Mexico remains an attractive destination for investment in a highly demanding regulatory environment

Mexico is at a defining moment to consolidate itself as one of the most attractive destinations for doing business worldwide. Our geographic position is privileged: located in the Northern Hemisphere, bordering the world's largest economy and serving as a bridge between the Asia-Pacific and European economic blocs. Furthermore, our cultural and linguistic affinity has made us a natural business hub for large multinationals to establish their regional headquarters for all of Latin America.

However, Mexico's appeal goes far beyond geography. We are the Latin American country with the most significant network of trade and tax treaties, which greatly facilitates investment, the movement of talent, and capital flows. A crucial factor that is often underestimated is our complete exchange rate freedom; unlike other economies in the region, there are no restrictions on the movement of capital in Mexico, guaranteeing foreign investors that their cash flow will not be arbitrarily withheld by authorities or the Central Bank.

The challenges of regulatory compliance and technology

Despite these competitive advantages, operating in the current environment involves navigating a series of geopolitical and macroeconomic risks that directly impact interest rates and exchange rates. Added to this is the challenge of regulatory compliance, which is one of the primary concerns for business leaders, particularly in the fiscal and labor sectors.

Today, tax auditing and enforcement have evolved rapidly, and authorities require taxpayers to maintain a robust file that demonstrates the materiality of their operations, going far beyond simple accounting and electronic invoices (CFDI). Companies must evidence, through contracts and irrefutable proof, that the services received were real and provided a benefit to the business. For multinational firms, the validation of foreign transactions, such as the deductibility of interest from parent company funding, is a topic under constant scrutiny.

While it is true that the burden of oversight falls mostly on large formal and multinational companies—since auditing micro-enterprises is not profitable for the authorities—we have also observed a greater openness from current tax authorities to engage in dialogue, understand the origin of transactions, and reach fair agreements. To alleviate the administrative burden of real-time compliance, technology is our best ally; therefore, at Baker Tilly, we develop cloud platforms such as DocuMeta, focused on the comprehensive management of evidence and contracts.

Legal certainty as a driver of investment in the energy sector

Growth opportunities in Mexico also extend to the utilization of our natural resources. There is a recent debate regarding the feasibility of implementing more sophisticated technologies for oil and gas extraction—resources that we know exist in abundance in regions such as the Burgos Basin and the Gulf of Mexico.

The success of any opening in this sector will depend on private capital, as it requires a massive technological and financial investment that the State should not divert from priority social needs. Nonetheless, private capital seeks returns under an appropriate degree of certainty; thus, the cornerstone for triggering this industry is, undoubtedly, legal security.

Currently, we are experiencing a period of caution among investors, who have paused large projects while waiting to see how recent reforms to the Judiciary evolve. A legal framework that does not provide certainty halts development, as for businesses to thrive in Mexico—and throughout the world—it is essential to have prompt and expeditious justice to resolve disputes, both between private parties and with the State.

Our commitment to the future

In an environment of challenges and great possibilities, our mission at Baker Tilly is to create present and future value for our clients. We project ourselves as the most important firm for mid-sized companies, which are the engine of employment and growth in the country. By offering a comprehensive range of services—from legal and tax consulting to auditing—we seek to be true business partners. Our goal is to anticipate the needs of entrepreneurs, honor our word, and accompany the success of those who, day after day, decide to bet on Mexico.