American exporters often seek representatives to help them export to Mexico. However, because of differences in labor law, tax law, and other legal and fiscal arrangements in Mexico, the term representative does not always mean the same thing as it would in the United States.

      In common commercial practice, the terms agent, sales agent, sales representative, commercial intermediary and the like are used interchangeably, but under Mexican law the terms are not defined. A commonly used legal term in Mexico is Comisión Mercantil (Mercantile Commission).

      An understanding of the various constructs under which American companies work with Mexican partners in order to export to Mexico is essential to ensuring that the American company does not incur unintended consequences under Mexican tax or labor law when exporting to Mexico.

      The following compares and contrasts, and describes some of the legal and fiscal considerations, for the following common types contractual arrangements:

      •Direct Export Sales

      •Sales Agent

      •Distributor

      •Permanent Establishment

Direct export sales

      While not necessarily the most effective way to export to Mexico, the easiest way is through direct export sales. Through this arrangement an American company sells its products or services directly from the United States to a Mexican customer, and the Mexican customer pays the American company directly. When selling direct, there is no intermediary in Mexico, so American companies often maintain their relationships with their Mexican customers through their U.S.-based salespeople who travel to Mexico for short visits.

      By selling direct neither the American company nor its employees are subject to Mexican labor or tax law. However, a U.S.-based salesperson should not enter Mexican Territory as a tourist...

...Continued in the pages of Twin Plant News, Subscribe Today!