Treasury & FX in Mexico
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For the Latin American region, Mexico stands out as being unusually easy to operate in: there are no exchange controls, pooling is allowed, accounts can be operated from offshore, hedging is easy. So it works.
Of course, nothing is perfect:
- Banking can be more difficult than usual, especially as Citi has exited the market. They have a relationship with CitiBanamex, which works, but not as well as a direct relationship with Citi.
- The processes for opening bank accounts and changing signatories are bureaucratic and painful.
- The tax regime is burdensome and complex. Withholding tax is a problem.
- One participant has included a maquiladora company in their local cash pool. This has caused significant issues with the tax authorities.
- Although FX works, the currency is very volatile, and liquidity can be an issue in time zones outside the Americas, though not all participants have had this issue.
Bottom line: Mexico is the easiest country in the region to work in. But it still has some of the complexities you expect in Latin America!
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