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Branch of a foreign company in Mexico: Ministry of Economy authorization, registration, permanent establishment tax and remittances

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Last verified: 2026-10-26 · Status: Stable

A foreign company may trade habitually in Mexico through a branch only after Ministry of Economy authorization, which must be granted within 15 business days of a complete request or is deemed approved, and after registration in the Public Registry of Commerce. The 2026 government fee for the authorization is MXN 2,935 (about USD 159); the branch must then register in the RNIE within 40 business days, publish an accountant certified balance sheet each year and renew its RNIE record annually. For tax, the branch is a permanent establishment taxed at the corporate rate on income attributable to it, its remittances to head office are not deductible, and profits sent abroad that are not from its tax profit account bear tax plus an extra 10 percent.

USD figures use MXN 18.5026 per US dollar, the Federal Reserve H.10 noon buying rate for 16 October 2026 (FRED series DEXMXUS), the latest official observation verified for this page. Conversions are for orientation only.

Key facts

Statutory deadline for Ministry of Economy branch authorization (silence means approval)	15 business daysLIE art. 17 A, as of 2026-10-26 · in force
Government fee to authorize a foreign company to register or establish in Mexico, 2026	2935 MXNLFD art. 72, fraction V; RMF 2026 Annex 4, as of 2026-01-01 · in force
Deadline for a foreign company trading habitually to register in the RNIE	40 business daysLIE art. 32; RNIE Regulation art. 37, as of 2026-10-26 · in force
Fine for habitual trading without authorization	500 to 1,000 UMALIE art. 38, fraction II, as of 2026-10-26 · in force
Additional tax on profits remitted by a permanent establishment	10 %LISR art. 164, fraction IV, as of 2026-10-26 · in force
Gross up factor for branch remittances not covered by the net tax profit account	1.4286 factorLISR art. 164, fraction II, as of 2026-10-26 · in force
UMA daily value from 1 February 2026	117.31 MXNINEGI publication, DOF 9 January 2026, as of 2026-02-01 · in force

The rule

1. Authorization first. Subject to treaties, foreign legal entities that intend to carry out commercial acts habitually in Mexico must obtain Ministry of Economy authorization. It is granted when the entity proves it is validly formed under its home law, its bylaws do not breach Mexican public order, and it establishes itself in Mexico or has an agency or branch there. A complete request must be granted within 15 business days; if no decision is issued, it is deemed approved. The Ministry sends copies to the Ministry of Foreign Affairs.
Cost to do it: Government fee for the authorization in 2026: MXN 2,935 (LFD art. 72, fraction V, MXN 2,934.59 before rounding).
Example: MXN 2,935 per authorization. / About USD 159 per authorization.Ley de Inversión Extranjera (Foreign Investment Law, LIE), DOF 27 December 1993, last reform DOF 27 May 2024, Arts. 17, fraction I, and 17 A (reformed and added DOF 24 December 1996), 1996-12-24 official text · verified 2026-10-26

2. The authorization fee. The Federal Duties Law charges a foreign investment duty for authorizing foreign legal entities to register in the Public Registry of Commerce or establish themselves in Mexico. The 2026 amount is MXN 2,934.59, payable as MXN 2,935 after rounding under Annex 4 of the 2026 Miscellaneous Tax Resolution.
Cost to do it: MXN 2,935 (about USD 159).
Example: MXN 2,935. / About USD 159.Ley Federal de Derechos (Federal Duties Law, LFD), last reform DOF 7 November 2025; 2026 amounts in Annex 4 of the 2026 Miscellaneous Tax Resolution, DOF 28 December 2025, LFD art. 72, fraction V; RMF 2026 Annex 4, 2025-12-28 official text · verified 2026-10-26

3. Registration and the yearly balance sheet. Foreign companies have legal personality in Mexico but may trade only once registered in the Public Registry of Commerce, and registration is made only after the Ministry of Economy authorization. Each year they must publish, in the Ministry of Economy electronic system, a balance sheet of the business certified by a licensed public accountant.Ley General de Sociedades Mercantiles (General Law of Commercial Companies, LGSM), DOF 4 August 1934, last reform DOF 20 October 2023, Arts. 250 and 251 (reformed DOF 24 December 1996, 28 July 2006 and 13 June 2014), 1934-08-04 official text · verified 2026-10-26

4. Fine for trading without authorization. A foreign legal entity that trades habitually in Mexico without prior authorization is fined 500 to 1,000 times the daily wage reference in the law. Since the constitutional deindexation of 27 January 2016, legal references to the minimum wage as a unit of account are read as the UMA, whose daily value is MXN 117.31 from 1 February 2026, so the range is MXN 58,655 to MXN 117,310.
Example: 500 to 1,000 UMA: MXN 58,655 to MXN 117,310. / About USD 3,170 to USD 6,340.Ley de Inversión Extranjera (Foreign Investment Law, LIE), DOF 27 December 1993, last reform DOF 27 May 2024; Constitutional decree on minimum wage deindexation, DOF 27 January 2016, third transitory article; UMA daily value of MXN 117.31 published by INEGI in the DOF on 9 January 2026, in force from 1 February 2026, LIE art. 38, fraction II; deindexation decree, third transitory article, 1993-12-27 official text · verified 2026-10-26

5. RNIE registration, updates and renewal. Foreign individuals and legal entities that trade habitually in Mexico must register in the National Foreign Investment Registry within 40 business days of starting habitual trading (or of formalizing the relevant documents). They must report quarterly changes and capital flows (including loans with the head office and group companies) within 10 business days after each quarter when above the thresholds set by the National Foreign Investment Commission, and renew the registration certificate every year during April (names starting A to J) or May (K to Z) by filing the economic and financial questionnaire. Late or missing RNIE filings are fined 30 to 100 UMA (MXN 3,519.30 to MXN 11,731 in 2026).
Cost to do it: RNIE filings carry no government fee in the LIE.
Example: Fine range for a late renewal: MXN 3,519.30 to MXN 11,731. / About USD 190 to USD 634.Ley de Inversión Extranjera (Foreign Investment Law, LIE), DOF 27 December 1993, last reform DOF 27 May 2024; Reglamento de la Ley de Inversión Extranjera y del Registro Nacional de Inversiones Extranjeras (Foreign Investment and RNIE Regulation), DOF 8 September 1998, last reform DOF 17 August 2016, LIE arts. 32, fraction II, 35 and 38, fraction IV; Regulation arts. 37, 38 and 43 (reformed DOF 31 October 2014), 1998-09-08 official text · verified 2026-10-26

6. The branch is a permanent establishment. Under the Income Tax Law a permanent establishment is any place of business where business activities are carried out in whole or in part; branches, agencies, offices, factories, workshops and installations are expressly listed. Income from the business activity of the establishment, and from sales of goods or real estate in Mexico by the head office or another establishment, is attributable to it and taxed under Title II (companies). Income obtained by the head office in proportion to the establishment's share of the related expenses is also attributable.Ley del Impuesto sobre la Renta (Income Tax Law, LISR), DOF 11 December 2013, last reform DOF 1 April 2024, Art. 2o. (paragraphs reformed DOF 9 December 2019), 2013-12-11 official text · verified 2026-10-26

7. Head office charges are not deductible. Remittances from the Mexican establishment to the head office or another establishment abroad are not deductible, even when labeled royalties, fees for patents or other rights, commissions for specific services or management, or interest on money sent to the establishment.
Example: A branch that books MXN 1,000,000 of royalties to its head office cannot deduct them; at the 30 percent corporate rate, that costs MXN 300,000 of tax that a subsidiary paying an arm's length royalty might deduct. / About USD 54,046 of royalties not deductible, costing about USD 16,214 of tax.Ley del Impuesto sobre la Renta (Income Tax Law, LISR), DOF 11 December 2013, last reform DOF 1 April 2024, Art. 26, 2013-12-11 official text · verified 2026-10-26

8. Profit remittances. Profits a branch sends to its head office or another establishment abroad that do not come from its net tax profit account (CUFIN) or its capital remittance account bear corporate tax on the amount grossed up by the factor 1.4286. On top, profits and distributions by a permanent establishment bear an additional 10 percent tax, paid by the establishment as a final payment. Amounts sent abroad are treated as capital repayments last.
Example: A branch remits MXN 1,000,000 of profit fully covered by its CUFIN balance: no gross up tax, but 10 percent additional tax of MXN 100,000, leaving MXN 900,000 for the head office, before any treaty relief. / About USD 54,046 remitted, about USD 5,405 of additional tax, about USD 48,642 net.Ley del Impuesto sobre la Renta (Income Tax Law, LISR), DOF 11 December 2013, last reform DOF 1 April 2024, Art. 164, fractions II and IV, and last paragraph, 2013-12-11 official text · verified 2026-10-26

9. Tax registration and transfer pricing duties. A foreign company with a Mexican permanent establishment registers in the RFC for it and files the yearly tax situation report (ISSIF) for its establishment activities as part of the annual return.Código Fiscal de la Federación (Federal Tax Code, CFF), DOF 31 December 1981, last reform DOF 9 April 2026, Arts. 27, section A, and 32-H, fraction IV, 1981-12-31 official text · verified 2026-10-26

10. Argentina link, high level only. Mexico and Argentina have an agreement to avoid double taxation on income and capital, with protocol, signed in Mexico City on 4 November 2015, approved in Argentina by Ley 27.334 and in force since 23 August 2017. An Argentine company operating through a Mexican branch should check how the agreement treats permanent establishment profits and the additional 10 percent tax on remittances. Read it together with the Argentine side of the rules in the Argentine guide.Agreement between Mexico and Argentina to avoid double taxation and prevent tax evasion on income and capital taxes, and protocol; Argentine approval Ley 27.334, Boletín Oficial 21 December 2016, Whole instrument (approval and entry into force), 2017-08-23 official text · verified 2026-10-26

Point	Branch	Subsidiary (S.A. or S. de R.L.)
Legal person in Mexico	No; the foreign company itself (LGSM art. 250)	Yes, separate (LGSM art. 2o.)
Set up approval	Ministry of Economy authorization, 15 business days, MXN 2,935 fee (LIE art. 17 A; LFD art. 72)	Free name authorization, notary deed (LIE art. 16 A; LGSM art. 5)
Liability	Head office fully exposed	Limited to contributions (LGSM arts. 58 and 87)
Head office royalties, fees, interest	Not deductible (LISR art. 26)	Deductible subject to general rules
Profits out	10% additional tax on remittances; gross up tax if not from CUFIN (LISR art. 164)	10% dividend withholding; gross up tax if not from CUFIN (LISR arts. 10 and 164)
Yearly corporate filing	Certified balance sheet in Ministry of Economy system (LGSM art. 251)	Annual meeting, legal reserve (LGSM arts. 20 and 181)
RNIE	Register within 40 business days and renew yearly (LIE arts. 32 and 35)	Same

Branch versus subsidiary on points that usually decide the choice (sources as cited)

Worked example

A Spanish engineering firm wins a two year contract with a Mexican utility. It applies to the Ministry of Economy for authorization to establish a branch, paying the MXN 2,935 duty (about USD 159) (LIE art. 17 A; LFD art. 72). The authorization is due within 15 business days.
With the authorization it registers in the Public Registry of Commerce (LGSM art. 251), registers the branch in the RFC and, within 40 business days of starting operations, in the RNIE (LIE art. 32).
The branch earns tax profit and pays corporate tax as a permanent establishment (LISR art. 2o.). Engineering fees it pays to head office for design work are not deductible (art. 26).
At year end it remits MXN 1,000,000 (about USD 54,046) of profit covered by its CUFIN account: the 10 percent additional tax of MXN 100,000 (about USD 5,405) applies (art. 164, fraction IV), before any treaty relief.

Step by step

1. Compare a branch with a subsidiary on liability, deductibility of head office charges and remittance tax (see the table).
2. Gather proof that the company is validly formed under its home law and that its bylaws do not breach Mexican public order, and file the authorization request with the Ministry of Economy, paying the MXN 2,935 duty (LIE art. 17 A; LFD art. 72, fraction V).
3. Once authorized (or after 15 business days of silence), register the foreign company in the Public Registry of Commerce (LGSM art. 251).
4. Register the branch in the RFC and obtain the advanced electronic signature (CFF art. 27).
5. Register in the RNIE within 40 business days of starting habitual trading (RNIE Regulation art. 37).
6. Each year publish the certified balance sheet (LGSM art. 251), renew the RNIE certificate in April or May (Regulation art. 43) and file the annual return with the ISSIF (CFF art. 32-H).

Common traps

Trading before authorization. Habitual trading without authorization is fined MXN 58,655 to MXN 117,310 in 2026 (LIE art. 38, fraction II).
Unplanned permanent establishment. A dependent agent who habitually concludes or plays the principal role in concluding contracts for the foreign company creates a permanent establishment even without an office (LISR art. 2o.).
Head office charges. Royalties, fees and interest charged by head office to the branch are not deductible in Mexico (LISR art. 26).
Double layer on remittances. Remittances not covered by CUFIN bear the gross up corporate tax and the additional 10 percent (LISR art. 164).
Forgetting the yearly balance sheet. The certified balance sheet must be published every year in the Ministry of Economy system (LGSM art. 251).
Treaty relief is not automatic. Treaty reductions of the additional branch tax depend on the specific treaty and residence proof; check the Taxes section.

Sources

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