Business License Mexico: Who needs one and how to apply

Mexico offers international businesses a strong foothold in Latin America and direct access to North American markets. Competitive labour, favourable trade agreements, and growing consumer demand make it an attractive choice for expansion.

To operate legally, companies must comply with licensing requirements at the federal, state, and local levels. This includes RFC tax registration, VAT compliance, and sector-specific permits. Understanding these rules reduces compliance risks, prevents delays, and helps establish long-term credibility in Mexico’s business environment.

Does Mexico Require a Business License?

Mexico requires a multi-tiered business licensing system that combines federal tax registration, state permits, and municipal licenses, depending on your activities and location. At the federal level, any individual or company providing goods or services must obtain a Registro Federal de Contribuyentes (RFC), which serves as the primary business identifier for tax obligations and commercial transactions. Since 2022, all citizens and residents aged 18 and above must register for an RFC. Beyond this, each of Mexico’s states operates its own permit system, with major cities such as Mexico City, Guadalajara, and Monterrey imposing additional municipal requirements that cover zoning, health, and environmental compliance.

Foreign and domestic businesses follow the same core licensing steps; however, foreign companies face additional hurdles, including immigration status checks for RFC registration and sector-specific restrictions. Permanent establishments must comply fully with Mexican tax obligations, while non-permanent entities face limited options. 

Importantly, businesses must secure RFC registration before operations begin, as it is essential for opening bank accounts, signing contracts, and completing local registrations. Delays in federal registration often create a ripple effect, holding up approvals at the state and municipal levels.

Mexico Business License vs Regional / Municipal Licenses

Understanding the distinction between federal, state, and municipal licensing prevents compliance gaps and ensures comprehensive legal operation across Mexico’s diverse jurisdictional framework.

Mexico Business License (Federal RFC Registration)	Regional / Municipal Licenses
Managed by SAT through the RFC system, required nationwide to establish a business identity and tax obligations.	Issued by state and municipal governments to regulate operations beyond federal tax registration.
Uniform process across all states; mandatory before opening bank accounts, contracts, and tax filings.	Varies by location, some states use digital platforms, others paper-based; municipalities add local approvals.
Must be completed first; it forms the basis for all other permits.	State permits cover environmental and labour rules; municipal licenses handle land use, construction, health, and signage.
Single national authority (SAT).	Multiple authorities with separate fees, timelines, and renewals.

Occupational & Professional Licenses in Mexico

In Mexico, certain professions and regulated industries require more than just a general business license. When deciding how to structure your business, the right choice depends on your goals, liability concerns, and long-term market strategy:

• S. de R.L. (Sociedad de Responsabilidad Limitada): Often used by small and mid-sized foreign-owned businesses. It limits liability and offers flexibility in management.
• S.A. (Sociedad Anónima): Best suited for larger companies planning long-term growth in Mexico, with a more formal corporate structure.
• S.A.P.I. (Sociedad Anónima Promotora de Inversión): A strong option for startups aiming to attract investors or venture capital, since it allows more flexible shareholder agreements.
• Branch Office: Ideal for foreign companies seeking to expand operations in Mexico without establishing a separate local entity.
• Employer of Record (EOR): Ideal for businesses testing the market or hiring a small team before committing to full incorporation.

Sales Tax / VAT / GST License in Mexico

Mexico’s Value Added Tax (IVA) system requires registration for all businesses engaging in taxable activities within Mexican territory, with no minimum turnover threshold for mandatory compliance.

VAT Registration Requirements 

VAT was introduced in Mexico in 1980, initially at the standard rate of 10%. The current standard rate is set at 16%. There is no threshold for registering for VAT in Mexico – businesses that supply taxable services or goods in the country must register for Mexican VAT. This includes foreign companies with a permanent establishment, while foreign companies without a permanent establishment may not register as non-resident traders and cannot reclaim Mexican VAT.

Registration Process and Documentation 

VAT registration occurs through the SAT system as part of your RFC application process. Once registered, businesses receive a VAT registration number that establishes them in the Mexican tax system as a legal entity. Overseas businesses must appoint a local tax representative to handle VAT compliance and communication with Mexican authorities.

VAT Compliance Obligations 

Registered businesses must issue electronic invoices (CFDI) for all transactions, file monthly VAT returns, maintain detailed transaction records, and comply with electronic invoicing requirements through SAT-certified platforms. The 16% standard rate applies to most goods and services, with certain items subject to 0% rate or exemption status.

IEPS Special Tax Requirements 

Individuals and legal entities engaged in the disposal and permanent import of specific goods or rendering services related to luxury items, alcoholic beverages, tobacco, and gasoline must also register for Special Tax on Production and Services (IEPS). This additional indirect tax applies in conjunction with VAT and requires separate compliance procedures and reporting obligations.

Federal / National Licenses in Addition to a Mexico Business License

Beyond state and municipal permits, certain industries in Mexico require federal approval. National authorities oversee these licenses, which are mandatory for activities that affect public health, the environment, national security, or international trade. Securing the right federal licenses ensures compliance across multiple layers of government and prevents costly interruptions to your operations.

Key Federal Licenses and Permits

• Importer’s Registry (Padrón de Importadores): Required for businesses importing goods into Mexico. Managed by the SAT (Tax Administration Service), this registry is only available to companies that are current on their tax obligations and already have an RFC number.
• Environmental Impact License: Issued by SEMARNAT (Secretaría de Medio Ambiente y Recursos Naturales) for projects that could impact the environment, such as manufacturing, construction, or resource extraction.
• Health Licenses: Managed by the Secretaría de Salud (Ministry of Health) for companies in healthcare, pharmaceuticals, medical devices, and related sectors.
• Industry-Specific Licenses: Additional approvals may apply depending on your industry:
  • SENER (Secretariat of Energy): For energy and fuel-related operations.
  • CNBV (National Banking and Securities Commission): For financial institutions and investment firms.
  • SICT (Secretariat of Infrastructure, Communications, and Transportation): For businesses in transport, logistics, and infrastructure development.

How to Get a Mexico Business License — Step by Step

Successfully obtaining your Mexico business license registration requires systematic navigation through federal, state, and municipal requirements with careful attention to documentation and timing.

Step 1: Prepare Documents: Collect shareholder IDs or passports, proof of address, draft bylaws (Acta Constitutiva), and notarised powers of attorney if abroad. Foreign owners need immigration documents and apostilled certifications.

Step 2: Choose Structure & Register Company: Select the best entity type, notarize bylaws, and file incorporation with the Public Registry of Commerce.

Step 3: Obtain RFC Tax Registration: Book a SAT appointment, present CURP, residency card, and passport. SAT issues your RFC number and tax card.

Step 4: Register for VAT & E-Invoicing: Complete VAT registration, obtain CFDI invoicing, e.firma digital signature, and CSD certificate.

Step 5: Secure State & Municipal Permits: Apply for state permits and municipal licenses (land use, health, environmental). Requirements and fees vary by location.

Step 6: Banking & Employee Registration: Open corporate bank accounts, register employees with IMSS for social security, and set up compliant payroll systems.

How Much Is a Mexico Business License?

Mexico business license costs vary significantly based on business structure, location, and industry requirements, making comprehensive budgeting essential for successful business establishment.

Basic Incorporation and Registration Costs 

Name reservation and registration range from $100 to $300, while notary and legal fees typically cost $500 to $2,000, depending on business complexity. Public Registry filing requires $300 to $800, and tax registration with compliance setup costs $200 to $500. Overall incorporation expenses range from $2,000 to $6,000, excluding optional licenses and permits.

Professional Service Investment 

Most foreign businesses engage professional assistance costing $1,000 to $3,000 for comprehensive incorporation support. Complex multi-state operations or specialised industries may require higher professional service investments to navigate regulatory requirements effectively. These services often prove cost-effective compared to potential compliance violations and associated penalties.

Ongoing Tax and Compliance Expenses 

Corporate income tax is set at 30%, VAT at 16%, plus social security contributions for employees. Monthly accounting and compliance services typically cost $500 to $2,000, depending on business complexity and transaction volume. Annual audit requirements for larger companies add additional professional service costs to ongoing operational expenses.

Renewing a Mexico Business License

Maintaining a valid business license in Mexico requires proactive management of federal, state, municipal, and industry-specific registrations to avoid operational interruptions or penalties.

Federal / Tax Registration (RFC)

Your RFC (Registro Federal de Contribuyentes) remains valid indefinitely, but you must stay current with tax obligations by filing monthly and annual returns with the SAT. Falling behind can lead to suspension of your RFC, which halts legal operations until compliance is restored. Additionally, the e.firma digital signature linked to your RFC has an expiration date and must be renewed periodically.

State and Municipal Licenses

State permits and municipal operating licenses often require annual or biennial renewal, depending on the jurisdiction and business type. Renewals generally require updated documents such as proof of continued operations, tax compliance certificates, and current business information. Many states and municipalities now offer online renewal platforms, but processing times can vary, making early submission essential.

Industry-Specific Renewal (REPSE)

Companies providing specialised services or working under Article 15 of the Federal Labour Law must also renew their REPSE registration every three years. Renewal must be completed within three months prior to expiration, and updated documentation showing compliance with tax and social security obligations (IMSS, INFONAVIT) is required. Missing the renewal window leads to cancellation, and companies must re-register as new applicants.

Penalties for Operating Without a Mexican Business License

Commercial establishments in Mexico City, whether in low-income neighbourhoods or zonal areas, must comply with federal, state, and municipal requirements to operate legally. Businesses are required to use their premises only for the registered activity, maintain permits and insurance on-site, renew licenses on time, and allow authorised inspections. They must adhere to operating hours, manage crowd control, and ensure clearly marked emergency exits, while also providing accessibility for service and assistance dogs.

Neighbourhood and zonal impact establishments have additional responsibilities, including displaying anti-discrimination signage, ensuring certified security personnel, implementing civil protection or safety measures, and providing potable water and child-friendly facilities where applicable. 

These businesses must also comply with regulations regarding parking, bicycle storage, and soundproofing, and take steps to prevent drunk driving, such as implementing alcohol testing where required. Compliance with these rules is crucial for ensuring safety, maintaining legal operation, and fostering community trust.

Penalties for operating without the required licenses are severe. At the federal level, businesses may face fines, audits, or criminal charges for failing to register with the SAT or comply with tax laws. State authorities can impose fines and suspend operations for missing local permits. Municipal fines range from 25 to 125 times the current Unit of Account (UMA) of Mexico City for minor violations, with higher penalties for serious breaches, false information, or safety failures. Repeat offences can result in permanent license revocation or closure.

Best Mexico Business License Services (2025)

Commenda is a trusted choice for international businesses seeking a Mexico business license, offering a platform that streamlines registration while reducing administrative complexity. Its automated tools and local expertise help companies meet federal and state requirements quickly and accurately.

Key Features of Commenda for Mexico Business License Registration:

• Automated Registration Management: Handles all documentation, filings, and approvals needed for foreign entities.
• Multi-Currency Tracking: Converts fees and payments between MXN and your home currency for precise reporting.
• Real-Time Compliance Monitoring: Dashboards show license status, renewal dates, and regulatory alerts.
• Audit-Ready Records: Maintains detailed documentation to simplify inspections or audits.
• Expert Local Guidance: Provides specialised support familiar with Mexican regulations and cross-border compliance.

With Commenda, obtaining and maintaining a Mexico business license is efficient, accurate, and fully compliant, allowing your team to focus on business growth instead of regulatory hurdles.

How Commenda Simplifies Mexico Business Licensing

Commenda goes beyond registration by offering a full-service approach to managing Mexico business licenses. Its platform combines automation with hands-on expertise to guide companies through every regulatory requirement, from federal to municipal levels.

Key Ways Commenda Simplifies Licensing:

• Comprehensive Assessments: Identify all necessary federal, state, and municipal licenses based on industry, ownership, and location to prevent compliance gaps.
• End-to-End Management: Handles RFC registration, incorporation, VAT setup, and municipal permits directly with authorities and notaries.
• Multi-Jurisdiction Expertise: Covers all 32 Mexican states and hundreds of municipalities, ensuring both federal and local requirements are met.
• Digital-First Platform: Provides real-time updates, automated renewal reminders, and secure digital document storage integrated with SAT and municipal systems.
• Ongoing Support: Offers renewal tracking, audit assistance, and regulatory updates, backed by bilingual experts and fixed-fee pricing.

By combining full-service management with digital tools and expert guidance, Commenda makes Mexico business licensing straightforward, transparent, and reliable for international companies

Conclusion & Next Steps

Securing and maintaining a business license in Mexico is essential for long-term success in Latin America’s second-largest economy. Careful planning, early preparation of documentation, and budgeting for both upfront and ongoing compliance costs will help you avoid delays and penalties. Setting up tracking systems and maintaining up-to-date records across federal, state, and municipal levels ensures smoother operations.

Commenda simplifies this entire process with end-to-end licensing support, compliance management, and local expertise. Our team helps you expand with confidence while ensuring full compliance. 

Book a free demo today to see how Commenda can streamline your Mexico business licensing journey.

FAQs: Mexico Business License (2025)

Q. What happens if I operate without a license?

Operating without licenses can lead to fines, business closure, asset seizure, and even criminal charges. Non-compliance also harms credibility and future licensing opportunities.

Q. Do home-based businesses need a business license?

Yes. Home-based businesses must register with SAT for RFC, follow zoning rules, and obtain permits if required. VAT registration applies if you sell taxable goods or services.

Q. Is a VAT/GST certificate the same as a business license?

No. VAT registration is tax compliance, while licenses include incorporation, municipal permits, and state approvals. Both are required for full compliance.

Q. How long does approval take in Mexico?

RFC registration takes 1–2 weeks, incorporation 2–4 weeks, and municipal permits 2–6 weeks. Complete setup often requires 6–12 weeks.

Q. Can I transfer a business license if I expand to another region?

No. Licenses are jurisdiction-specific. Expansion requires new applications in each state or municipality, though federal tax status remains valid nationwide.

Q. What documents are required to renew?

Renewals need incorporation papers, proof of address, valid immigration documents for foreign shareholders, SAT tax certificates, and proof of ongoing operations.

Q. Do foreign-owned companies need additional licenses?

They follow the same process as domestic firms but require valid immigration documents. Some restricted industries may need federal approval or local partners.

Q. Which service offers the best license filing support?

The best service depends on your industry and location. Choose providers with strong Mexico expertise, bilingual teams, and ongoing compliance support.

Q. Does the federal government override regional licenses?

No. Federal licenses cover tax and certain sectors, while states and municipalities handle operating permits. Both must be satisfied.

Q. How does Commenda help with business license compliance?

Commenda manages the full process, from RFC and VAT registration to renewals, across all jurisdictions. With digital-first tools and bilingual experts, they simplify compliance for international businesses.