General Law of Commercial Companies (SAS)

SUPPORT MECHANISM:

The law gives entrepreneurs the opportunity to create a legal company in one day, making the constitution process accessible and allowing merchants and entrepreneurs to fill all the forms in an online platform at no cost. Mexico aims to design an efficient regulatory system that would decrease the 59.9% informal business rate, while making “Doing Business” in Mexico more attractive. 

Some benefits introduced by the law are:

  • SMEs can be created and formalized in just one day. This process would take at least 6 days and up to 20, 000 MXN; without considering other several costs such as accountants, notary public and lawyers
  • SMEs have the possibility of being part of Public Registry of Commerce
  • SMEs will be included in the Federal Taxpayers Registry, according to the National Institute of Statistics and Geography, the total businesses sum up to more than 5 388 000. This is beneficial for credit requests, property registration and potential investments.
  • Employees will have access to Social Security services provided by the Mexican Social Security Institute
  • Unipersonal companies are now permitted in the Mexican System
  • The internet portal usage will make the business creation process more efficient, saving up to 15 million pesos and 82 bureaucracy years for every 1000 businesses created

In 2016, the law was signed by president Enrique Peña Nieto and came into force 6 months after its publication in the Official Journal of the Federation.

Retrieved from: Forbes MexicoEl Universal, and Haysboone.

IMPLEMENTING AGENCIES:

Secretariat of Economy, Tax Administration Service, Mexican Social Security Institute, National Institute of Entrepreneurship.

MONITORING + EVALUATION METHODS

Mexico aims to improve in the Doing Business scale implemented by the World Bank, where it has a score of 73.72/100. According to the National Institute of Statistics and Geography, 59.9% of the informal entrepreneurs and merchants will have the opportunity to formalize and operate in the formal economy.

Retrieved from: El Universal.

RESULTS:

No success has been reported, as the law hasn’t come into force yet.

CHALLENGES + LESSONS TO DATE:

Héctor Galeano Inclán, President of the national Association of Mexican Notaries, has declared this law as risky and dangerous. He says this new online process has no identity protection layers, there’s no protection against malpractices and gives the opportunity to create shell companies. This new law has a cost, in the end charged to all taxpayers.

NOTES + ADDITIONAL CONTEXT:

The law gives entrepreneurs the opportunity to create a legal company in one day, making the incorporation process accessible and allowing merchants and entrepreneurs to fill all the forms in an online platform at no cost. Mexico aims to design an efficient regulatory system that would decrease the 59.9% informal business rate, while making “Doing Business” in Mexico more attractive. Some benefits introduced by the law are:

  • SMEs can be created and formalized in just one day. This process would take at least 6 days and up to 20, 000 MXN; without considering other several costs such as accountants, notary public and lawyers;
  • SMEs have the possibility of being part of Public Registry of Commerce;
  • SMEs will be included in the Federal Taxpayers Registry, according to the National Institute of Statistics and Geography, the total businesses sum up to more than 5 388 000. This is beneficial for credit requests, property registration and potential investments;
  • Employees will have access to Social Security services provided by the Mexican Social Security Institute;
  • Unipersonal companies are now permitted in the Mexican system;
  • The internet portal usage will make the business creation process more efficient, saving up to 15 million pesos and 82 bureaucracy years for every 1,000 businesses created.

Last March 11th 2016, the law was signed by president Enrique Peña Nieto and will come into force 6 months after its publication in the Official Journal of the Federation.

Retrieved from: Forbes Mexico and El Universal.

 

Policy immediate target(s): Small and Medium Enterprises, Informal economy

Small and Business Enterprises that would not have enough economic resources to legally operate. Formal constitution process needs an initial investment of 20,000 MXN plus at least 6 days of bureaucracy, making it more convenient to operate in the informal economy.

By formalizing, entrepreneurs acquire new obligations such as tax returns, however, employees have the right to free access to public health.

 

Background of policy

Jamaica implemented a similar policy by creating an electronic platform that connects enterprises with the fiscal system of the country, making it efficient for entrepreneurs to pay their taxes online.

 

Official Journal of the Federation statement.

Economiahoy

 

 

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