Cancún, Quintana Roo — Entrepreneurs and new business owners in Quintana Roo face mounting obstacles to formalization, with persistent bureaucracy and a heavy tax burden discouraging economic growth, according to business leaders.
“Even though the government and institutions now allow you to do almost everything online with digital procedures, there are certain steps that force you to go in person… it’s the issue of bureaucracy; they definitely ask for many documents,” said Lidia Paredes Castillo, president of the Regulatory Improvement Commission of the Coordinating Council of Women Entrepreneurs (CCME) Quintana Roo.
Paredes noted that current technology has not eliminated in-person barriers, which consume valuable time and resources for business owners. She described bureaucracy as the main obstacle, especially when digital systems fail or require additional validation.
A critical bottleneck occurs at the Tax Administration Service (SAT), she said. New companies must provide a utility bill in their name to obtain their tax registration — a requirement impossible to meet without first being registered with the tax authority. This catch-22 delays the start of formal operations for weeks, pushing entrepreneurs to seek alternative solutions from electricity or cable service providers, which also do not offer immediate responses.
On the economic front, the combination of federal taxes and social security contributions represents a substantial portion of gross income. “It’s not just income tax (ISR) or value-added tax (IVA), but also local taxes like the payroll tax, which has risen from 2% to 4% in recent years, financially suffocating businesses that are just beginning to generate cash flow,” Paredes said.
Overall, the tax burden for an entrepreneur paying all contributions amounts to approximately 55% of total revenue. “What does this mean? The government becomes your partner, because you have to pay ISR, payroll tax, IVA, all the taxes,” she added.
