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Closing the Mexican branch of a foreign company: profit remittances, RFC cancellation for cessation, the foreign investment registry and staff

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

A foreign company's branch in Mexico is a permanent establishment, so closing it involves taxes on what goes back to head office: remittances not covered by the branch's net tax profit account or its capital remittance account bear 30 percent on the grossed up amount. The branch cancels its RFC with a free notice for total cessation of operations within the month after its last required return, provided its tax and social security standing is clean, and must request cancellation of its foreign investment registration within 40 business days. Staff are owed severance as in any closure, and a sale of the branch's business makes the buyer jointly liable for the branch's past taxes up to its value.

USD conversions use MXN 18.6638 per US dollar, the US Federal Reserve H.10 noon buying rate in New York for 23 October 2026 (FRED series DEXMXUS), the latest observation available when this page was verified. Mexican tax law uses the Banxico FIX for foreign currency amounts, which differs slightly. Conversions are for orientation only.

Key facts

Tax on branch remittances outside CUFIN and capital remittance account	30 % of remittance x 1.4286 %LISR art. 164, section II, as of 2026-10-26 · in force
Cessation notice deadline	Within the month after the last required return RMF 2026 Annex 2, sheet 127/CFF, as of 2026-10-26 · in force
RNIE cancellation deadline	40 business daysRNIE regulation art. 40, as of 2026-10-26 · in force

The rule

1. Profits in cash or in kind sent by a permanent establishment of a foreign company to its head office or another establishment abroad are treated as distributed dividends when they do not come from the branch's net tax profit account (CUFIN) or its capital remittance account. The branch pays tax at 30 percent on the amount grossed up by 1.4286. The branch CUFIN is increased by each year's net tax profit and dividends received from Mexican companies, and reduced by remittances made from it.
Cost to do it: 30 percent of the grossed up remittance outside CUFIN and capital remittance account, about 42.86 percent of the remittance.
Example: A branch closing with MXN 20,000,000 of cash not covered by CUFIN or its capital remittance account remits it to head office: tax MXN 20,000,000 x 1.4286 x 30 percent = MXN 8,571,600. / Remittance about USD 1,071,593; tax about USD 459,263.Ley del Impuesto sobre la Renta (LISR), DOF 11 December 2013 (Chamber of Deputies consolidated text, last reform DOF 1 April 2024), Art. 164, section II, 2013-12-11 official text · verified 2026-10-26

2. A foreign company may trade in Mexico only once registered in the Public Registry of Commerce, after Ministry of Economy authorization under arts. 17 and 17 A of the Foreign Investment Law, and must publish an annual balance sheet certified by a public accountant in the Ministry's electronic system while it operates.
Cost to do it: No fee in the LGSM for the publication.
Example: A branch still registered must keep publishing its annual balance until its registration is cancelled. / Not a monetary rule.Ley General de Sociedades Mercantiles (LGSM), DOF 4 August 1934 (Chamber of Deputies consolidated text, last reform DOF 20 October 2023), Arts. 250 and 251, 1934-08-04 official text · verified 2026-10-26

3. A branch that stops operating files the RFC cancellation notice for total cessation of operations (127/CFF), free of charge, within the month after the last required return, with the notarized document recording the cessation, the legal representative's identification and powers, the anti money laundering register deregistration where applicable, a social security compliance opinion, and the appointment of a legal representative for tax purposes for foreign residents. The conditions of CFF art. 27, section D, item IX apply.
Cost to do it: Free.
Example: Last return filed 17 May 2027; notice 127/CFF by 17 June 2027. / No government fee; USD 0.Annex 2 to the Resolución Miscelánea Fiscal para 2026 (procedure sheets), SAT compilation including the First Amendment, DOF 17 July 2026, Procedure sheet 127/CFF; CFF art. 27, section D, item IX, 2026-07-17 official text · verified 2026-10-26

4. Foreign companies registered in the National Foreign Investment Registry must request cancellation within 40 business days after they stop falling within the registration cases of art. 32 of the Foreign Investment Law.
Cost to do it: No fee set in the regulation.
Example: Branch operations end on 30 April 2027; RNIE cancellation should be requested within 40 business days. / Not a monetary rule.Reglamento de la Ley de Inversión Extranjera y del Registro Nacional de Inversiones Extranjeras, DOF 8 September 1998 (Chamber of Deputies consolidated text, last reform DOF 17 August 2016), Art. 40, 1998-09-08 official text · verified 2026-10-26

5. Closing the branch triggers the same labor rules as closing a company: three months' salary plus the seniority premium where a statutory closure cause applies, dismissal rules otherwise, and absolute priority for workers' claims. If the branch business is sold, the buyer becomes jointly liable for its taxes up to the business value and the employer substitution rules apply.
Cost to do it: See the employees and asset sale pages.
Example: A branch with 20 staff budgets severance before remitting cash to head office. / Not a monetary rule.Ley Federal del Trabajo (LFT), DOF 1 April 1970 (Chamber of Deputies consolidated text, last reform DOF 14 May 2026), LFT arts. 41, 113, 162 and 436; CFF art. 26, section IV, 1970-04-01 official text · verified 2026-10-26

Source of remittance	Mexican tax MXN	USD
Branch CUFIN	0	0
Capital remittance account	0	0
Outside both accounts	8,571,600.00	459,263

Branch closure remittance of MXN 20,000,000 (LISR art. 164 II; USD at 18.6638)

Worked example

Before remitting, the branch maps its cash against CUFIN and the capital remittance account; only the excess bears the 30 percent grossed up tax.
Treaties may contain branch profit rules; check the head office country's treaty with Mexico.

Step by step

1. Reconcile the branch CUFIN and capital remittance account.
2. Settle staff and IMSS; sell or transfer assets with VAT invoices.
3. File the last returns, then notice 127/CFF with clean compliance opinions.
4. Remit cash, paying tax on any amount outside the accounts.
5. Cancel the RNIE registration within 40 business days and the registration in the Public Registry of Commerce.

Common traps

Remitting before reconciling the accounts: excess remittances bear about 42.86 percent (LISR art. 164 II).
Leaving the branch registered: annual balance publication duties continue (LGSM art. 251).
Forgetting the tax representative for foreign residents in the cessation notice (Annex 2, 127/CFF).

Sources

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