Good to know
Good to Know
- You do not need a Mexican citizen as a partner or shareholder to incorporate a standard company in Mexico as a foreigner — most business activities allow up to 100% foreign ownership.
- Incorporation itself does not give you the right to live or work in Mexico — that requires a separate residency/work permit process through INM, so plan the two tracks separately.
- Because Puerto Escondido is a smaller coastal town, it's worth confirming a local notario público or corredor público covering the Oaxaca Public Registry of Commerce before assuming full services (bank account opening, ongoing accounting) are as fast or as available as in a larger city like Oaxaca City or Mexico City.
- Budget for ongoing monthly/annual accounting fees (a Mexican accountant, contador, is effectively mandatory for tax compliance) — this recurring cost is often overlooked when people only budget for the one-time incorporation fee.
- If you're a remote freelancer billing foreign clients from Puerto Escondido, RESICO (1–2.5% tax on gross income under MXN 3.5M/year) is usually the simplest, cheapest legal path — you generally don't need to form a company at all.
- RESICO does not allow expense deductions, so if your business has genuinely high costs, running the numbers against the general regime is worth it before assuming RESICO is always cheaper.
- Services billed to clients outside Mexico are typically treated as 0% VAT 'exports,' which covers most remote/online freelance work — but check this with a contador for your specific service type.
- You need a temporary/permanent residency card with paid-activity permission (not a tourist FMM) before you can legally register an RFC and invoice as a freelancer or company owner.
- A full S.A. de C.V. company only tends to make sense in Puerto Escondido if you're opening a physical business (restaurant, shop, rental operation) or hiring local staff — the compliance load (monthly ISR/VAT filings, CFDI invoicing, potential payroll/IMSS registration) is considerably heavier than the freelancer route.
Option 1 Persona Moral Full Company
- Corporate Income Tax Rate
- Flat 30% ISR (federal corporate income tax) on worldwide taxable profits for Mexican tax-resident companies, including fully foreign-owned entities incorporated in Mexico. Non-resident companies are taxed only on Mexican-source income.
- Simplified Corporate Variant
- A company (any foreign-owned S.A. de C.V. included) with annual income below MXN 35,000,000 (approx. USD 1,995,500 at current rates) may elect RESICO's corporate variant, which simplifies bookkeeping to a cash-flow basis and removes some filing burdens (e.g., monthly electronic accounting, the DIOT third-party-operations return). This simplifies compliance only — the 30% ISR rate itself is not reduced for corporations.
- VAT Iva
- Standard VAT/IVA rate of 16% on Mexican-source sales; 0% applies to services genuinely exported/billed to foreign clients; an 8% reduced rate exists only in certain northern border regions, not relevant to Puerto Escondido.
- Structure Name
- Persona Moral — typically an S.A. de C.V. or S. de R.L. de C.V., which can be 100% foreign-owned
- Dividend Withholding Tax
- 10% withholding tax applies when the company distributes profits to shareholders.
Filing Obligations
- Annual
- Annual ISR return for the prior calendar year is due by March 31, filed electronically through SAT's 'Declaraciones y Pagos' portal, with financial statements and CFDI-backed accounting attached.
- Monthly
- Provisional ISR payments and the definitive VAT (IVA) return are both due by the 17th day of the following month.
- Ongoing
- All income and deductible expenses must be documented via CFDI 4.0 electronic invoices; if the company hires staff, it must also register as an employer with IMSS/INFONAVIT and handle state payroll tax (roughly 1–3%) and social security contributions on a monthly/bi-monthly schedule.
Typical Recurring Professional Costs
Local Accountant Contador
- Amount USD Low
- 57
- Currency Local
- MXN
- Amount USD High
- 143
- Amount Local Low
- 1000
- Amount Local High
- 2500
- Note
- per month, for basic monthly RESICO/freelancer filing support
Option 2 Persona Fisica Freelancer Sole Proprietor
- Tax Rate
- Progressive RESICO rates from 1.0% up to 2.5% on gross income actually collected (cash-flow basis, banded as income rises toward the MXN 3.5M ceiling). No business-expense deductions are allowed at these rates — the low headline rate is the trade-off for losing deductions.
- VAT Iva
- 0% VAT on services invoiced to foreign clients as 'exported services' (the situation for most remote-work freelancers); 16% VAT applies if billing Mexican clients.
- Setup Cost
- RFC registration itself is free through SAT and requires no minimum capital; the process is largely online plus one in-person SAT appointment, though appointment availability can take from a few days to several weeks.
- Who It Suits
- Solo consultants, freelancers, remote service providers, and small online sellers working without local employees or business partners.
- Structure Name
- Persona Física con Actividad Empresarial (individual with business/professional activity) — in practice almost always filed under RESICO (Régimen Simplificado de Confianza) if eligible
- Loses Eligibility If
- Annual income exceeds the MXN 3.5 million cap, the person becomes a partner/shareholder in a legal entity, or SAT/an auditor later reclassifies the arrangement as a disguised employment relationship with a single client — in any of these cases the taxpayer is moved to the general 'business and professional activity' regime, which requires full bookkeeping and applies progressive personal ISR rates up to 35%.
Eligibility
- Income Cap
- MX$3,500,000
- Immigration Requirement
- A foreigner needs a temporary or permanent residency card with permission to carry out paid activity (a tourist FMM is not sufficient), plus a CURP, to register for an RFC and file taxes.
- Cap Note
- Eligibility requires annual gross income under this cap, no employees, and no partnership/shareholder position in a corporation.
Filing Obligations
- Annual
- Annual personal return due in April of the following year.
- Monthly
- Monthly ISR/VAT declaration due by the 17th of the following month; under RESICO these monthly payments are generally treated as final.
Incorporation Process And Requirements
- Realistic Timeline
- Roughly 2 to 6 weeks from SRE permit application through Public Registry filing and RFC issuance for a straightforward company with no unusual corporate structure, assuming documents are in order; bank account opening can add further time on top of this.
- Typical Total Cost
- MX$15,000
- Local Partner Or Sponsor Mandate
- No Mexican citizen partner, local sponsor, or nominee shareholder is legally required for a foreigner to own or incorporate a standard Mexican company (e.g. Sociedad Anónima de Capital Variable, S.A. de C.V., or Sociedad de Responsabilidad Limitada, S. de R.L.). Foreigners can hold up to 100% of shares in most business activities. Restricted sectors (e.g. certain areas near the coast/border for direct land ownership, some energy, and a short list of activities reserved for Mexicans under the Foreign Investment Law) may require a fideicomiso (bank trust) for real estate or a Mexican-majority structure, but general commercial/service company formation does not require a local partner.
- Jurisdiction Note
- Company incorporation rules are set at the Mexican federal level, not by the city of Puerto Escondido or Oaxaca state, so the process below applies uniformly but must be executed through a local notario público or corredor público (several operate in Puerto Escondido and nearby Oaxaca state) and registered with the local Public Registry of Commerce covering the Puerto Escondido/Oaxaca jurisdiction.
Core Steps
- Step
- Obtain a permit from the Secretaría de Relaciones Exteriores (SRE) authorizing use of the proposed company name and allowing foreign participation in the company (Permiso de la Secretaría de Relaciones Exteriores).
- Notes
- This is a standard, routine federal filing done online via the SRE's system; it is not a special foreigner-investment approval process but a mandatory step for any new Mexican company.
- Step
- Draft the corporate bylaws (estatutos sociales) setting out share structure, corporate purpose, administration (sole administrator or board), and registered address.
- Notes
- Typically prepared by the notario público or a corporate lawyer.
- Step
- Sign the incorporation deed (acta constitutiva) before a notario público or corredor público, who formalizes the company's legal existence.
- Notes
- Foreign shareholders can grant a power of attorney to a representative in Mexico to sign on their behalf if they cannot be present in person.
The notario usually handles this filing.
- Step
- Register the company with the Public Registry of Commerce (Registro Público de Comercio) in the relevant state (Oaxaca, for a Puerto Escondido-based company).
- Step
- Obtain a Federal Taxpayer Registry number (RFC) from the Servicio de Administración Tributaria (SAT) for the new company.
- Notes
- Required before the company can legally invoice, open a bank account, or hire staff.
Only required once hiring begins.
- Step
- Register with the Mexican Social Security Institute (IMSS) and Infonavit if the company will have employees.
Open a Mexican corporate bank account.
- Notes
- Banks require the RFC, incorporation deed, and proof of address; foreign-owned companies sometimes face extra compliance/KYC scrutiny and longer account-opening timelines than Mexican-owned companies.
- Step
- If a foreign shareholder/director will personally reside and work in Mexico rather than just own shares remotely, they separately need an appropriate immigration status (e.g. Temporary or Permanent Resident visa with permission to work) from the National Immigration Institute (INM) — this is distinct from the company incorporation itself.
Official Links
- SAT RFC Registration
- https://www.sat.gob.mx/tramites/16626/inscripcion-en-el-rfc-de-personas-morales
- Public Registry General
- https://www.gob.mx/ProteccionCivil/es/articulos/registro-publico-de-comercio
Jurisdiction Note
Corporate and freelancer tax rules in this section are set by Mexican FEDERAL law (SAT / Ley del ISR) and apply identically whether the business is based in Puerto Escondido or anywhere else in Mexico — there is no distinct Oaxaca-state corporate tax regime for foreign-owned businesses. Incorporation paperwork (notario público, SAT registration) is handled through national systems even when the business operates locally in Puerto Escondido.
Freelancer Vs Company Practical Distinction
Freelancer Vs Company Practical Distinction
- Most solo digital-nomad freelancers and remote contractors never need to incorporate a Mexican company at all — registering as a Persona Física under RESICO is cheaper, faster, and carries far lighter bookkeeping.
- Forming a full Persona Moral generally only becomes necessary if you plan to hire local employees, sign a commercial lease or open a physical storefront/restaurant as a business entity, need liability separation from personal assets, or your income structure requires attracting local investors/partners.
- A company requires a notario público to incorporate, ongoing accounting support, and materially heavier monthly/annual filing than the freelancer route, in exchange for the 30% flat corporate rate rather than personal progressive rates.
- Even under RESICO, a local accountant (contador) is close to a practical necessity for correctly filing monthly CFDI-based declarations and avoiding penalties.
AI-generated estimateData refreshed July 2026
Sources cited for this category
These are the sources cited in this business permits & incorporation for foreigners research for this city. Individual figures may not each trace to one of them.
- 1.gob.mx
- 2.sat.gob.mx
- 3.gob.mx
More About Puerto Escondido
Data last updated July 2026 · Verify anything important.