Technical Assistance for Roading

Our client is a Guatemalan company specialized in engineering and roading design as well as optimization and maintenance of highways. They were approached by a local Mexican customer which had recently been awarded a public contract for the construction of an interstate highway for which it needed our clients assistance..

Our client’s local customer was only interested in obtaining assistance and knowledge to overcome the difficulties that were present. These services would be provided in the vast majority from Guatemala (knowledge and research), while the assistance would be provided locally in Mexico for a maximum of 3 months.

After our initial consultation with our client, we understood their immediate need to set up a local company in order to invoice the Mexican client. Nevertheless, our assessment in this case was to not invest in a local entity with implicit and explicit compliance and maintenance costs, providing that for the moment, there would only be one customer to service with one operation in Mexico.

Therefore our Firm analyzed the terms of the operation and were able to determine that considering that the provision of intangible services would not be done within Mexico, and also that actual presence in Mexico would be limited to a 3 month period, we then concluded that operating as a foreign company directly in Mexico was the optimal solution.

The above mentioned was possible considering that Mexican tax legislation does not tax or consider a permanent establishment, any services provided regarding construction as long as the stay within the country is no longer than 183 days.

As a result, our Client was able to operate within Mexico without having to set up a local entity which streamlined their commercial relationship with their local customer all while legally avoiding double taxation within Mexico.

If you have doubts about how to start your operations and expand your company to Mexico, contact us and we will advise you on how to achieve your goals.