As businesses seek faster, more resilient, and cost-effective supply chain solutions, nearshoring to Mexico has become a strategic move for many U.S.-based companies. With its close geographic proximity, competitive labor costs, skilled workforce, and trade advantages under the United States-Mexico-Canada Agreement (USMCA), Mexico stands out as an ideal partner for manufacturing and operational expansion.
However, while the benefits are compelling, nearshoring involves navigating a unique legal and regulatory environment. Understanding the legal and compliance factors involved is crucial for minimizing risk and ensuring long-term operational success.
In this article, we explore the key legal and regulatory considerations that businesses must evaluate before and during their nearshoring journey to Mexico.
1. Business Formation and Legal Structures
Foreign companies looking to establish operations in Mexico must choose an appropriate legal structure. Common business entities include:
- A. de C.V. (Sociedad Anónima de Capital Variable): A popular form of limited liability corporation, suitable for manufacturing operations and joint ventures.
- de R.L. de C.V. (Sociedad de Responsabilidad Limitada de Capital Variable): Similar to an LLC in the U.S., with fewer administrative requirements.
- Branch Offices: Not commonly used due to more complex tax and regulatory obligations.
To register a company, you’ll need:
- A notarized deed of incorporation
- Federal taxpayer registration (RFC)
- Municipal permits and licenses
- Registration with the Public Registry of Commerce
Tip: Work with local legal counsel and a bilingual notary public to streamline the process and ensure accuracy.
2. Understanding the USMCA Framework
The USMCA, which replaced NAFTA in 2020, plays a central role in shaping the regulatory environment for nearshoring. Key benefits include:
- Tariff-free trade for most goods produced within the region
- Stricter rules of origin, particularly for automotive and industrial sectors
- Stronger IP protections and labor rights enforcement mechanisms
To qualify for USMCA benefits, companies must ensure that a significant portion of components and labor originate from within the U.S., Mexico, or Canada. Documentation and certification requirements must be met for customs clearance.
3. IMMEX Program and Tax Incentives
One of the most powerful tools for foreign manufacturers in Mexico is the IMMEX Program (Industria Manufacturera, Maquiladora y de Servicios de Exportación). It allows companies to temporarily import goods and raw materials tax- and duty-free, provided the finished products are exported within a specified timeframe.
Benefits of IMMEX include:
- Exemption from VAT on imported materials
- Eligibility for certification under the VAT Certification Program
- Preferential treatment for exporters in customs and tax compliance
To qualify, businesses must:
- Register with the Mexican Ministry of Economy
- Maintain detailed inventory control systems
- Regularly report production and export data
4. Labor and Employment Regulations
Mexico’s labor laws are worker-focused and differ significantly from U.S. standards. Companies must comply with the Federal Labor Law (Ley Federal del Trabajo), which governs:
- Employment contracts (must be in writing)
- Minimum wage and overtime rules
- Profit-sharing requirements (10% of pre-tax profits must be distributed to employees)
- Mandatory benefits, including vacation, paid holidays, social security, and severance
In addition, union presence is common in Mexico’s industrial sectors. Under USMCA, labor reform requires greater transparency in union negotiations, secret-ballot elections, and independent labor courts.
Tip: Conduct a thorough labor risk assessment and consult a local HR advisor when sourcing or managing talent in Mexico.
5. Environmental and Safety Compliance
Depending on your industry and location, environmental and occupational safety regulations may be enforced by federal, state, or municipal agencies. Compliance areas include:
- Air and water emissions
- Hazardous waste management
- Energy efficiency and land use
- Employee health and safety standards (NOMs)
Non-compliance can result in fines, operational shutdowns, or license revocation. Conduct an Environmental Impact Assessment (EIA) when required and maintain records for inspections.
6. Intellectual Property Protection
One of the significant improvements under USMCA is the modernization of intellectual property rights (IPR) enforcement in Mexico. This includes protections for:
- Trademarks and trade names
- Patents and utility models
- Copyright and trade secrets
Companies should register their IP through IMPI (Instituto Mexicano de la Propiedad Industrial) to secure legal recognition. Even if IP is already registered in the U.S., it must be filed separately in Mexico to ensure enforceability.
7. Import/Export Regulations and Customs Compliance
Customs procedures can impact production schedules and cost efficiency. Businesses must comply with:
- Harmonized Tariff System codes
- Certificates of origin to qualify for USMCA
- Customs documentation, including invoices, manifests, and bills of lading
- Recordkeeping requirements for imports/exports
It’s common to work with a Mexican customs broker (agente aduanal) for smooth customs clearance and document management.
8. Site Selection and Zoning Laws
Before establishing a manufacturing facility, businesses must verify that the location complies with:
- Zoning laws
- Industrial land use permits
- Infrastructure requirements (power, water, transportation access)
Many industrial parks in Mexico offer built-in legal and operational benefits, including:
- Streamlined permitting processes
- Security and utilities
- Support with compliance and hiring
9. Corporate Governance and Transparency Requirements
Companies operating in Mexico must maintain:
- Annual meetings and shareholder documentation
- Tax filings and accounting per Mexican GAAP
- Compliance with anti-corruption laws (including FCPA and Mexico’s own anti-bribery statutes)
Transparent corporate governance not only ensures legal compliance but also builds trust with suppliers, regulators, and employees.
Nearshoring to Mexico offers transformative opportunities, but legal readiness is critical to unlocking long-term value. From labor law and customs compliance to intellectual property and tax incentives, every step must be carefully planned and locally informed.
Whether you’re launching a greenfield operation or expanding an existing one, working with experienced nearshoring advisors and legal partners can significantly reduce risks and accelerate timelines.