apply for a

Maquiladora (IMMEX) program.

• It is an authorization which allows

Mexican Companies to import, under

a temporary basis, the necessary

goods (raw materials and fixed

assets) to be utilized in an industrial

process to manufacture finished

goods or for rendering export

services, which mainly represents a

benefit related to duty deferral and

exemption of VAT payment on

imports, as well as coverage against

permanent establishment issues for

the foreign parties.



Maquiladora concept

(now known as IMMEX)

• A maquiladora may either: (1) adopt

the Safe Harbour rules; or (2) elect to

obtain an advance pricing agreement

(APA) via a private letter ruling. Under

the Safe Harbour, a maquiladora

must report taxable income

corresponding to the higher of the

following:

• 6.9% of the value of its assets.

• 6.5% of its costs and expenses.

• Types of maquiladora entities.

• Typical maquiladora.

• Non-typical maquiladora.


• The Mexican government has curtailed the use of direct tax incentives for

investment. The most significant tax incentive still available is the accelerated

depreciation allowance for investments in production facilities, which allows

same-year deductions for up to 92% of a new investment´s value. (Has it been

eliminated?)

• A variety of export incentive programs, including special temporary import

programs, are in place to encourage export sales. The legislation promoting in-

bond facilities in Mexico (maquiladoras) makes the country an attractive place to

manufacture goods for export.

• The Federal Government grants to “maquiladora” companies:

− Partial exemption on corporate tax, (because they don’t have to set up a

permanent establishment?)

− Reduction on flat tax (Has it been eliminated?)

− VAT exemption

− Duty payment deferral under certain conditions


Government actions to support foreign

investment



Mexico-China Treaty to avoid double taxation

• Signed in 2005. Effective as of January 1, 2007.

• Benefits similar to other Chinese treaties to avoid double taxation.

• Tax exemptions (i.e. technical assistance) and reduced withholding rates (i.e.

interest and royalties).

• Allows “maquiladora” operations to enjoy Mexican special tax regime that

provides tax administrative conveniences.

• Tax exemption on interest paid to People’s Bank of China, State Development

Bank, Import and Export Bank of China, Agriculture Development Bank of China,

China Export & Credit Insurance Corp.


Main clients


Manufacture industry:

• HiTi Digital, Inc.

• Hisense Mexico S. de R.L. de C.V.

• Beijing West Industries Co. (BWI)

• Hynday Motors Mexico

• Nam Liong Group

• Foxconn Mexico Precision Industry Co

S.A. de C.V.

• Flextronics Manufacturing Mex., S.A. de

C.V.

• Huawei Technologies

de Mexico, S.A. de C.V.

• Lenovo Mexico, S. de R.L. de C.V.

• Likom de Mexico, S. A. de C. V.

• Pegatron Mexico, S.A. de C.V.

• Rapid Manufacturing

Consume industry:

• Smithfield Foods, Inc.

• PC BAJA, S.A. de C.V.

Services:

• Truper S.A. DE C.V.

• Technology, media and

telecommunications:

• Wistron Mexico, S.A. de C.V.

Mining Industry:

• Desarrollo Minero de Unificado (DMU)

• Agromag

Our recent main clients are:


Energy and Natural Resources

Industry:

• Great Wall Drilling Company

• COSL Mexico, S.A. de C.V.

• Sinopec

Technology, media and

telecommunications:

• Wistron Mexico, S.A. DE C.V.

• HUTCHINSON WHAMPOA

• PCE Paragon

Solutions (Mexico), S.A. de C.V.

• Tatung Mexico, S.A. de C.V.

Real Estate:

• Parks Desarrolladora S.A. de C.V.

• Desarrollo Nuevo Altata S.A. de C.V.

• Recursos Tyler, S.A. DE C.V.

(JINCHUAN)

• Chileno Bay Development Partners, LP

• Danske Bank A/S

• Anhui Foreign Economic Contruction

Group Co. Ltd. (AFECC)

• CCIS Real State Joint Appraisers Firm

China Credit Information Service, Ltd.

Infrastructure Industry:

• China Harbour Engineering Company

(CHEC)



Other Industry:

• Vehicle Stability Technology, S.A. de C.V.

• Mentor Media Juarez S.A. de C.V.



Organizations and government groups CSG

Mexico works with:

• Mexican Business Council for Foreign Trade, investment and Technology

(COMCE)

• China Council for the Promotion of International Trade (CCPIT)

• Embassy of the People´s Republic of China in Mexico

• China Chamber of Commerce and Technology, Mexico

• General Chamber of Chinese Entrepreneurs in Mexico

• Taipei Economics and Culture Office in Mexico

• Korea Trade-Investment Promotion Agency

• Taiwan Trade Center, Mexico City

• World Trade & Investment Group


Contacts


Our contacts

Gonzalo Gómez

Tax & Legal Office partner

+52 6646227950

[email protected]

David Chen Chung/陈忠智

Chinese Services Group, Partner

+52 (65) 66886568

[email protected]

Amy Liang/梁怡芳

Chinese Services Group, Manager

+52 (55) 50807659

[email protected]

Xiao Cheng/程霄 China Services Group, Senior Specialist

+52 (55) 50807338

[email protected]


mailto:[email protected]




Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms,

each of which is a legally separate and independent entity. Please see www.deloitte.com/mx/aboutus for a detailed description of the legal structure of Deloitte

Touche Tohmatsu Limited and its member firms.

Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globally connected

network of member firms in more than 150 countries, Deloitte brings world-class capabilities and high-quality service to clients, delivering the insights they

need to address their most complex business challenges. Deloitte has in the region of 200,000 professionals, all committed to becoming the standard

of excellence.

As used in this document, "Deloitte" means Galaz, Yamazaki, Ruiz Urquiza, S.C., which has the exclusive legal right to engage in, and limit its business to,

providing auditing, tax consultancy, financial advisory, and other professional services in Mexico, under the name "Deloitte".

This publication contains general information only, and none of Deloitte Touche Tohmatsu Limited, its member firms, or their related entities (collectively the

“Deloitte Network”) . No entity in the Deloitte Network shall be responsible for any loss whatsoever sustained by any person or entity who relies on this

publication.

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deloitte mexico chinese services group · 2020-03-23 · • our advantage is the team’s...

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