Eduardo García Hidalgo, President, Grupo Asesores en Negocios • Interview

Helping its clients comply with new legal requirements and negotiate unpredictable amendments, Grupo Asesores en Negocios offers its knowhow to inspire greater investor confidence.

2019 was a good year for our group, but hard for Mexico, due to the amendments that the Mexican legislation is undergoing. For us, this has implied an increase of clients that need help from us, especially when it comes to complying with the new law requirements. Unfortunately, this situation has only slowed down economic growth. Apart from a few sectors such as construction and FMCG, the economy is not having an easy time at the moment.

“We have the opportunity to do things differently working together with all the stakeholders. We have a great chance to change the country’s model and build a better future.”

What new legal requirements for taxes should companies be aware of?

Most companies have to follow up a new legal process under the new law. Mexican tax authorities believe that companies that use the services of tax advisors do not follow the full process properly. For example, there are new legal requirements, for individuals as for companies, that compels you to verify the processes of their tax advisors, which is a huge thing to require of companies. The OECD also has regulations that companies must fulfill. One example are deductions, because with this change, now tax authorities have the right to check and examine if them are based on authentic reasons or done with the only purpose to help shareholders earn profits. When talking about private sector, most owners develop business models to increase their earnings. This business model can be translated into the need of increasing the tax collection and forcing companies to check their accounting and financial reports more carefully. But instead of seeing this as a disadvantage, we prefer to see it as a business opportunity, exploring ways to maximize the wealth of our clients and at the same time have an adequate tax compliance.

With the new changes, is the outsourcing segment of your business set to shrink?

Outsourcing firms are currently going through a challenging phase. Mexico signed the US-Mexico-Canada (USMC), which highlights the fact that salaries in Mexico are inferior to Canada and the US. In terms of the framework of social security, most companies are not paying people properly. Another aspect is social services in Mexico. It is compulsory for companies to pay social security contributions; however, the social healthcare system fails to adequately address the prevailing health deficiencies in the country, and most employers find ways not to pay the full social security contributions. Thus far, the government has amended laws to fulfill this gap in the system. If a company gets caught on evasion of social security contributions, it will face huge penalties or, worse, end up in with a prison sentence.

How are these stricter rules impacting investor confidence in Mexico?

Domestic and foreign investors are not certain about investing in Mexico. Many are heading to Europe, specifically Spain. A huge proportion of the capital investment in Spain come from Mexicans. Tax regulations in Mexico are getting so complicated and uncertain that investing in the country could be described as a high-stakes gamble.

What are the main advantages of doing business in Mexico?

If you have the know-how about the process, Mexico can be a great place to do business. People with high purchasing power have a great propensity to invest in construction; however, the real estate sector is currently declining, and prices are falling. Inflation and unemployment are increasing. In order to lift people out of poverty, we need to invest more in education and create more jobs. When there is too much risk, people are afraid of making investments. Mexico is a great model for the rest of Latin America. If Mexico can change with these reforms, the rest of the countries in this region can change, too. We have the opportunity to do things differently working together with all the stakeholders. We have a great chance to change the country’s model and build a better future. ✖