Paraguay Investment Guide 2019-2020 Summary

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PARAGUAY INVESTMENT GUIDE 2019-2020 SUMMARY

Investments and Exports Network of paraguay - REDIEX EDUCATION AND HEALTH IN COUNTRY TRAITS LEGAL FRAMEWORK PARAGUAY

1.1. Socio-economic, political and 4.1. Tax Regime 7.1. Education Services geographical profile 4.2. Labor System 7.2. Professional and Occupational 1.2. Land and basic infrastructure 4.3. Occupational health and safety Training Av. Mcal. López 3333 esq. Dr. Weiss 1.3. Service Infrastructure policies of covid-19 7.3. Health Services Asunción - Villa Morra 1.4. Corporate structure 4.4. Immigration Laws 1 4 7 Paraguay. Page. 9 1.5. Contractual relations between Page. 101 4.5. Intellectual Property Page. 151 Tel.: +595 21 616 3028 +595 21 616 3006 foreign companies and their 4.6. Summary of procedures and [email protected] - www.rediex.gov.py representatives in Paraguay requirements to request the foreign 1.6. Economy investor’s certification via SUACE Edition and General Coordination 4.7. Environmental legislation Paraguay Brazil Chamber of Commerce

REAL ESTATE MARKET

MAJOR INVESTMENT SECTORS IMPORT AND EXPORT OF GOODS 8.1. Procedure for real estate purchase 8.2. Land acquisition by foreigners 2.1. General Information 5.1. Regulatory framework for interna- Av. Aviadores del Chaco 2050, Complejo World Trade Center Asunción, 2.2. Countries investing in Paraguay tional trade Torre 1, Piso 14 Asunción - Paraguay 2.3. Investment sectors 5.2. Customs 8 Page. 157 Tel.: +595 21 612 - 614 | +595 21 614 - 901 2.4. Investments 5.3. Customs broker [email protected] - www.ccpb.org.py 2 5 5.4. Exports Page. 59 Page. 131 5.5. Imports 5.6. Tariff preferences, trade agreements Production, Design and Layout and rules of origin

INCENTIVES FOR FOREIGN PHONEBOOK AND ADDRESSES INVESTMENT FINANCIAL SERVICES OF PUBLIC AND PRIVATE INSTITUTIONS 9.1. Central Government Translated: Grizzie Logan 3.1. Foreign investment 6.1. Financial Services Public Banking License N.°758 3.2. Incentives offered by Paraguay to 6.2. Financial services, private banking 9.2. Ministries and public institutions the investor and trust companies 9.3. Executive Secretariats of the For the making of this Guide we had the 3.3. Investment Guarantee Law Presidency of the Republic valuable contribution of information, data and statistics that were used in the general 9 9.4. Local authorities 3.4. International agreements 3 6 content, so we are grateful to all the people, Page. 161 Page. 75 3.5. Guarantee of investments Page. 143 9.5. Binational Entities companies, institutions, unions and chambers 3.6. Investor Benefits 9.6. Business organizations of commerce that gave their support. 3.7. Other benefits Liz Rosanna Cramer Campos Mario Aníbal Romero Lévera Minister of Industry and Commerce of Paraguay Director Nacional REDIEX Paraguay has the Best Climate for Investment Guide Investments in the Region Advantages and incentives to invest in Paraguay

Mercosur is a market of more than 260 million people and this will take time and gradual implementation, but it will be Dear reader, Paraguay aims to be a competitive base of access to it, based part of the global market to which Paraguay will have access We are pleased to present the current Investment Guide According to international analysts, our country has a high on its distinctive attributes, such as macroeconomic stability, on preferential terms. At the same time, negotiations continue prepared jointly by the Network of Investment and Exports resilience to a difficult international scenario, being its main low energy costs, diverse and abundant natural resources, with South Korea, Singapore and Canada, always aiming at (REDIEX in Spanish), under the Ministry of Industry and strengths a stable macroeconomic environment, the abun- high quality of life at a reasonable cost, young workforce and expanding opportunities for foreign trade. This will be effec- Commerce, and the Chamber of Commerce Paraguay Brazil dant agricultural capacity and the wide availability of renew- demographic profile. tively exploited to the extent that the national industry be- (CCBP in Spanish). able and accessible electric energy. At the same time, Para- comes more competitive, with the incorporation of innovation guay aims to convert these strengths into higher value-added A recent success story is the auto parts industry, where in- and technology. The publication is intended to provide national and interna- products and services, thus creating new jobs and increasing ternational firms have bet on Paraguay, taking advantage of tional businesses with an overview of the conditions, advan- the diversification of our economy. these factors and the existing incentive structures for this Paraguay, like all the economies of the world, is expected to tages and incentives available to make an investment in Para- type of industry. suffer the effects of the economic crisis caused by the covid-19 guay, as well as to guide the various steps to be taken during As an opportune place for investment, we hope to contribute pandemic, but the aforementioned attributes and Paraguay’s the implementation phase. to the growth of your company, not only in relation to the Paraguay offers favorable conditions, especially for multina- productive framework make it a resilient country that produc- internal market of Paraguay, but also with a view to the Mer- tional companies seeking to migrate to a 100% renewable es what the world consumes now and will consume in the fu- Over the past few years, Paraguay has hosted hundreds of in- cosur market of which our country is a part. energy system, since Paraguay is the world’s second largest ture, such as food and renewable energy, as well as others. It is vestment projects, many of them with the support of REDIEX. exporter of electricity and only 16% of the total volume gen- worth mentioning the comparative success that Paraguay has Based on these experiences, the most frequent queries made REDIEX is an organization to articulate the productive and erated is consumed locally, leaving a very significant sur- had in the area of health, in terms of controlling the spread of by investors were identified and are covered in this guide. the public sector of Paraguay. In addition to the information plus for the use of these companies, as well as for the the virus, which was achieved thanks to clear messages from provided in this publication, REDIEX’s team of professionals is development of industrial hubs. the Government and total compliance by the population. Like all the countries of the region, Paraguay has also faced available to provide you with comprehensive advice on your the covid-19 crisis, achieving relatively low figures due to the investment during all phases of the project. Paraguay is making progress along a new road map for its Finally, it should be noted that Paraguay is only one step away pandemic and now, encouraging prospects for the recovery development, which incorporates a strategy for transforming from investment grade, a position it has managed to maintain of the productive sector. For this reason, our country offers a It is our sincere hope that this Guide will be the first step in production, based on strategic pillars such as: strengthening despite the crisis. The most important rating agencies in the timely socio-economic context for the continuity of interna- a shared success story, both for your company and for our institutional capacity, continuously improving the business world kept Paraguay at this status thanks to its solid growth tional investment, in accordance with best health practices. country’s economy. climate and de-bureaucratization, improving the competitive- in recent years, the economic resilience it has shown, despite ness of hubs, value chains and strategic sectors, and financing external shocks (including the current one), the credibility of and gross capital formation. its macroeconomic policy, which has a solid inflation targeting scheme and low external debt. The recent agreements reached between Mercosur and the European Union and EFTA will mean access to an integrated market of 814 million people for Paraguayan industry, with bilateral trade of more than USD 107 billion per year. Certainly, What is REDIEX?

MISSION AND ROLE REDIEX is an office under the Ministry of Industry •Presenting advantages and investment opportu- Services provided: • Trade promotion: and Commerce, which aims to: nities in Paraguay to foreign investors and interna- •Application for business export diagnostics. Coordinate the necessary activities for the national tional counterparts. •Design of co-financing project. and international trade promotion of national com- 1.Promote local and foreign investments that would •Initial link between foreign companies interested •Support in the elaboration of a business plan. panies and products, as well as investment and ex- help drive the social and economic development in investing in Paraguay and government agencies •Presentation of the project before the Evaluation port projects of national companies. of the country. and private sector associations. Committee (CEP in Spanish) 2.Support the export of the most productive sec- •Post assistance: support to established foreign •Support in the execution process of the project Services provided: tors in Paraguay through networking with all key investors by detecting the operational obstacles actions. National and international fairs for the promotion players: government, business and civil society or- they face and helping them finding solutions. •Support in the process of operational and admin- of national companies and products. ganizations while generating joint actions. istrative closure of the project. •International marketing for Paraguayan products •Export promotion •Local and foreign commercial missions. MISSION Industry platforms: beef and meat products, food •Competitive intelligence: •Business rounds. •To encourage Paraguay’s economic and social de- and beverages, biofuels and renewable energy, To provide market intelligence services, accord- •Business networking. velopment through export promotion. auto parts and assembly, pharmaceutical chemi- ing public demand, private and academic sectors, •Seminars specialized in international trade. •To improve the business context. cals, forestry and floriculture, creative industries through the provision and analysis of information •To attract investments, in order to create jobs and and services, textiles and clothing. related to market access, commercial evolution, •Country Brand improve the quality of life of Paraguayans. business opportunities, among others. Promote and safeguard the Country Brand as a Activate the private sector participation in exports strategic and valueable tool for attracting invest- ACTION and articulate the needs for improvement that arise Services offered: ment and promoting exports. •Promoting investment: to articulate actions de- and that depend on the Government, in coordina- •Customer service for the exporter. veloped in projects, programs and institutions, tion with the units and the responsible institutions. •Export products and markets. •Commercial attaché offices: Representations of which are an initiative of the National Government To promote financing programs for projects devel- •Foreign trade publications. the Ministry of Industry and Trade abroad: Brazil, and affect exports and investments in Paraguay. oped with the private sector that aim to boost ex- •Statistics. Argentina, Spain, Italy, Taiwan. •Promoting systems to attract investment. ports and investments. •International Importers Directory. Promote mechanisms to support the exporter and •Specialized sectorial and market studies. Services provided: annual commitments with the private sector, for •Identification of market opportunities. •Advise foreign investors on their investments in exports and investments. the country. 1 COUNTRY TRAITS Country Traits Country Traits

the Executive, the Legislative and the Judiciary. During the autumn and spring the accumulations 1.1 SOCIO-ECONOMIC, POLITICAL AND The territory is divided into 17 departments, each are around 350 mm to 250 mm in the southeast to GEOGRAPHICAL PROFILE governed by a governor and a departmental board, northwest, while the driest season is winter with and each district has a local government headed accumulations ranging from 250 mm in the south- by a municipal mayor and a municipal board. east of this region and up to 75 mm in the north- Paraguay is located in the heart of South America zil and Bolivia to the north, Brazil and Argentina to west of the Chaco. between the parallels 19° 18’ and 27° 36’ south lati- the east, Argentina to the south and Argentina and Its multiculturalism makes it a peculiar and differ- tude, and the meridians 59° 19’ and 62° 38’ west Bolivia to the west, with an area of 406.752 km2. ent country, in constant evolution. It is a country Average temperature longitude, with GMT – 4 time zone. It borders Bra- with native populations of five linguistic families, The highest temperatures are recorded mainly in with a predominance of Guarani, and the presence summer, with an average value in the order of 28°C of immigrants from various countries of the world, to 30°C; in autumn, average temperatures range who contributed an extraordinary wealth of cul- from 22°C to 26°C, varying from south to north, tural manifestations to the first Spanish-Guarani and in the same direction in winter average tem- mixture. peratures range from 18°C to 22°C.

Climate Eastern Region The country´s climate is quite variable; the north- Rainfall west of the Chaco is semi-arid, becoming dry sub- Summer is the rainiest season in both the Eastern humid and mega thermal with savannah vegeta- Region and the Western Region, with a total rain- tion in the Chaco basin of the Paraguay River and fall ranging from 400 mm to 600 mm. This range northwest of the Eastern Region, and mega ther- of precipitation is maintained in average during the mal sub-humid in the rest of the Eastern Region, autumn and until the spring, especially in the de- with maximum humidity index in the departments partments located on the center, east, northeast of Alto Paraná, Itapúa and Canindeyú. and southeast of the mentioned area.

The annual rain cycle is accentuated by two well- In winter, rainfall is around 250 mm except for defined periods. Between October and March the the extreme southeast of the country, where it is most intense rainfall is recorded, which generates around 300 mm. the maximum accumulated values; however, between April and September the rainfall decreases Average temperature considerably throughout the country with mini- Average temperatures in summer range from 24°C mum annual values in the middle of winter. to 30°C from south to north. During the spring and autumn seasons a similar behavior is observed, Despite the limited territorial extension and topo- with average values between 22°C and 24°C from graphical homogeneity, there are significant spa- south to north. Source: depositphotos tial and temporal variations in temperature. In winter the temperatures are around 16°C and The country is divided by the Paraguay River into that make up the Central Department, a region Western Region 18°C in the center and southeast of the country. two natural regions: the Eastern part, bordered that holds 37% of the population. Other important Rainfall More information at: by the Paraguay, Apa and Paraná Rivers; and the cities in the country are: Ciudad del Este, Encar- The rainiest season is undoubtedly the summer, https://www.meteorologia.gov.py/ Western part or Chaco, bordered by the Paraguay nación, Pedro Juan Caballero, Salto del Guairá, with accumulations in the order of 400 mm to 600 and Pilcomayo Rivers. Both regions are fundamen- Concepción and Coronel Oviedo. The first four cit- mm in much of the Region. tally different in terms of flora, fauna and climate. ies share borders with Brazil and Argentina, where There are no mountains and the highest elevations there is a constant commercial, social and cultural do not exceed 850 meters. exchange.

The capital is Asunción, which is surrounded by At present, Paraguay is a democratic, Social State a metropolitan area made up of 19 municipalities under rule of law with a three-branch government:

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Language Religion and ideologies The official languages are spanish and guarani, the ing, although more slowly than the proportion of The National Constitution declares that freedom latter being the heritage of the indigenous people, children and young people. of religion, worship and ideology are recognized, the root of the Paraguayan nation. with no other limitations than those established by The age structure shows that 29,6% of the popu- the Constitution and the laws. Population lation is under 15 years old, 64,1% are between 15 The estimated population is 7.152.073 according to and 64 years old (age group considered as work- Ethnic groups the report of the General Directorate of Statistics, ing age population) and about 6,4% are 65 years At present, the indigenous population living within Surveys and Censuses (DGEEC in Spanish). Para- old and older. Paraguay’s borders is made up of 19 indigenous guay is a country that historically has admitted peoples belonging to five linguistic families com- foreign immigration, and there are currently thriv- The average annual growth rate of the Paraguayan prising 122.461 people, corresponding to 1,78% of ing colonies of Brazilians, Germans, and Japanese, population by 2019 was 1,40% and will experience the Paraguayan population (DGEEC 2017). among others. According to the Migration Regis- a slight reduction throughout the period. In 2024 it try, updated to November 2019, there are 219.513 is expected to be 1,33% per year. The indigenous population is distributed in both Brazilians, 55.581 Argentines, 24.191 Koreans, 19.196 regions of the country. However, there are several Germans, 16.831 Poles, 15.689 Taiwanese, 9.709 The total labor force composed of employed and cross-border peoples who, despite the political di- Japanese, 8.053 Spaniards, 7.896 Uruguayans, unemployed people (those who are currently un- visions between the countries, maintain constant 7.847 Americans, 4.517 Mexicans, 3.894 Peruvians, employed) in the country is 3.555.774 (71,2%), ac- exchanges with other communities using their an- among other nationalities. cording to the report of the second quarter of cestral territory. This is the case of several peoples 2019.* of the Guaraní language family, and of the Ayoreo According to the DGEEC report of 2019, half of the indigenous groups in voluntary isolation. population is 26 years old or younger. The propor- (*) Source: DGEEC. Continuing Household Survey tion of the population of older adults is also grow- 2018-2019.

Linguistic Families

Distribution of the population by age. Year: 2018. Zamuco: Ayoreo, Yshir, Tomaraho.

80+ Mataco: Nivaclé, Maká, Manjui. 70-74 Men Women Enlhet-Enenlhet (Maskoy): Enlhelt, Enxet, 60-64 Guaná, Sanapaná, Angaité, Enenlhet (Toba 50-54 Maskoy), Maskoy.

40-44 Guaicurú: Qom. 30-24 Guaraní: Guaraní Occidentales, Guaraní Ñande- 20-24 va, Paí Tavyterã, Mbyá, Avá. Guaraní, Aché.

10-14

0-4

400000 200000 0 200000 400000

Source: DGEEC

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Political división Education Paraguay is divided into 17 departments, three in The current National Constitution of 1992, declares Since the 1992 Constitution, the country has been The Government currently has an “Educational the Western Region and 14 in the Eastern Region. that the Republic of Paraguay is free and inde- a multicultural and multilingual state with two of- Action Plan 2018-2023”, which is a document that The capital of the country is the city of Asunción, pendent; it is constituted as a Social State of Law, ficial languages, Guarani and Spanish. 29% of the summarizes the actions prioritized in this govern- located on the left bank of the Paraguay River. unitary, indivisible and decentralized, and it adopts population over the age of five speaks only Span- ment period for the education sector, in accor- the participative and pluralist representative de- ish, while 37,6% speaks Guarani and 30,7% both dance with the National Education Plan 2024, the mocracy. languages, with the highest proportion of Guarani National Development Plan 2030 and the Sustain- speakers in rural areas 66,9%. able Development Goals (ODS in Spanish), in order Source: General Directorate of Statistics, Surveys and to ensure access to and quality of education in our Censuses (DGEEC in Spanish). country, to reduce the high levels of poverty and inequality and, consequently, to serve as a basis Most of the demand for education corresponds to for the sustainable development of the country, the 3-18 age group, which represented 32,1% of the where its great cultural wealth and diversity is har- population in 2018. The average number of years monized and enhanced. of study of the population is 15, (10.3 years in urban areas and 7.4 in rural areas); about 13,7% of the population aged 15 to 29 has 6 or less years of National holidays study. At the country level, 6% of the population aged 15 and more is illiterate. This rate is higher in January 1st, New Year’s Day the rural area (9,4% of the total rural population ´ aged 15 and more) than in the urban area (4,1% of March 1st, Memorial Day the total urban population aged 15 and more). Good Thursday and Friday

The National Education System comprises formal, May 1st, Labor Day ´ non-formal, special and other types of education. Formal education is structured on three levels: the May 15th, National Independence ´ first level of Initial Education (EI in Spanish), the first and second cycle of Basic School Education June 12th, Chaco Peace (EEB in Spanish); the second level, which consists ´ of the third cycle of EEB and Secondary Educa- August 15th, Foundation of Asunción ´ tion (EM in Spanish); and the third and final level comprising Higher Education (ES in Spanish). Ba- December 8th, Virgin of Caacupé ´ sic education is made up of initial education, basic school education, secondary education and December 25th, Christmas ´ ´ ´ ´ continuing education for young people and adults (Law 5.749/17). Therefore, secondary education ´ ´ as part of basic education is also compulsory and In addition to the national holidays listed above, must be guaranteed by the State, both universal there are other departmental and municipal holi- ´ ´ ´ access and completion. days that are distributed throughout the year. ´ At the end of 2018, the education system had a Electric Voltage ´ total of 1.451.663 students enrolled, of which 77% 220 volts and 50 cycles. ´ were in the official sector, i.e. most of the students’ training is paid for by the State. Likewise, it registers 75.259 teachers and more than 10.000 institu- Source: depositphotos tions, of which some 8.650 are officially managed, 861 are privately managed and 632 are privately subsidized.

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1.2. LAND AND BASIC INFRASTRUCTURE Port operators Since the enactment of the “Law that creates the The main public ports for container handling are Legal Regime for the Construction and Operation located on the Paraguay River: Asunción, Villeta, Paraguay is located in the center of South Amer- The Government of Paraguay welcomes the par- of Private Ports N.° 419 of 1994”, there has been a 37 km south of Asunción, and Concepción, 310 km ica, a little over 1.000 kilometers from the nearest ticipation of the private sector in more infrastruc- significant development in the infrastructure and north of the capital. The main ports for the han- exit to the sea, equally distant from the countries ture works, which will support the industrial and quality of port management, which provided the dling of dry bulk cargo (mainly soybean) are on of the region, which favors business and interna- economic development of the country. Paraguayan coast with a network consisting of 49 the Paraná River. tional trade. It is a country of 406.752 km2, small private ports. Private ports are members of the in size, ranks 60th in the world, and eighth in the The following two bridges that will improve road Paraguayan Chamber of Private Terminals and Since 1991, engineering and technical and eco- region, yet it is larger than great nations such as communication with Brazil were tendered: the Ports (CATERPPA in Spanish). nomic feasibility work has been carried out to per- Germany and Japan. Puerto Murtinho - Carmelo Peralta bridge (in the manently improve navigation conditions on the technical study and project stage), worth USD 4.3 Beyond this group of ports, Paraguay has ports Paraná-Paraguay waterway between Puerto Cáce- It is mediterranean, surrounded by very important million, and the Foz de Iguaçu-Presidente Franco and land terminals operated by the National Ad- res in Brazil (3.442 km upstream of Buenos Aires) rivers such as the Paraguay and the Paraná, which bridge (under construction with delivery sched- ministration of Navigation and Ports (ANNP in and Nueva Palmira in Uruguay. flow into the Rio de la Plata basin and the Atlantic uled for 2022), worth USD 83 million. A third bridge Spanish). Ocean. with Brazil is under study, located on the Apa Riv- Paraguay is strategically located, it only lacks the er, which will improve Paraguay’s connectivity with River transport and port infrastructure right infrastructure to become the river hub of Mer- Paraguayan is divided into two large regions, the the State of Mato Grosso del Sur. The port system includes the ports located on the cosur, connecting the following six countries: Bra- Western Region or Chaco, and the Eastern Region Also, the bridge that will connect Asunción with Paraguay River: Asunción, Villeta, Concepción, zil, Argentina, Uruguay, Paraguay, Bolivia and Chile, which is flat with some medium height elevations, the Western Region (worth USD 125 million) was and other smaller ones (Villa Hayes, Rosario, An- being the most cost-effective exit to the Atlantic. perfect for the development of infrastructure tendered, creating a new real estate and industrial tequera, Alberdi, Humaitá, Pilar and Itaipú); and works at very efficient costs, compared to other development pole. It was tendered in June 2019 those located on the Paraná River: Ayolas, Encar- countries in the region. under the turnkey modality. nación, Presidente Franco and several smaller public and private ports. Road transport and road network Multimodal transport operators Road transport plays a major role in bilateral Although in practice work is done with integrated Map of the Paraguay River System trade with most Mercosur countries, and is cen- operations, in reality these do not have a multi- tral to Paraguay’s internal trade. According to of- modal transport character, as no single transport River System Length (Km) Connections ficial data, the total length of the national routes document is issued through a multimodal opera- is 9.056 km. In the Eastern Region of the country tor. In fact, in Paraguay there is no local standard Paraguay - Paraná Bolivia - Paraguay 2.770 the paved roads reach 5.502 km, while in the Para- to regulate this modality. This type of modality has Uruguay Rivers Argentina - Uruguay guayan Chaco its road heritage reaches 3.554 km not prospered at the regional or international level Tiete – Paraná Rivers 2.400 Brazil - Paraguay of paved roads. either.

Most Important Economic Centres Due to the new Public-Private Partnership (Law However, in Paraguay there are more and more Santa Cruz Corumbá

5.102/13) and Turnkey (Law 5.074/13) laws, the fol- transport operators, or freight forwarders, who as- Río Tieté

lowing works have been awarded for more than sume the integral management of transport con- Paraguayan Free Ports Conchas River Paraná

Mejillones São Paulo USD 800 million: the duplication of Routes 2 and tracting in their different modes, as well as the co- Paraguay River CDE Santos Antofagasta 7 that connect Asunción with Ciudad del Este, and ordination of these operations. ASU Paranaguá the creation of the first section of the Bioceanic Most Important Regional Ports Corridor of 277 km, which crosses the entire West- As for the amount of cargo transported, according River Paraná ern Region from Carmelo Peralta to Loma Plata. to Shipowners Association (CAFYM in Spanish) Rosario River Uruguay data, Paraguay mobilized around 220 thousand River Navigation Nueva Palmira Montevideo Santiago TEUs by river in 2018. In imports the movement Buenos Aires was almost 125000 TEUs. Sea Navigation

Infographics: Map – Paraguayan Brazilian Chamber of Commerce.

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For Paraguay to become a river hub, it is necessary Energy Sector According to a report by the Ministry of Public Natural Gas Sector to open the channel at 10 feet of draught on the Primary energy production in Paraguay is com- Works and Communications (MOPC), once con- By means of decrees N.° 11.884. 12.108 and 12,820 Paraguay River and to build the locks on the Itaipu posed exclusively of renewable energy sources struction is completed in the case of Bahía Negra, of 2001, the Government of the Republic of Para- dam (project under study) to guarantee the navi- (hydropower and biomass). No oil is produced, it will be possible to become a 100% renewable, guay decided to establish the Coordinating and gability of the Paraguay and Paraná rivers all year and natural gas production is local and marginal alternative and clean energy country. The Small Promoting Commission for Natural Gas and Re- round. These infrastructure works will create a new and does not, for the moment, represent any con- Hydroelectric Plant of Ypané is estimated to pro- lated Investments (COMIGAS). As of July 4, 2002, development pole where more than 20 million tribution to the national energy matrix. duce about 10 megawatts, with an investment of Law 1.948 on the Transport of Gas by Duct has people from the countries mentioned above approximately USD 40 million. been in force, in accordance with national poli- currently live. Approximately 75% of Paraguay’s gross domestic cies on regional energy integration and comple- energy supply consists of hydropower. The opera- In the case of the electricity sub-sector, the state mentarity. The estimated flow of containers in Paraguay tion of binational hydroelectric plants (Itaipú with company National Energy Administration (ANDE amounts to about 110.000 TEU 13, these operate Brazil and Yacyretá with Argentina) make up the in Spanish) exercises the legal monopoly of the In accordance with the provisions, the functions of 90% in three terminals: Caacupemí, Fénix and Ter- electro-export profile of Paraguay’s energy system. public electricity service. In the hydrocarbons COMIGAS are: the study, promotion and develop- port, and the remaining 10% is operated in the port In terms of hydroelectric power generation, the subsector, Paraguayan Petroleum Administration ment of the real possibilities of regional energy in- of Asunción by National Administration of Naviga- country occupies a significant position in the (PETROPAR in Spanish) is authorized to process tegration in terms of production, transport and use tion and Ports (ANNP in Spanish) world; it has two hydroelectric dams, Itaipú and oil and currently shares with the private sector the of natural gas; the study, promotion and develop- Yacyretá, and energy is its main export item. The former legal monopoly on the import of crude oil ment of the demand for the different applications As a Mediterranean country it is important that the country also has three interconnections, one with and diesel oil. Prospecting and exploration activi- of natural gas, as well as the global negotiation of country can count on river transport at an afford- Argentina and two with Brazil. ties are granted by the State to foreign and nation- the supply to cover the identified requirements. able price. al private companies for a defined period of time. However, energy consumption in terms of kWh As an initial goal, COMIGAS has proposed to pro- Air Transport per inhabitant is low, due to a low-density and Hydrocarbon Sector mote an integrated project for the production, There are two international airports for all types low-range internal distribution system. A 500 kVA The hydrocarbons subsector accounts for ap- transportation and supply of gaseous hydrocar- of aircrafts: first, Silvio Pettirossi International Air- transmission line has been in operation since Octo- proximately 30% of final energy use in Paraguay, bons through the construction of a large gas pipe- port, located 10 km from the center of the coun- ber 2013, allowing a more intensive use of the en- of which nearly 70% is made up of diesel fuel in the line that, starting from the fields in the south of try’s capital. It is the main entrance and exit for ergy generated by the hydroelectric power plants. different transport, agricultural, construction and Bolivia, will cross the territory of our country sup- international passengers. This airport has a 3.553 service activities. plying the local demand to enter the Brazilian ter- m long runway. The following airlines operate at The high surplus of energy available for export ritory. this airport: Air Europa, Aerolineas Argentinas, keeps the pace in the country’s energy structure. Paraguay imports all the hydrocarbons it needs, Amaszonas, Avianca, Copa Airlines, Gol, Latam Electricity is the only component of exports and which are derived from oil. The National Govern- The present law seeks the diversification of the and Paranair. about 98% of the electricity Paraguay exports (ac- ment concentrates its greatest efforts on facilitat- forms of energy available for sustainable develop- cording to the National Energy Balance scheme) ing hydrocarbon prospecting and exploration work ment, the appropriation of new technologies in the The second is the International Airport Guaraní, is the energy transferred by treaty to the Brazilian in national territory, in addition to providing highly matter and the reliability and security of the en- which is located in the district of Minga Guazú - and Argentine markets as a result of the lack of a favorable treatment for exploitation concessions. ergy supply in the long term, with the minimum Alto Paraná, 28,9 km from Ciudad del Este, is has domestic market. environmental impact. a 3.400 m long runway and is mostly used for air The indications of hydrocarbons found so far are cargo. The construction of the 14 mV Small Hydroelectric considered very encouraging. Mining Sector Plants (SHPs) on the Ypané River is in the process Paraguay has considerable mineral wealth, such There are also seven airfields with paved run- of international tendering, as well as the genera- as iron, magnesium, non-metallic industrial prod- ways in Itaipú, Concepción, Vallemí, Pilar, Ayolas, tion of alternative energy for Bahía Negra, in the ucts, including kaolinic clays, dolmitized limestone, Caazapá and Mcal. Estigarribia. The Encarnación Alto Chaco. ornamental rocks, semi-precious stones, gold and airport was recently opened. In addition, there are raw materials for inorganic fertilizers. numerous small airports throughout the country, although most do not have paved runways. Currently, Paraguay is working to integrate mining into its economic policy with the aim of making this important sector a factor in the country’s development.

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Concessions for mineral exploitation activities may On the other hand, the highest energy require- Benefits: be requested by individuals or legal entities by ments of the Paraguayan industrial sector are re- •The Paraguayan State subsidizes 75% (seventy- plan, must submit an application form and a tech- means of a letter addressed to the Minister of Pub- lated to thermal needs. Many of the raw materials five percent) and for one time only, for each for- nical study at the offices of the corresponding IN- lic Works and Communications (MOPC in Spanish) used in industry contain combustible waste (co- ested or reforested area, the direct costs of the im- FONA, according to the location of the property, in in its original form and two copies submitted to conut husks, rice husks, sugarcane bagasse, etc.), plantation incurred by natural or legal persons of forms that this agency will provide. the General Secretariat of the MOPC. which are used to meet energy requirements. any nature and that are carried out in rural proper- There is also a widespread use of wood-fired boil- ties, whose soils are qualified as a forestry priority The application for the qualification of forest prior- Concessions to carry out mineral exploitation ac- ers in industry. This means that biomass has been (Law 536, Art. 7). ity soils and management plan, shall contain the tivities are granted by law, after the signing of a and continues to be the main fuel in the country. individualization of the owner of the property, the contract approved by decree of the Executive. •Similarly, 75% (seventy-five percent) of the direct signature of the owner, the administrative history A reasonable part of the Gross Domestic Sup- costs of maintaining forestation and reforestation of the location of the property and the certified The certificates of qualification and/or renewal of ply (GDP) of firewood is destined to the coal during the first three years are subsidized, provid- copy of the property title. the exploitation of quarries can be requested by companies (with very low performance in most ed this has been done in accordance with the ap- individuals or legal entities by means of a note ad- cases), which produce charcoal for industrial use proved Forest Management Plan. The technical study for the qualification of forest dressed to the MOPC in original and two copies (the national steel company, Acero del Paraguay priority soils must include the following aspects: submitted to the General Secretariat of the MOPC S.A.(ACEPAR in Spanish), consumes about 80 •Certificates of forestation or reforestation are is- •Information on the soils to be graded, area by through the Single Step Desk (MEU). The applica- thousand tons of charcoal per year) and for resi- sued after 12 (twelve) months of implementation class and subclass of use capacity, taxonomic tion is processed at the Vice-Ministry of Mines and dential use. The charcoal is used for cooking food and after it has been confirmed that the survival grouping, limiting factors and area to be graded. Energy, through the Department of Mineral Re- in the outlying areas of the Asunción metropolitan of the plantation is not less than 80% (eighty per- sources. area and other cities. cent) per established hectare (Law 536, art. 9). •Technical justification of the qualification proposal. The Office of the Vice-Ministry of Mines and En- According to a report by the Vice-Ministry of Mines •Non-expropriation. ergy is a body under the MOPC, and is the leading and Energy (VMME), there is a commitment to •Plan of the property indicating the sector to be institution in the national energy sector. work in coordination with the sector’s institutions •Exemption from Real Estate Tax. evaluated. and the general public in order to achieve a more Biomass Sector balanced energy matrix that will lead to greater •Tax regime: the soils of rural properties qualified The management plan must contain the foresta- Currently, Paraguay’s energy matrix has a high and better use of electrical energy. as priority forestry and the forests that are planted tion or reforestation project and the management production of renewable electric energy, gener- there, subject to forestation or reforestation, are activities to be carried out, indicating the nature ated in the binational plants Itaipú and Yacyretá, Forestry Sector exempt from any other municipal or departmental of the work to be done, the areas affected by the and in the Acaray plant. However, when we ana- The National Forestry Institute (INFONA) is the tax, whether in force or to be in force. Likewise, the project identified in the plan and an annual calen- lyze the final energy consumption, we have a high agency responsible for promoting and encourag- real estate tax is exempted by 50% (fifty percent) dar of these areas, subject to a framework to be consumption of biomass (43%) and oil derivatives ing forestation and reforestation on priority forest- while it is subject to the forestation or reforesta- drawn up by the INFONA. (41%), all of which are imported. The consumption ry soils, based on a management plan and with the tion program. of electrical energy in the country represents only incentives established in Law 3.464. The technical study for the qualification of forest 16%. Forest priority soil and management plan grading priority soils and the respective management plan The projects approved by INFONA are not subject Soil is considered a forest priority when technical must be prepared and signed by a forest engineer Historically (until the early 1990s), Paraguay has to Agrarian Reform or expropriation, except for studies determine that its productive suitability is or agronomist with forestry studies or specialty. had a preeminent rural population in its popula- reasons of public utility for infrastructure works of preferably forest. This technician must have a professional permit tion structure. The abundance of forests (50% of national character, such as roads, bridges, canals, authorized by the INFONA. the national territory was made up of forests in dams and others. The property owners who wish to obtain the quali- the 1960s), the fact that no hydrocarbons are pro- fication of forest priority soils and/or the approval On properties of no more than 20 hectares, the IN- duced in the country and dietary habits and cus- of the forestation or reforestation management FONA shall be responsible for drawing up the plan. toms have led to the cooking of food, especially in rural areas, through burning wood, which is still done today using very low efficiency processes (around 5% to 8%).

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Deadline: Qualification of telecommunications services Companies providing value-added services that Services reserved to the State In accordance with Article 8 of Decree N.° 9.425/95, Basic Services wish to use their own telecommunications net- The telecommunications services reserved to the the time limit for obtaining a certificate of forest These are point-to-point switched telephone ser- works, other than those for basic services, must State, by direct management or by its public enti- priority soil grading and a management plan is 30 vices using fixed cable or radio, used as a substi- obtain express authorization from CONATEL, and ties, are the following: days from the date of filing of the respective appli- tute for or extension of the wiring network. They also register in the National Registry of Telecom- cation with its corresponding requirements. Once can be local, national long distance or international munications Services. •Radio services to assist in meteorology. this period has expired, they will be considered ap- long distance. Basic services are public services •Radio services to assist air navigation. proved and the corresponding certificate will be provided under a concession. Currently, these ser- The license to operate in the spectrum from 1,700 •Radio-assisted services for river and maritime granted. vices are provided exclusively by Paraguayan Tele- to 2,100 was tendered in 2015, and the companies navigation communications Company S.A. (COPACO in Span- AMX Paraguay (Claro) and Telefónica Celular del •Radio services for air-space navigation. The deadline for submitting the application for the ish), whose main shareholder is the Paraguayan Paraguay S.A. (Tigo) were awarded, for the de- •Radio services for radio astronomy qualification of forest priority soils and manage- State. ployment of 4G LTE technology. The value paid by •Relief and safety of life services on the rivers of ment plan will be April 30th of each year. each company was USD 45 million. the Republic and on the high seas Broadcasting Services •Telecommunications, information and road assis- Telecommunications These are telecommunications services that allow In 2017, the bidding process for the broadband and tance services. In Paraguay, the emission and broadcasting of the transmission or broadcast of communications data transmission in the frequency of 700 MHz •Those services that affect the safety of human electromagnetic communication signals are in the in one direction to several reception points simul- was carried out. The private companies Telecel SA, life, or when for reasons of public interest the Ex- public domain of the State. Investors are guaran- taneously. Broadcasting services are considered to AMX Paraguay and Núcleo SA were awarded, and ecutive Branch so decides. teed free access to the use of the electromagnetic include, among others, sound broadcasting, tele- the value of the total investment was USD 84.54 spectrum on an equal opportunity basis, subject vision, cable-communication, tele-distribution, ra- billion. The State may grant a concession for the tempo- to the principle of non-discrimination. Within the dio-distribution and cable-distribution. These may rary provision of these services to individuals un- framework of the advent of globalization, the lib- be operated by natural or legal persons holding In 2018, CONATEL held a tender for the granting der the conditions laid down in the respective laws, eralization of markets and the progressive dereg- licenses as determined by the regulations. of broadcasting licenses for 38 frequencies. Four regulations and contracts. ulation of telecommunications at the world level, stations are AM (Amplitude Modulation) and 34 Paraguay ratified by Law 444/94, the Final Act of Broadcasting services are provided under a li- FM (Frequency Modulation). See licenses granted Operating conditions the GATT Uruguay Round, and with it the General cense. Free competition is guaranteed for those in the link: https://www.conatel.gov.py/conatel/wp- For the purpose of providing telecommunications Agreement on Trade and Services with their re- who invest in the sector. content/uploads/2019/10/licencias-formato-general- services, the provider of such services must obtain spective references to telecommunications. A spe- rnst_completo_-120619_fm-comercial.pdf a concession, license or authorization from the cific law was also enacted (Law 642/95), regulated Other Services State, as the case may be. All these rights are non- by the Executive (Decree N.° 14.135/96). Added Value Services Private Services transferable, unless expressly authorized by CO- Value-added services are considered to be those Private telecommunications services are those ser- NATEL. Holders of the above-mentioned permits Telecommunications Law 642/95 that, using basic or broadcasting services as sup- vices established by a natural or legal person to are not allowed to engage in practices that restrict The Telecommunications Law creates the National port, add some characteristic or ease to the ser- meet its own communication needs within the na- free competition. Telecommunications Commission (CONATEL) as a vice that serves as its basis. Value-added services tional territory. regulatory body, in addition to classifying the dif- include, among others, facsimile, videotex, teletext, Concessions ferent types of telecommunications services, es- teleaction, remote control, remote alarm, data stor- For the purposes of their classification as private Concessions are granted for the provision of basic tablishing the conditions for their operation, the age and retransmission, teleprocessing and mobile services, partners, affiliates and subsidiaries of the services. They are granted by public tender or at protection regime for subscribers and users, the cellular telephony. Value-added services will be same legal entity operating as an economic unit the request of an interested party, for a maximum system of tariffs to be applied, the imposition of provided on a free-market basis. shall be considered as one and the same person. period of 20 years, which may be renewable. To sanctions and the establishment of the Universal this effect, CONATEL and the investor sign a con- Services Fund. These services may not be provided to third par- cession contract that must be approved by the Na- ties, except for the provision of value-added ser- tional Congress. vices for the fulfillment of its corporate purpose.

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Licenses using the table in the following link: https://www.cona- Cost The licenses are granted by CONATEL for the pro- Interconnection of public telecommunications ser- tel.gov.py/conatel/wp-content/uploads/2019/09/res-63_2016_ There are no costs for applying for the license, ex- vision of broadcasting or value-added services. vices is mandatory. Interconnection agreements tabla-de-concepto-derecho-de-licencia-y-renov-1.pdf cept in the case that the license is granted through They are granted for a maximum period of 10 years, must be in writing and under the principles of a bidding process. License holders for commercial renewable for the same period only for broadcast- equal access, non-discrimination and neutrality; Procedures for obtaining a license, concession or exploitation must pay the annual fee of 1% of their ing services; and 5 years renewable at the request otherwise, CONATEL may modify them. authorization gross income. of the interested party, for value added services. The licenses include the establishment, installation Duty, fee and tariff payments Licence Concession and operation of equipment and the use of the ra- Investors who obtain a concession, license or au- •Submit a license application letter addressed to Concession by public tender dio spectrum if necessary. thorization, to provide telecommunications ser- the CONATEL President, which must include the The required documentation, as well as the criteria vice, will be required to pay a one-time fee for such legal background of the applicant, the technical and guidelines for the evaluation of the offers will For the granting of both licenses and concessions, rights. If these rights were granted under the pub- and economic project and the program proposal. be established in the terms and conditions of the the applicant must demonstrate economic and lic bidding regime, the amount of such rights will public tender. The CONATEL is in charge of pre- technical capacity to develop the project and es- be fixed in the respective terms and conditions, or •The request must necessarily be supported by: paring and approving the terms and conditions, pecially the plan to expand the services it has re- according to the best offer, but not less than 1%. If conducting the bidding process and setting up the quested. they were granted under the regime of request of In case of an individual: Committee for the Reception of Bids. part, the amount will be of: 5% for investments less •Certified photocopy of the Paraguayan identity In general, the condition that can support the eco- than or equal to USD 1.000.000; 4% for amounts card. The specifications must necessarily contain: nomic capacity of a company is through the pre- greater than USD 1.000.000 and less than USD •Constitution of legal domicile. •Schedule of the public bidding process. sentation of a letter issued by a banking institution 5.000.000; and 3% for amounts greater than USD •Certificate of criminal record. •Documents required for the qualification of bid- in Paraguay, certifying that the individual or legal 5.000.000, amounts foreseen for the first five •Certificate of tax compliance. ders entity is a client of that bank. Another way is the years. •Certificate of the general bankruptcy syndicate. •Concession area. presentation of a sworn statement of assets of a •Certificate of interdictions. •Minimum service expansion plan, deadlines. natural or legal person, by public deed. More information at: https://www.conatel.gov.py/index. •Sworn statement of not having incurred in breach •Obligation, if applicable, to present a technical php/registro-nac-de-serv-de-telecomunicaciones/110-6-servi- of contract with the Paraguayan State. project profile of the service to be installed. Authorizations cio-basico •Description of the basic components of the tariff It is required for the performance of private ser- In the case of a company: structure and application criteria. vices. By means of the authorization granted by Concessionaires and licensees shall pay an annual •Copy of the Bylaws. •Draft of concession contract. CONATEL, the investor can install radio communi- fee equivalent to 1% of their gross revenues for the •Power of Attorney granted by public writ. •Guarantees including bid bond. cation equipment for private use in a specific loca- commercial operation of the telecommunications •Constitución de domicilio legal. •Documentation to be submitted by the winning tion. services. There is also a tariff for the use of the ra- •Tax Compliance Certificate. bidder for the signing of the concession contract. dioelectric spectrum, fixed annually by CONATEL, •Proof of criminal record of each of the directors •Schedule for the execution of the project. There are two methods: through tenders for the on the basis of the minimum salary in force, and or managing partners. •Base amount of the offer. case of exclusive use frequency or upon request in which must be paid by the holders of concessions, •Certificate of the general bankruptcy syndicate. •Criteria and guidelines for the evaluation of bids. the case of shared use frequency. licenses and authorizations. •Certificate of interdictions. •Sworn declaration of not having incurred in Granting on request Tariffs and interconnections The amount to be paid as a fee for the renewal of breach of contract with the Paraguayan State. A concession application letter must be presented The concessionary companies are free to estab- licenses that do not have frequency band assign- •Copies of balance sheets of the last 2 (two) years. to the CONATEL president, which must include the lish the rates as long as they do not exceed the ments, consists of a single amount per service. The • Personal report of each of the directors and man- legal background of the applicant, the technical maximum prices set by CONATEL. Tariffs for other determination of the minimum amount of the li- aging partners. and financial project, and the program proposal. services (e.g., value-added services) are free and cense/authorization and renewal fee to be paid by • Proof of registration in the National Labor Reg- regulated by supply and demand, but are subject the licensee/authorized party for each period of istry. to a reasonableness control by CONATEL. validity of the license granted by CONATEL is done

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The application letter must include the following In case of a request of one of the parties, the appli- attached documents: cant will pay the equivalent to 1% of the necessary 1.3. SERVICE INFRASTRUCTURE amount declared for the establishment of the tele- In the case of an individual: communications service granted in concession. Basic services • A copy of the company’s charter, duly legalized Electricity and certified by a notary public. Authorization The National Administration of Electricity, ANDE, and to be the recipient of the “Transferable Assets” • Copy of the duly legalized power of attorney of A note requesting authorization must be submit- is an autonomous, decentralized institution of pub- of ANTELCO, which enables it to comply with said the legal representative. ted to the president of CONATEL and must include lic administration, of unlimited duration, with legal objective. the legal background of the applicant. status and its own assets. Given the transformation into a company subject In case of an individual: to the provisions of private law, with the scope and • Photocopy of identity card certified by notary It must also be supported by specific information Its primary purpose is to adequately meet the limitations that this implies, a process was initiated public and legalized if foreign. and documentation required in each case accord- country’s electricity needs in order to promote its to define plans, strategies and policies on which • Personal data of the applicant. ing to the corresponding regulations. economic development and foster the well-being it will base its operations in order to enable the • Affidavit of the applicant. of the population, through the preferential use of supply of services more effectively and efficiently • Tax compliance certificate. the nation’s natural resources. through proper administration of resources and • Technical project for the provision of the request- optimal management of business risks, which are ed service signed by a professional engineer regis- Among the purposes of this institution, the main increasingly complex given the scenarios that arise tered with the CONATEL. ones are: generation, transmission, distribution of in the environment and within the same company. • Projection of the planned investments and eco- electricity, and other facilities and goods neces- These situations led to the reinforcement of mea- nomic analysis of the project to be executed in the sary for the normal operation of electricity servic- sures that strengthen the good governance of the first years. es; operating the electricity supply systems owned company and the necessary control of resources, • Once all the documentation has been presented by it or by third parties; marketing of energy, and understood from the point of view of effective and verified, CONATEL will order the publication interconnections with neighboring countries. management, having as a fundamental axis the of an extract in the Official Gazette and in 1 (one) satisfaction of the communication needs of the widely read newspaper. The applicant must carry To access the services, the interested party must customers. out the publication within 5 (five) working days submit the corresponding form to the ANDE of- from the date of publication, otherwise the ap- fice. The forms are available at: www.ande.gov.py/ Water plication will be automatically denied without the solicitudes.php With the creation of the National Environmental need to issue any resolution. Sanitation Service (SENASA in Spanish) in 1972, an Telephone agency under the Ministry of Public Health and So- If CONATEL approves the request, it will issue a The Paraguayan Telecommunications Company cial Welfare, water services and disposal of black report proposing the granting of the concession S.A. (COPACO) seeks the provision of public tele- waters in all communities with a population of less and will send the report to the Executive Branch, communications services within the territory of than 10,000 inhabitants became its purpose, leav- which must in turn send it to the National Con- the Republic of Paraguay and abroad, broadcasting CORPOSANA to serve populations with great- gress, which must authorize it. Likewise, if it is con- ing services and value-added services. er numbers of inhabitants than that established for sidered that the concession should be granted by SENASA. public bidding, it must issue a founded resolution The company was established as part of the pro- and summon it as soon as possible. cess of transformation of ANTELCO for the pur- Currently, the Sanitary Services of Paraguay (ES- poses set forth in Law 1.615/2000 “On the Reor- SAP S.A. in Spanish), formerly CORPOSANA, is Cost ganization of Decentralized Public Entities and the governed by the Regulations of Law 1.614/2000 In order to sign the contract, the concessionaire is Reform and Modernization of Central Administra- which creates the ERSSAN (Regulatory Agency of required to provide proof of prior payment of the tion Bodies” to be the continuation of ANTELCO Sanitary Services), for the provision of potable wa- concession fee, which will vary according to each in the supply of the services foreseen corporately ter and sanitary sewerage. contract.

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The entity carries out the procedures of connec- Bottled mineral water •Digital Government: that allows to be more ef- Taiwan, Singapore, Jersey, Sweden, Denmark, Ja- tion, disconnection, construction or extension of There are several companies in Paraguay dedicat- ficient in the attention to the citizen, saving time pan, Luxembourg, Netherlands, Switzerland and the sanitary sewage network, water connection, ed to the production of mineral water for personal and money, as much of the State as of the people. San Marino, are the sites with greater speed, being sewage connection, tanker trucks, among others. use. According to the latest report published by the European continent the most represented. Some of the procedures can be requested from the the National Food and Nutrition Institute (INAN in •Digital Economy: that makes us more competi- Taiwan is the world’s fastest broadband country, website. More information at: http://www.essap.com.py/ Spanish), in October 2019, there are more than 130 tive as a country. with an average download speed of 85.02 Mbps. companies authorized to produce mineral water. •Strengthening the Institutions: that allows all in- In the South American region, Uruguay is ranked The best-known brands at national level are novation to continue to develop and evolve over 69th. In this country the average download speed time. is 9.16 Mbps. Brazil is ranked 111th, with an average BRAND COMPANY of 4.84 Mbps, Chile in position 124, while the aver- In addition, at the beginning of 2019 an inter-insti- age in Paraguay is 3.89 Mbps. Bes Bebidas Envasadas Saludables S.A. tutional technical committee was created to form Dasani Paraguay Refrescos S.A. the National Optical Fiber Network, with the pur- Paraguay is ranked 129th, with an average speed pose of uniting the infrastructure already deployed of 3.55 Mbps. Further down are Colombia, Ecua- De La Costa Embotelladora Central S.A.C.I. by the institutions that have this optical fiber: CO- dor, Peru, Argentina, Bolivia and Venezuela, in that Del Prado Mariano Vargas PACO, ANDE, the Ministry of the Interior and the order. Génesis Frutika S.R.L. Ministry of Finance. Service Providers Gondwana Bebidas Nativas del Paraguay S.A. Internet Speed Currently, there are several private and public com- Las Gotas Pablo Aguero Paraguay has very low percentages in terms of in- panies that offer internet and cable TV services in Seltz Seltz S.A. ternet speed and fixed line penetration, compared Paraguay, the main ones are Tigo, Personal, Claro, to other countries in the region. Rieder (only internet), Vox and COPACO. Vertientes Rocco S.A.

Watson Sixson S.A. According to data published by the Cable.co.uk Regarding the fiber optic network, most of the mu- Ysati Angelina Solalinde Arrúa platform, average global broadband speed contin- nicipalities in the country are already connected. ues to increase, averaging 7.40 Mbps in 2016/2017, Tigo, COPACO and Personal have fiber networks Source: Paraguayan Brazilian Chamber of Commerce. 9.10 Mbps in 2018 and around 11.03 Mbps in 2019. throughout the country, as well as Claro, Ufinet, Internet, cable and fiber network Rieder and Teisa. Paraguay has limited access to the Internet, at a demia, citizens and reference sectors, to promote time when it is so crucial for development in a glo- access to and use of ICTs to bring public services balized world. This issue is one of the priorities of closer, better, simpler and safer, to invigorate the the National Government, and through a project economy, to reduce the digital gap and to intro- called “Digital Agenda” to be implemented by the duce innovation in the way citizens relate to their Ministry of Information Technology and Communi- government through electronic networks. The cations (MITIC in Spanish) with funding from the Digital Agenda seeks to achieve the digital trans- Inter-American Development Bank (IDB), it seeks formation of Paraguay and improve people’s lives to promote the improvement of the competitive- by using technology as an effective means for the ness of the Paraguayan economy and the quality exercise of rights. of public services provided to citizens and businesses. Within this agenda, four key areas of work were defined: The Digital Agenda is the ICT (Information and Communication Technologies) master plan that •Digital Connectivity: to no longer be landlocked the National Government has decided to imple- with regards to the access to the Internet and to ment over the next few years (until 2025) through make the systems of the State safe and working its various institutions, the private sector, aca- online.

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1.4. CORPORATE STRUCTURE Types of companies Under Paraguayan law, there are the following • Limited partnership by shares types of corporate legal entities: general partner- It also has collective and limited partners; the con- To determine the most convenient type of compa- •Sole Proprietorship of Limited Liability ship, limited partnership (simple or by shares*), tributions of the latter being represented by shares. ny for each case, the following are the basic char- It is also a productive unit that allows for the sepa- limited liability company and corporation, as well acteristics of each of the existing legal forms in the ration of personal assets from business assets. In as a special class called branch, agency or repre- •Limited Liability Company (S.R.L. in Spanish) country. this way, personal assets may not be affected due sentation. Characteristics to bankruptcy, except in the case of intentional or a.The liability of the partners is limited to the value Types of personal companies negligent bankruptcy. To achieve this separation, Partnerships and limited partnerships are gener- of their contributions. •Sole proprietorship the company’s transactions must be documented ally used for small businesses. b. The contributions of the members are repre- Any productive unit belonging to a single individ- and recorded. sented by social quotas. ual, where capital and labor are used jointly, in any The limited liability company is used for small and c.Must have a minimum of two (2) and a maximum proportion, to obtain an economic profit, except When a company of this type is set up, a minimum medium enterprises where the personality of the of twenty-five (25) members. for services of a personal nature. Capital and labor capital of 2.000 days’ salary is required (Resolu- partner is imposed on that of the capital, therefore, d.The law does not establish nationality require- may be owned by the individual or by others. tion N.° 147/98 of the Ministry of Justice and La- the rules of transfer and maximum number of partments for partners; however, permanent residence bor). ners are established by law. cards are required for directors and trustees. They may be individuals domiciled in the coun- e.The share capital is divided into quotas of equal try who carry out commercial, industrial, service In public limited companies where the rules of its value, and these quotas may not be represented or agricultural activities. Likewise, sole proprietor- functioning are structured in a more open way and by negotiable instruments. ships are those considered as such in articles 4° take as a preponderant factor the contributions f.The share capital must be fully subscribed at the 28, paragraph a) and 42 of Law 125/91 and its made by the partners regardless of their personal- time of incorporation. amendments. ity. g.50% (fifty percent) of the contributions in cash must be incorporated at the signature of the con- The sole proprietorship is the simplest form of Branches are used when, for strategic reasons, it stitutive public deed and completed within a pe- ownership and has the lowest cost to open. In case is appropriate for there to be a link between the riod of two (2) years. The deposit will be held at of bankruptcy, the owner is liable with all the com- Paraguayan company and the headquarters. the Banco Nacional de Fomento, the amount that pany’s assets and also with his personal assets. An will be available once the procedures for the reg- important advantage is the tax regime, from the (*) Since 2019 several companies in Paraguay are istration of the Company in the Public Registry of year 2020, it can contribute to the simplified rein the process of dematerialization of shares, that Commerce have been completed. gime for medium enterprises (SIMPLE) or the sim- is the digitalization of the securities papers, for h.No minimum or maximum capital required. plified regime for small enterprises - (RESIMPLE), their negotiation in the Electronic Trading System i.The shares cannot be assigned to third parties ex- according to Decree N.° 3.182/19. (SEN). cept with the agreement of partners representing 3/4 of the capital if the company has more than In the SIMPLE mode, taxpayers with annual turn- •Business partnership five (5) partners. Not being more than five (5), the over up to G. 2.000.000.000 are included. In the This is the type of company formed by 2 (two) or unanimity of the same will be required. The trans- RESIMPLE a fixed monthly amount is considered, more partners who are subsidiary, unlimited and fer of shares must be done by public deed. according to the amount of gross income of the jointly and severally liable for the company’s obli- j.They may not have as their corporate purpose previous year, offering several advantages to micro gations. the carrying out of banking, insurance or capital- and small companies, without the need to have an ization and savings operations. accounting book and by liquidating a fixed amount •Limited partnership of the tax in the year. In this type of company there are general partners who are jointly and severally liable for the company’s obligations and limited partners who are liable for the same up to the limit of their contributions.

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•Meetings, management and control •Meetings •Management and Audit Identification of the final beneficiary of the shares The Limited Liability Company (S.R.L.) is not re- Shareholders’ decisions are adopted at meetings, The direction and administration will be in charge All companies represented by shares must notify quired to call a shareholders’ meeting (ordinary or which can be: of one or more directors, shareholders or not. The the Treasury Lawyer’s Office, which reports to the extraordinary) or to appoint a trustee, unless is di- directors are jointly and severally responsible for Ministry of Finance, who is the final beneficiary of rected in the Company’s Bylaws. Ordinary: to deal with the annual report of the poor performance of their duties, for violations of the company’s shares, this being understood as in- board of directors, balance sheet and profit and the Articles of Association, for gross negligence dividuals who directly or indirectly fall into at least The direction, administration and representation of loss account, distribution of profits, trustee’s re- and abuse of the power conferred in relation to the one of the following situations: the company corresponds to one or more manag- port, appointment and assignment of the respon- position they hold. The salary of the company’s di- a.Hold at least ten percent (10%) of the shares in ers, partners or not, who are unlimitedly and jointly sibilities of directors and trustees, and the issue of rectors will be set by the Ordinary General Meet- the company. liable for the non-execution or bad performance of shares within the authorized capital. It is annual ing. b.Exercises, including through other means, ulti- the mandate, for the violation of the law or the so- and must be convened by the board of directors mate effective control over a company. cial statutes and for any damage caused by fraud, or the trustee within the first four months follow- The supervisory body of the S.A. is the syndicate. c.Uses, receives or benefits from assets owned by abuse of powers or serious fault. ing the close of each financial year (December 31 The appointment of the trustee is personal and the company; or, in whose name or benefit a com- of each year). cannot be delegated. The following are unlimited pany transaction is carried out. •Limited Company (S.A. in Spanish) and jointly and severally liable for compliance with Characteristics Extraordinary: may be convened at any time for the obligations established in the laws and the ar- Branch offices a.The participation of the partners is represented the purpose of dealing with all matters which are ticles of association. Their function is remunerated, The establishments, agencies or branches of for- by shares. not within the competence of the ordinary meet- and they must attend the meetings of the Board of eign companies, constituted in Paraguay, are con- b.The shareholders are responsible for the obli- ing and which relate to any amendment of the ar- Directors and the Meetings of Shareholders where sidered to be domiciled in the country as far as the gations incurred by the company only up to the ticles of association, increase, reduction and rein- they participate with voice, but without vote. The acts they practice here are concerned, and must amount of their respective contributions. tegration of capital, redemption, repayment and duration of the trustee’s mandate may or may not comply with the obligations and formalities pro- c.Must have a minimum of two (2) shareholders. amortization of shares, merger, transformation and coincide with the duration of the Board’s mandate. vided for the type of company most similar to that d.The law does not establish nationality require- dissolution of the company, issue of debentures of its constitution. Liability for the obligations in- ments for partners; however, permanent residence and participation certificates. They may be called curred by the branch extends to the foreign head cards are required for directors and trustees. by decision of the board of directors, the trustee office. e.The capital must be fully subscribed and issued or when required by shareholders representing at in shares of equal value. There is no time limit for least 5% (five percent) of the share capital. the integration of the subscribed capital. f.The shares are nominative, this implies to include For both types of meetings, shareholders may be in the statutes of the company the name, national- represented by proxies, by means of a simple pow- ity, profession and address of the partners and the er of attorney, with a signature certified by a notary specific mention in the shares and the provisional public or registered with the company. In case the certificates the name of the shareholder, declaring power of attorney is issued abroad, it must also be expressly the nominative nature of the shares. duly legalized before the Paraguayan Consulate or g.Shares can be transferred by private contract apostilled. The directors, trustees, managers and or public deed, or by notarized endorsement. The other officers of the company cannot be proxies. transfer of shares must be recorded in the company’s records, in the books authorized for this purpose.

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Simplified Joint Stock Company •Log Book. Incorporation of companies via SUACE (EAS in Spanish) As for the responsibility of the members of the •Inventory book. They must also present their fi- The SUACE (Unified System for Opening and Clos- This legal form was created by Law 6.480/2020 EAS, it will be limited to the amount of the contri- nancial statements in accordance with current ing of Companies) was created by Law 4.986/2013 and is an excellent tool for the development of in- butions made by them to the company. regulations. as a single window for the opening and/or formal- vestments in Paraguay. ization of physical and legal companies in order to The capital shall be divided into shares that must Financial institutions should provide mechanisms simplify, speed up and make transparent the pro- The main characteristics and innovations of this be registered, endorsable or not, ordinary or pre- to enable the EAS to open an account within a cess of opening new business ventures. type of company are: ferred, or with special voting rights. The subscrip- maximum period to be established by regulation. •They can be set up by one or more individual or tion and integration of the capital may be done in Through this institution it will be possible to carry legal entities. It is the first legal entity of a business conditions, proportions and terms different from In all matters not covered by this document, the out the process of opening the following types of type which is possible to create it with a single those foreseen in the norms contemplated in the rules laid down for public limited companies in the companies: partner. Civil Code for corporations, but in no case shall Civil Code, as amended and regulated, shall be ap- •They can be created by contract or by a unilateral the term for the integration of the shares exceed plied in addition. •Sole Proprietorship. writ that is registered in: 2 (two) years. •Individual Limited Liability Company. Disclaimer: As of the date of publication of this •Limited Liability Company. a.Public deed. As far as the governing bodies are concerned, Guide, the regulation of Law 6.480/2020 is pending. •Limited Company. b.Private instrument with notary public signature the law establishes broad freedom in determin- certification or registration officer where it is cre- ing them by basically recognizing two mandatory Applications from enterprises requiring prior ad- ated. bodies: the meeting of the members of the EAS ministrative authorizations from regulatory bodies c.If in the asset’s incorporation requires a transfer (with equal powers in the ordinary and extraordi- for certain activities, such as banks, finance com- of public deed, this must be added to its constitu- nary meetings of the corporations) and the legal panies, insurance and reinsurance houses, and all tion and registration. representative. There is no obligation to have an other enterprises supervised by the Central Bank administrative body (similar to a board of direc- of Paraguay (BCP in Spanish)and its relevant su- The registration application must be submitted tors) or an oversight body (such as a trustee or per-intendencies, may not be processed initially only and exclusively through the Unified System supervisory board). through the SUACE. of Opening and Closing of Companies (SUACE in Spanish). Meetings of members of the EAS must be sum- Once the relevant prior, extraordinary or special moned in writing at the address of the members authorizations have been obtained, the SUACE The statutes of the EAS approved in the form es- five working days before the date of the meeting, may also be used to complete the pending regis- tablished by this Law, as well as the amendments therefore, there is no obligation to publish the call tration and opening procedure at the SUACE Di- to the statutes and liquidation of the EAS, shall be in widely read newspapers. Meetings of the mem- rectorate-General. registered with the Ministry of Finance and, once bers of the EAS and the board of directors (if any) the registration has been formalized, the General may be held remotely and recorded in minutes Regarding closure of companies, via SUACE, they Directorate of Public Records shall be informed. signed by a single member. still do not carry out this procedure, which must be managed independently, depending on the Unlike other companies, the EAS acquires its le- The responsibility of the administrators and legal nature of the company, with the following institu- gal nature once it is registered with the Ministry representatives will be regulated by the rules that tions: SET (tax agency); the Treasury Department of Finance rather than with the public registries, apply to the administrators of corporations in the (for S.A. and S.R.L.); IPS (Social Security Institute); therefore the time to start operations will be much Civil Code. the Ministry of Labor, Employment and Social Se- faster. curity; and the Municipality in which the company The EAS shall maintain the following corporate operated. They will always be of a commercial nature and will and accounting records: be governed by the tax rules applicable to the nature of their activities. A one-person EAS cannot •Minute book of the governing body. incorporate or participate in another one-person •Share register book. EAS. •Minute book of the governing body.

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Procedures carried out at the SUACE Procedures for foreign investors 1.5. CONTRACTUAL RELATIONS BETWEEN The following procedures can be done at the •Proof of being a foreign investor. SUACE: •Permanent admission card for foreigners. FOREIGN COMPANIES AND THEIR

•Registration in the Public Registry of Commerce Closing of companies REPRESENTATIVES IN PARAGUAY for legal companies (Registration in the Legal Enti- The closure of a company implies a series of ac- ties Section and the Public Registry of Commerce). tions that are aimed at guaranteeing the rights of •Verdict of the Treasury Lawyer’s Office. workers and creditors. The actions and/or liquida- Representation, agency and distribution •Registration of business for individuals in the tions that proceed when the company is closed Law 194/93, also known as the “Law on Represen- the minimum amount of which shall be determined Public Registry of Commerce. will be different according to the reason for clo- tation, Agency and Distribution”, regulates rela- by law, taking into account: •Tax ID and proof of legal and individual status sure. Likewise, according to the type of company, tions for the promotion, sale or placement within from the Undersecretary of State for Taxation (SET it will be necessary to carry out the procedures be- the country or another specific area of products •The duration of the representation, agency or in Spanish). fore the competent authorities, among which are: or services provided by foreign manufacturers and distribution of the products corresponding to the •Proof of employer’s registration with the Social firms through representatives, agents or distribu- foreign manufacturer or firm will be calculated ac- Security Institute (IPS in Spanish). •Public Registry. tors domiciled in the Republic, and establishes the cording to an ascending scale by periods (2 to 5 •Proof of employer’s registration with the Ministry •Treasury Advocacy. guidelines for the corresponding compensation on years, more than 5 to 10 years, more than 10 to 20 of Labor, Employment and Social Security (MTESS •Secretary of Taxation. the occasion of the termination, without cause, of years, more than 20 to 30 years, more than 30 to in Spanish). •Social Security Institute. contractual relations. 50 years and more than 50 years). •Mipymes Card. •Ministry of Labor. •Commercial Patent in the Municipality of Asun- •Municipality in which the commercial patent was Legal instrumentation •Average gross annual profits, obtained by the cion. granted. The relationships of representation, agency and representation, agency or distribution during the •Municipal license in the Municipality of Asuncion. distribution must be properly instrumented with a last three years of any of them. written contract that must be registered. These guidelines will serve to establish the mini- However, individuals or legal entities claiming rep- mum amount of compensation through the judicial resentation, agency and distribution without hav- or arbitral process. ing a contract may prove the association and the time corresponding to it by all means of evidence. Gross profit is understood to be the result of the amount of net sales minus the cost of goods sold. Canceling or changing the relationship If payment to the representative, agent or distribu- In order to cancel, revoke, modify or refuse to ex- tor in the form of commissions is established, the tend the representation, agency or distribution, gross profit will be the total amount of those. the manufacturer or foreign firm must identify the reasons that justify the measure, since its legal and A descriptive formula of the above could be as fo- economic consequences will depend on whether llows: or not a just cause is expressed by the representative, agent or distributor. (i) Gross Profit Year 1 + Gross Profit Year 2 + Gross Profit Year 3 Cancellation or change without cause If the foreign firm decides to cancel, revoke, modify 3 or refuse to extend the relationship, without cause, it shall be obliged to pay the representative, agent (ii) Commission Year 1 + Commission Year 2 + or distributor domiciled in Paraguay, an indemnity, Commission Year 3

36 Paraguay Investment Guide Paraguay Investment Guide 37 Country Traits Country Traits

In addition, the representative, agent or distribu- It should be taken into account that before making Other specific registrations tor shall have the option, irrespective of any com- the decision to cancel, revoke, modify or refuse to RIEL Industry Registration pensation due, to sell to the other contracting par- extend the relationship, the manufacturer or for- According to the provisions of Decree N.° 6.258/2011 The industries that have the registration certificate ty, without any possibility of refusal, the stock of eign firm should request its representative, agent “By which the Industrial Registry of the Ministry of with technical verification of the industrial regis- goods plus a normal profit in accordance with the or distributor to resolve the cause invoked within Industry and Trade is created” this section is in- try and also present the authenticated copy of selling price of the products in the market. one hundred and twenty days (120). If the cause is tended to strengthen the capacity for study, pro- the environmental license issued by the Ministry not resolved within that period, the affected party motion and advice in the industrial area, together of the Environment and Sustainable Development Cancellation or change with cause may exercise its right immediately, except in the with the development of national and international (MADES in Spanish), will be able to take advan- The manufacturer or foreign firm may cancel, re- case of fraud or breach of trust. cooperation and coordination networks in the field. tage of the benefits of the special laws and instru- voke, modify or refuse to extend the representa- The Industrial Register (RIEL) collects the data of ments of fiscal incentives, such as: tion, agency or distribution with just cause, with- Once this period has expired, the cause or causes the establishments in which an industrial activity is out being obliged to pay any compensation if the must be presented to the courts and tribunals of carried out, with the following objectives: •Import of raw materials under special laws. following causes exist: the Republic or in arbitration if this is agreed. Oth- erwise, it shall be presumed that the cancellation, •Have updated information on the productive ca- •Priority processing to grant tax incentives to in- •Failure to comply with the terms of the represen- revocation, modification or refusal of extension is pacity of the industrial sector and its territorial dustrial investment (Law 60/90 on investments, tation, agency or distribution agreement. unjustified. distribution, in order to formulate plans and poli- Maquila Law, National Automotive Policy (PAN in cies for the development of the national industrial Spanish). It is a law of fiscal incentives for the in- •Fraud or breach of trust. Jurisdiction and applicable law policy. vestment of capital of national and foreign origin, it All distribution, agency and/or representation •Generate a database, which allows quantitative grants fiscal benefits to stimulate the manufacture •Ineptitude or negligence on the part of the repre- contracts involving commercial relations between and qualitative analysis of the industrial sector for and/or assembly of motorized and nonmotorized sentative, agent or distributor in the sale of prod- national companies and foreign firms must neces- decision making. vehicles, auto parts in general - system of registra- ucts or the provision of services. sarily be submitted to the jurisdiction and compe- •Constitute the instrument of official information tion and identification of the automobiles). tence of the Paraguayan courts. on industrial activity, as a service to citizens and, •Continued decline in sales or distribution of the particularly, to the business sector. Registration goods for reasons attributable to the representa- Arbitration The interested party must go to the Ministry of In- tive, agent or distributor. However, representatives, The parties may submit their differences to arbi- The RIEL is mandatory and is aimed at all com- dustry and Commerce (MIC in Spanish); Avenida agents or distributors shall not be liable for decline tration, either before or after a lawsuit is filed, pro- panies that carry out industrial activities, including Mariscal López 3333; Telefax: (595-21) 616-3092; in sales where quotas or import restrictions are vided that no final judgment has been rendered. those that carry out assembling and fractioning Asunción, Paraguay. established and sales are unavoidably affected by activities. Link: http://www.mic.gov.py/riel/index.html fortuitous causes or force majeure which are duly Subject of arbitration justified. Any question of compromise and of patrimonial Benefits offered Registration of companies providing specialized content may be submitted to arbitration provided •Facilities to access the industry promotion of- REPSE services •Any act by the representative, agent or distribu- that no final and enforceable judgment has been fered by the Ministry of Industry and Commerce. The REPSE is a register of service providers for in- tor which is detrimental to the proper conduct of passed on the matter. Those in which the interven- dividuals and legal entities. It is mandatory for all the introduction, sale, distribution of goods or pro- tion of the Public Prosecutor’s Office is required •Guidelines for the financing of industrial activity. individuals and legal entities, national or foreign, vision of services. may not be subject to arbitration. who provide services in the country and are tax- •Priority management in the application of con- payers of Value Added Tax (VAT). It was created •Conflict of interest for the representation, agen- The State, decentralized entities, self-governing sumer protection rules. by Decree N.° 6866 dated July 5, 2011, of the presi- cy or distribution of products or the provision of entities and public enterprises, as well as munici- dency of the Republic, and is mandatory. services that are in line with competition with the palities, may submit to arbitration their differences products or services. with individuals, whether national or foreign, provided that they arise from legal acts or contracts governed by private law.

38 Paraguay Investment Guide Paraguay Investment Guide 39 Country Traits Country Traits

This registry serves to formalize and promote the Mipymes Card (SME card) Requirements to obtain the Mipymes Card activities that are developed in the sector. It was It is a document that certifies the creation of a mi- •For new companies: •For sole proprietorships: created due to the existing informality in the provi- cro, small or medium enterprise. It allows access a.Complete the procedures to start the company. Business owner’s license. They are classified as: sion of services, of the unfair competition both of to the benefits established in Law 4.457/12 and b.Fill in the application form for the mipymes card professionals and companies that offer their ser- to everything managed by the Vice-Ministry of and the annex to the single business form. a.Category for new companies vices without the fulfillment of the existing rules Mipymes in compliance with its functions for the c.Copy of identity card (holder or legal representa- (without annual turnover) in the market, which, enjoy benefits in detriment development and competitiveness of the sector. tive). of the formal ones that pay their taxes and social d.Complete the single form to start a company. a.1.Microenterprise, MIE: up to 100 monthly mini- charges. Benefits offered: e.Proof of employer registration. Employee form mum wages worth of assets. •Design and hosting of free websites for mipymes submitted to IPS from the last month prior to the a.2.Small enterprise, EP: up to 500 monthly mini- The role of the registry is, among others: to regu- with ID. date of submission of your application. mum wages worth of assets. late sectors according to national priorities, and •Tracking system of Good Manufacturing Practices f.Proof of registration as an employer from the a.3.Medium enterprise, ME: up to 1,200 monthly the coordination of these in international econom- (GMP) procedures for MSMEs. Ministry of Labor, Employment and Social Security. minimum salaries worth of assets. ic negotiations. •Training and technical assistance. g.Municipal patent. •Support in business promotion. b.Category for existing companies (with annual Likewise, with a view to the opening of Merco- •Starting capital for mipymes. •For existing companies: turnover) sur, the Ministry of Industry and Commerce has •Differentiated rates for micro and mipymes with a.Fill in the application form for the mipymes card generated Decree N.° 20.735/98 and Resolution ID in certificates and certificates from the MIC (In- and the annex to the single form for companies. b.1.Microenterprise, MIE: company formed up to a N.° 288/98, by which it regulates the provision dustrial Registry, Technical Verification of the In- b.Copy of identity card (holder or legal represen- maximum of 10 workers and annual turnover of Gs. of specialized services within the territory of the dustrial Establishment, fiscal incentives of Law tative). 500 million. Republic. The aforementioned decree requires all 60/90 in investment projects and certificates of c.Complete the single form to open companies. b.2.Small Business, PE: up to 30 employees and companies and/or professionals to be registered in registration of consultants, fiscal incentives of Law d.Proof of employer registration. Employee form annual turnover of G. 2.5 billion. the Register of Companies providing Specialized 4.838/12 of National Automotive Policy for certifi- submitted to IPS for the last month prior to the b.3.Medium Business, ME: up to 50 employees and Services (REPSE in Spanish), which reports to the cates, reports and annual production programs). date of submission of your application. annual turnover of G. 6 billion. Undersecretary of State for Commerce. Each com- •Access to projects for individual and collec- e.Proof of registration as an employer from the pany or professional, in addition to submitting the tive companies promoted by the Vice-Ministry of Ministry of Labor, Employment and Social Security. For more information: tel (595-21) 616-3236 o corresponding receipts, must submit a certificate Mipymes. f.Municipal patent. 616-3274, e-mail: [email protected] from their relevant guild or association, member- •Differentiated rates and simplification of proce- g.Income tax affidavit submitted to the SET in the ship to any is not mandatory. dures in INAN registers (food). last year preceding the date of submission of ap- •Virtual shopping for mipymes. plication. Registrations can be made: www.ofertaspyme.com.py h.For companies: registration General Directorate •Online: creating a user request, accessing: •Access to the benefits of the State Vendor In- of Public Records (DGRP in Spanish) http://www.vue.org.py/AppVUE/faces/REG/RegSolicitud.jspx formation System -National Directorate of Public . •In office: would be carried out by going exclusive- Contracting (SIPE-DNCP) for State Vendors (Elec- ly to the VUE (Single Window for Export) building. tronic Auction). Address: Cap. Nicolas Blinoff esq. Cap. Pedro Vil- •Simplified labor regulations. lamayor. Asuncion, Paraguay •Zero rates in SUACE (Unified System for Opening and Closing of Companies) for mipymes. The Registration of Service Providers (REPSE in Spanish) is totally free.

40 Paraguay Investment Guide Paraguay Investment Guide 41 Country Traits Country Traits

The growing diversification of Paraguay’s econo- For 2020, current estimates are conditioned by the 1.6. ECONOMY my allowed it to maintain its previous year’s result crisis generated by the global covid-19 pandemic; in 2019 with a rate of variation of 0% in the midst however, World Bank estimates maintain that the Macroeconomic data of an adverse climatic and commercial context country would be the South American economy Economic indicators – GDP that affected agricultural and energy production. with the least impact. Currently, Paraguay has a strong economy. Ac- Since 2003, Paraguay’s economy has been grow- cording to the World Bank (WB), it has achieved ing steadily, except in 2009 and 2012, when the ef- an average annual growth rate of 4,5% over the fects of climate and lower international prices for last fifteen years, as a result of its good internal agricultural goods led to a lower result than in pre- Projections dynamics and its good macroeconomic manage- vious years. This economic momentum was largely ment. According to data from the Central Bank of due to the adoption of major reforms aimed pri- PARAGUAY Paraguay, the local Gross Domestic Product (GDP) marily at reducing the fiscal deficit and restructur- increased by over 50%. ing the public debt, but also to an improvement in the legislation, adaptation and supervision of 2014 2015 2016 2017 2018 2019P 2020P 2021P Paraguay’s economy has traditionally been based the national financial system. The reforms also in- Economic Activity on primary production, particularly agricultural cluded measures that led to the adoption of a new and livestock production, with a thriving commer- model of agro-industrial development, related to Growth, % of Real GDP 4,9 3,1 4,3 5,0 3,4 0,0 -2.6 5.1 strong demands in terms of investment in capital cial sector, where the export of products such as Nominal GDP – USD billions 40,3 35,5 36,0 39,0 40,4 38,1 35.8 37.7 soybeans, grains and beef, as well as the produc- and infrastructure. Population tion and export of electrical energy, in addition to 6,7 6,8 6,9 7,0 7,1 7,2 7.3 7.4 (millions of inhabitants) re-export, play an important role. During the second half of 2010, Paraguay’s econ- GDP per Capita 6.006 5.371 5.303 5.667 5.650 5.333 5,251 5,691 omy had an annual average growth of 3,2%, in the Unemployment Rate However, in recent years a major process of pro- midst of an adverse regional context, marked by 8,0 6,5 7,7 6,1 6,2 6,7 7.5 7.0 (Annual Average) ductive transformation towards higher value-add- recessive or low growth periods in Argentina and ed goods has begun. The country is registering a Brazil. Inflation growing industrial production of non-traditional Inflation Index - % 4,2 3,1 3,9 4,5 3,2 2,8 1.5 3.0 and agro-industrial manufactured products. Interest Rate

Interest Reference Rate 6,75 5,75 5,50 5,25 5,25 4,00 0.75 2.00

Balance of Payments USD/Guarani Exchange Rate – 4.636 5.782 5.738 5.588 5.964 6.465 6,700 6,800 end of period

Trade Balance (USD Billions) 1,0 0,8 2,2 1,9 0,8 0,4 1.2 0.8

Current Account - % of GDP -0,1 -0,4 3,6 3,1 -0,2 -1,2 1.1 0.3

IDirect Foreign Investment - 1,0 0,8 1,0 1,2 1,2 1,0 1.0 1.0 % GDP International Reserves 6,9 6,2 7,1 8,1 7,9 8,0 8.0 8.0 (USD billions) Public Finances

Nominal Results - % of GDP -0,9 -1,3 -1,1 -1,2 -1,3 -2,8 -6.0 -3.1

Net Public Debt - % of GDP 13,4 15,4 17,5 18,4 19,9 23,2 31.4 31.4

Sources: International Monetary Fund (IMF), Haber, Bloomberg, Central Bank, Itaú

42 Paraguay Investment Guide Paraguay Investment Guide 43 Country Traits Country Traits

Structure by sector •Manufacturing •Water and Electricity Analysis of GDP by activity The manufacturing industry in 2019 had a decrease The electricity and water sector (which includes of -0,9% compared to 2018. binationals) in 2019 has seen a variation of -8,0% •Agriculture compared to 2018. This result is a consequence of During 2019, the agricultural sector in Paraguay has The activities that had a positive impact in 2019 the lower generation of electricity by the bination- suffered a reduction of -6,2% compared to 2018. were beef production, chemical products, the als, which is still explained by the lower water flow manufacture of non-metallic minerals, drinks and of the Paraná River. The unfavorable result has been mainly due to tobacco, paper products, dairy production and the the lower levels of soybean production in the manufacture of metal products. However, the pro- •Services 2018/2019 season, due to adverse weather condi- duction of wood, oils, textiles and clothing had a The services sector continues to show a favor- tions. However, these results have been partially negative impact. able performance, registering an increase of 3,3 % mitigated by positive variations in the production with regards to 2018. In 2019, government services, of rice, maize, cotton, cassava, sesame and beans. •Construction household services, financial intermediation, ho- In 2019 the construction sector showed a positive tel and restaurant services, telecommunications, •Livestock, forestry, fishing and mining variation of 0,5% in its performance compared to transport, real estate services and trade all had a Livestock, forestry, fishing and mining activities in 2018. positive impact. 2019 showed similar performance to 2018, with a participation of 0,9% in the national GDP. The trend has been influenced at the beginning of the year by an unfavorable factor caused by exces- The livestock sector, in 2019 has had a lower per- sive rainfall that has hindered the normal develop- formance than expected, although a higher level of ment of both public and private works. However, slaughter of cattle and other types of production in the second half of the year the situation was such as poultry and other livestock products was reversed and a greater dynamism of public works observed in the last quarter of the year. The sec- was observed. tor is expected to recover by 2020. The work of genetic improvement and the implementation of high technology, allowed the positioning of Para- GDP Composition guayan beef in 38 countries. Even so, there is still a high dependence on five main destinations (Chile, Agriculture 7.8 Russia, Israel, Brazil and Taiwan), which is a chal- Taxes 7.6 Livestock 2.1 lenge for the livestock sector in terms of seeking market niches such as the Asian market, where it Other primary sectors 0.9 may have the option of placing a greater volume and at a better price.

Favorable performances have also been observed in mining, in line with the greater dynamics ob- USD Manufacturing 19.1 Other Services 29.2 served in the construction sector. 38,6 Billions

Construction 6

Water and Electricity 7.5

Commerce 10.6 Central Government 9.3

Source: BCP

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Expenses Inflation From an expenditure perspective, low GDP growth Gross fixed capital formation has decreased by Monetary policy remained consistent with inflation Price Index - CPI) below the target range of 4%, in 2019 was associated with drops in gross capital -6,6% compared to 2018. This performance was targets. The Central Bank of Paraguay kept infla- while the 2019 rate was 2.8%. formation and net exports. mainly influenced by the lower level of construction (measured by the variation of the Consumer tion and investment in machinery and equipment, According to a report by the Central Bank of as well as in metal products. Paraguay (BCP), consumer spending, or house- Inflation remains within the target range hold spending, has seen a year-on-year increase On the foreign demand, exports showed a varia- 9,0 of 1,3%, driven by spending on services such as tion of -2,9%, while imports of goods and services health, education, recreation, telecommunications, fell by -0,9% when compared to 2018. 8,0 hotels and restaurants, and by spending on non- durable goods, such as food and fuel. On the other 7,0

hand, Government spending has also grown 5,1% 6,0 at the end of 2019. 5,0

4,0 Accumulated Variation of GDP 3,0 2,8 2,5 Accumulated Change I-18 II-18 III-18 IV-18 I-19 II-19 III-19 IV-19 2,0 Total Consumption 4,1 1,9 1,0 Private Consumption 4,3 1,3

Government Consumption 3,0 5,1 0,0

Net Formation of Capital 11,9 -3,0 jul-17 jul-13 jul-15 jul-18 jul-19 jul-16 jul-14 oct-17 oct-13 oct-15 oct-18 Apr-17 Apr-13 Apr-15 oct-19 oct-16 Apr-18 oct-14 Apr-19 Apr-16 Apr-14 Jan-17 Jan-13 Jan-15 Jan-18 Jan-19 Fixed FBK 6,9 -6,6 Jan-16 Jan-14 Jan-20 Exports 1,8 -2,9

Imports 8,9 -0,9 Base inflation ------Floor ------Centre ------Ceiling Total

GDP 3,4 0,0 Source: BCP Source: BCP Gross Domestic Product, by Type of Expenditure Public debt According to the report “Preliminary Overview of for the economic slowdown. With the implementa- In millions of constant guaranies – 2014 the Economies of Latin America and the Carib- tion of the Law for the Modernization and Simplifi- 2019 PARTICIPATION bean”, published by ECLAC (Economic Commis- cation of the National Tax System, which contem- Components 2017 2018 2019* 2020** 2018 vs 2017 2019 vs 2018 IN COMPONENTS sion for Latin America and the Caribbean, in South plates an increase in both the tax base and rates, OF GDP America) during 2019, the decline in economic ac- it is expected that collection rates, although mod- Private Consumption 129.225.139 134.771.860 136.546.061 127.587.672 4,3 % 1,3 % 65,16 % tivity in Paraguay was reflected in a lower growth erate, will only take place as of the year 2021. The Public Consumption 22.173.437 22.848.146 24.012.165 26.413.382 3,0 % 5,1 % 11,46 % in revenue, while total compulsory expenditure fiscal deficit has been financed, in part, by bond augmented due to increases in expenditure on issues. In 2019, the seventh sovereign bond issue Net Formation of Capital 37.707.687 40.301.027 37.659.057 36.340.990 6,9 % -6,6 % 17,97 % debt interest payments, use of goods and services, was made for US$ 500 million, ending the year Variation of existing stock 4.494.772 6.932.508 8.147.454 7.862.294 54,2 % 17,5 % 3,89 % social benefits and employee remuneration. Also, with a public debt of 22.9% of GDP. For 2020, the Trade Balance investment, approximated by the net acquisition budget contemplates a new sovereign bond issue of non-financial assets, increased by 43.5%, in line for the same amount. Exports of goods and services 74.230.689 75.593.333 73.373.347 72.294.759 1,8 % -2,9 % 35,0 % with the expansionary fiscal policy to compensate Imports of goods and services -65.010.978 -70.819.115 -70.173.034 -66.173.171 8,9 % -0,9 % -33,5 %

Gross Domestic Product 202.820.746 209.627.759 209.565.051 204.325.924 3,4 % 0,0 % 100 %

Source: Central Bank – Statistics Department – Economic Studies (*) Preliminary Data subject to revision / (**) – Projection 46 Paraguay Investment Guide Paraguay Investment Guide 47 Country Traits Country Traits

Foreign Direct Investment Index Main economic activities experienced positive growth According to the BCP report, the net flow of For- of 16,3% in 2018. The economic activities with the eign Direct Investment (FDI) in Paraguay was posi- highest share in the FDI stock are financial inter- Net flows per activity tive in 2018 and reached USD 481 million, resulting mediation (17,1%), trade (16,2%), oil processing from a gross inflow of USD 1,6 billion and a gross (13,6%), transport (11,6%), communications (5,7%) outflow of USD 1,2 billion. By components, the net and chemicals (5,3%). Financial Intermediation Commerce Production of oils Transportation Communication flow for that year is mainly explained by the rein- Real Estate Meat production Other activities Net flows vestment of profits in 48%. It is important to note In recent years, Paraguay has received FDI from a that despite the retraction of new capital contri- growing number of countries. Currently, it comes

butions at the global and regional level, Paraguay mainly from investors from the United States, Spain 142,8 700 697,1 continued to receive new capital contributions, and Brazil. Other countries that have expanded 112,5 43,5 17,2 which represented 30% of net flows; the remaining 581,2 13,7 0,5 Paraguay’s FDI position include the Netherlands, 94,7 45,4 164,1526,2 15,8 500 23,3 171,8 201,4 22% corresponded to net loans between related 20,1 89,6 481,0 Chile, Luxembourg and Panama. The number of 11,1 462,0 3,1 425,3 54,9 411,9 43,5 175,2 47,1 203,5 companies. countries investing directly in the country has in- 74,2 253,3 3,4 177,5 122,7 62,4 76,9 300 308,1 12,4 creased significantly, from 20 in 2008 to 41 in 2018. 255,5 132,4 32,5 252,2 33,2 24,5 201,2 149,0 168,5 The revised figures for 2016 and 2017 reveal an 62,9 2,4 90,6 57,7 124,8 262,7 38,6 83,7 19,9 improvement in flow levels, partly as a result of 100 38,8 173,3 138,5 Millions of USD 118,6 109,1 118,6 103,5 77,0 71,0 greater information coverage. Net FDI flows in 13,6 -6,7 -2,9 -37,0 -44,9 -87,2 -76,7 -61,6 2016 reach USD 425,3 million, representing a 38% -131,0 -53,6 -100 -172,4 -260,7 increase over 2015, resulting from a gross inflow -79,6 of USD 1,7 billion and a gross outflow of USD 1,3 -44,4 billion. In 2017, net FDI flows amount to USD 526,2 -300 2010 2011 2012 2013 2014 2015 2016 2017* 2018* million, which represents an increase of 23,7% with respect to 2016, and results from a gross inflow of USD 1,5 billion and a gross outflow of USD 996,3 million. Source: BCP (*) Preliminary numbers

One aspect that has been highlighted on this oc- Local currency and dollar equivalent currencies in the region, such as Brazil (9,2%) and casion, has been the high profitability of FDI in The local currency is the guarani. At the end of Argentina (59,08%). Paraguay, which has been 13,6% in 2018, being well 2019, the dollar-guarani exchange rate closed with above the average profitability of the region 5,5%, an upward adjustment, due to speculative factors The nominal exchange rate closed at G. 6.453 per according to the latest report of the Economic in the market, although during the year there were dollar, remaining stable in real terms. By 2020, the Commission for Latin America and the Caribbean maximum peaks, due to external factors. Accord- exchange rate is expected to be G. 6.700 per dol- (ECLAC). ing to data from Bloomberg, in 2019 the Guarani currency depreciated by 8,28%, similar to other lar. By economic activity, it is worth noting the significant increase in net FDI flows in several activities, such as transport, oil production and financial intermediation, which were mitigated by lower net Evolution of nominal exchange rate flows in communications and real estate activities. FDI balances at the end of 2018 amounted to 2009 2019 USD 6,7 billion, an increase of 9,1% over 2017. In guaraníes, the FDI balance has registered a growth Nominal Exchange Rate – Guarani / USD – end of period 4.649 6.450

Variation in PYG 1.801

Depreciation Rate % 39 %

Source: BCP

48 Paraguay Investment Guide Paraguay Investment Guide 49 Country Traits Country Traits

Labor Force Low growth in Brazil and the contraction of the Private consumption or household consumption This part presents the central characteristics of the The average monthly income, in constant values economy in Argentina (representing 30% and 31% with a 1,3% increase over the previous year and labor market in terms of the distribution of em- and in thousands of guaraníes, of the working pop- of Paraguay’s exports, respectively), together with government consumption with a 5,09% increase. ployment by economic sector and occupational ulation in 2019 was around G. 2.400.000, which is a strong depreciation of the peso, contributed Private consumption accounts for 64,6% of the category, income levels, academic degree, among lower than the average for the same period in 2018 to the reduction of Paraguayan exports by 4,6%, GDP structure, while government spending ac- others. (G. 2.487.000). The decrease occurred in all eco- while fixed investments fell by 11,7%. counts for 12,8% (any variation in private spending nomic sectors, mainly in the service sector (-8,0%). is significant because of the weight of the GDP). According to data published in the Continuous The service sector grew 3,2% see BCP table below. Household Survey (EPHC), issued by the Census Economic policy Bureau (DGEEC in Spanish), 3.676.299 people were Paraguay has achieved significant economic part of the labor force (economically active popu- growth and prosperity in the last 15 years. The lation or EAP) in 2019, representing a little more economy grew at an average of 4.5% per year Evolution of Gross Domestic Product by economic activity, than half of the country’s population (7.110.095). In (2004-2017), a higher rate than most countries in percentage variations turn, the employment rate was 94,3%, which meant the region. This economic growth was in turn ac- that 3.466.761 people worked with or without pay companied by a reduction in poverty. In the same Economic Sector 1992 2016 2017 2018 2019* 2020**

for at least one hour in 2019. Consequently, the an- period, total and extreme poverty decreased by Agriculture 3,2 2,9 7,9 2,2 -4,9 8,5 nual unemployment rate was 5,7% (209.538). 49% and 65%, respectively. In general, the reduction of poverty in Paraguay was greater than the Livestock 7,6 5,1 2,9 -3,2 1,3 1,5 In the distribution of areas, 63,7% of those em- reduction of the regional average, although not Forestry, Fishing and Mining Exploitation 3,7 2,7 -1,7 1,1 -2,6 0,0 ployed are in urban areas and 36,3% in rural areas. as pronounced when considering the rate of eco- Primary Sector 4,3 3,3 6,0 1,1 -3,6 6,4 nomic growth. A remarkable increase in the in- Consistent with the structure of GDP in 2019, em- come of the poorest 40% of the population can Manufacturing 5,6 4,6 6,2 2,4 -1,0 -0,5 ployment is concentrated in the service sector also be observed, with an increase of 4,2% per year Construction (3,1) 8,7 3,5 0,3 1,1 0,0 61,9%, mainly in the sub-sectors of “Trade, restau- during the period 2003-2017. The middle class has Water and Electricity (10,9) 10,3 -2,5 1,9 -11,2 -2,5 rants and hotels” (26,7%) and “Communal, social also almost doubled its income since 2003, reach- and personal services” (25,4%). On the other hand, ing 38% of the total population by 2015. Secondary Sector 0,4 6,8 3,5 1,9 -3,1 -0,9

19,1% of the employed population is in the second- Commerce (0,9) 1,9 10,6 7,4 -0,4 -2,4 ary sector, where 11,1% is employed in the manufac- Paraguay’s economy has endured a series of si- turing industry and 7,9 % in construction. Finally, multaneous shocks for much of 2019, including Transportation 1,9 4,7 7,8 1,4 0,6 -7,0 the primary sector (agriculture, livestock, hunting a drought in the last planting season, flooding, a Telecommunications 12,1 0,6 5,5 5,1 6,3 5,0 and fishing) represents 19% of employment, except deep recession in Argentina and a slow recovery Financial Intermediation 0,4 4,1 0,4 3,9 4,8 1,8 that a large part is concentrated in the rural sector in Brazil. These events mainly affected agriculture, (46,6%). livestock, construction and electricity generation, Real Estate Services 1,9 6,2 4,7 3,3 2,3 -1,0 closing, according to data from the Central Bank Services for Companies 4,7 6,8 3,8 3,0 2,5 -6,1 As for the distribution of the occupation category, of Paraguay (BCP), with a growth rate of 0%. It 50% of the employed population is formally em- should be noted that the service sector showed a Restaurants and Hotels 6,1 4,5 6,8 8,0 5,7 -80,0 ployed, mainly composed of private sector em- positive variation throughout 2019, with an annual Services for Homes 0,8 3,5 5,6 7,3 6,8 -8,0 ployees or workers (40,3%) and to a lesser extent growth of 3,2%, in contrast to the primary and sec- Government Services 4,7 -0,9 1,6 4,3 5,1 5,0 of public sector workers (9,9%). On the other hand, ondary sectors that closed with rates of -3,6% and a significant proportion of employment is account- -3,1%, respectively. Services Sector 2,0 2,8 5,3 5,0 3,2 -5,2

ed for by the self-employed, who represent 42%, Net Value Added 1,5 4,3 4,7 3,4 0,1 -2,3 essentially self-employed. Finally, 7,7% of the em- Taxes on Products 5,1 4,5 8,1 3,3 -1,7 -5,0 ployed labor force are domestic workers. GDP – consumer prices 1,7 4,3 5,0 3,4 0,0 -2,5

Sources: BCP – Economic Studies – Department of Real Sector Statistics *Preliminary numbers subjects to revision **Projections

50 Paraguay Investment Guide Paraguay Investment Guide 51 Country Traits Country Traits

The economy in 2019 was weaker, with inflation The Central Bank of Paraguay (BCP in Spanish) Evolution of exports below the target, closing the year at 2,8%. The projects an 8% drop in exports and a 6% drop Years 2015 – 2019 flexible exchange rate regime continued to cushion in imports for the end of this year. This is a external shocks, and foreign reserves remained consequence of the economic downturn that 16.000 at prudent levels, recovering after the temporary occurred mainly due to lower production in the 13.730,5 13.396,4 14.000 12.386,1 decline in the impact of the Argentinean crisis. agricultural sector and the deterioration of prices 11.984,1 1.437,5 Paraguay’s current account remained in surplus in in the meat sector. 11.104,4 1.346,6 12.000 1.148,4 the first quarter of 2019. 1.200,7 3.250,8 10.000 1.223,0 3.370,0 2.281,6 3.585,7 Exports 1.553,9 The year 2018 ended with a fiscal deficit of 1,2% Total exports in 2019 have reached a value of USD 8.000

of GDP, in line with the limit set by the Fiscal 12,4 billion, which represented a reduction of 9,8 % 6.000 Responsibility Law of 1,5% of GDP. In 2019, at the with respect to the previous year, which was USD Millions of USD 8.327,5 end of the year the figure was 2,9%, this negative 13,7 billion. Recorded exports represented 61,8% of 4.000 8.501,9 8.679,8 9.042,1 7.652,0 balance was reached after having been authorized the total, reaching USD 7,6 billion, 15,4% lower than 2.000 by National Congress to exceed the limit established the value recorded in the previous year. 0 in the Fiscal Responsibility Law, as a mechanism to Jan-Dec 2015 Jan-Dec 2016 Jan-Dec 2017 Jan-Dec 2018 Jan-Dec 2019 maintain investments and reactivate the economy, Meat exports fell by 7,3%, less than the previous as foreseen in the aforementioned legislation. month. The increase in meat shipments to Chile in Registered exports Re Exports Other exports Total the last three months is noteworthy, as well as an Total public debt for 2019 was USD 8,9 billion, increase in shipments to Israel and Taiwan of 84,0 % Source: BCP equivalent to 22,9% of GDP, an increase of 10,1% and 108,5 % respectively. In 2019, total imports reached USD 12,3 billion, 5,2% a value of USD 11,8 billion, 5,5% less than in 2018, over 2018. less than the previous year, mainly due to a signifi- while other imports represented the remaining 4%, By 2020, public debt is estimated to be around Exports under the Maquila Regime continue to grow cant drop in consumer durables (-18,3%). Record- with a value of USD 495,8 million. 27% of GDP, given that the public budget is above and in 2019 amounted to USD 583,6 million, 6,9% ed imports represented 96% of the total, reaching the 1,5% ceiling more than in 2018. The main products exported are yarns and wires (auto parts), garments and other International trade (exports and imports) textile articles, plastics and their manufactures, Evolution of Imports As of December 2019, the country’s foreign leather and carpets. Years 2015 – 2019 trade transactions amounted to USD 18,4 billion, 12.917,5 representing a reduction of 6,7% with regards to Re-exports accounted for 28,9% of the total, with the accumulated value as of September 2018. Total a value of USD 3,6 billion in 2019, an increase of 13.000 11.524,2 12.250,9 exports as of the same month reached USD 9,5 10,3%. Other exports accounted for the remaining 10.316,8 billion, 8% less than the accumulated records as 9,3%, reaching USD 1,1 billion, 20,1% less than the 11.000 9.786,8 of September of the previous year, where a total cumulative value in 2018. of 130 countries imported Paraguayan goods. The 9.000 total accumulated imports for the year amounted 7.000 to USD 9 billion for the same period, which 12.433,9 represented a decrease of 5,3%, and where 146 11.755,1 11.027,4 countries represented the origin of our imports. 5.000 9.529,3 9.040,3 As a result, the trade balance has closed with a Millions of USD surplus of USD 531,3 million in this period. 3.000

1.000

-1.000 Jan-Dec 2015 Jan-Dec 2016 Jan-Dec 2017 Jan-Dec 2018 Jan-Dec 2019

Registered Imports Other Imports Total

Source: BCP

52 Paraguay Investment Guide Paraguay Investment Guide 53 Country Traits Country Traits

Imports of goods for domestic use totaled USD participates with 20,9% and with imports for an Financial system and capital market 9 billion in the year, a decrease of 11,9% over the amount of USD 2,4 billion and showed a decrease Until 2018, the financial system was the most Paraguay has had an important development in the previous year. Meanwhile, imports under the tour- of 12,3% compared to the accumulated to 2018. steady in the region, with favorable results. Howev- capital market in the last ten years. The national ism regime (Decree N.° 6.406/05) represented an From Brazil, the most popular items are passenger er, in 2019 the activities remained weak, explained market has a stock exchange, called Bolsa de Va- increase of 23,9%. vehicle imports, insecticides, fungicides and herbi- in part by the impact of supply shocks (climate) lores y Productos de Asunción (BVPASA), which cides and fertilizers. and the complex external environment, especially has grown steadily since 2010, with the implemen- In relation to countries, China has been the main in the region. In this context, the non-performing tation of the Electronic Trading System (SEN). country of origin of imports with a 34% share, Argentina is in third place, with a 9,0% share of loan rate increased and the growth rate of the loan equivalent to USD 4 billion, presenting an increase total imports, worth USD 1 billion, which has rep- portfolio slowed down. In order to mitigate this BVPASA provides the infrastructure for intermedi- of 12,2% with respect to 2018. Among the main resented a 14,1% reduction compared to 2018. The adverse scenario, the Central Bank issued a pack- aries to negotiate titles according to the order re- products imported from that country are mobile main products include oil, insecticides, fungicides age of transitory measures to support the sectors ceived from their clients. New products have also phones (cell phones), automatic data processing and herbicides, and automobiles for good trans- linked to agricultural and livestock activity, provi- been launched in recent years. As in most coun- machines, insecticides, fungicides and herbicides. portation. sions aimed at mitigating the adverse effects of tries in the region, it is an exchange that negotiates In second order of importance is Brazil, which the unfavorable climate and economic situation. mostly fixed income securities. It currently has 13 brokerage houses, including Cadiem CBSA, BASA It is worth noting that the local banking sector has Capital, Puente Casa de Bolsa, Avalon and Investor, made progress in the Paraguayan market, follow- among the main ones. ing updates to the regulations, as well as the entry Principal products imported and by origin of new players and, most importantly, technology. The regulatory body in Paraguay is the National Digital banking today is the priority agenda of Securities Commission (CNV), which is responsible Paraguayan banks, which is vital for increasing for ensuring its competitive, reliable and transpar- Jan- Dec. 2018 Jan-Dec 2019 banking penetration. ent operation. Var 2019/2018 Var 2019/2018 Var 2019/2018 12,2% -12,3% -14,1% According to data from the Central Bank of Para- The capital market has a lot of potential, both at guay, at the end of December 2019, the banking the level of demand for investment instruments

131,2% system had a growth in profits, despite the ad- or securities or in the offer of new investment op- verse situations faced during much of the year, tions. At present, at the local level it is still small for

1.270,6 where the total system generated profits worth 2.9 the financial system of Paraguay, although at this trillion guaranis versus 2.4 billion guaranis in the moment the investor feels comfortable with local previous year. issues and local issuers begin to find good rates and opportunities for long-term financing.

In 2019, the stock market sector stood out as one of the most dynamic sectors of the national 549,5 1,1% -15,0% -7,4% 6,4% 75,6% -31,4% -28,8% -40,3% economy. According to a report by BVPSASA the 172,6 volume traded was more than USD 1 billion, which 197,7 200,0 84,7 51,1 184,9 56,3 146,6 102,5 109,1 89,7 110,1 75,5 171,2 60,4 94,4 meant an increase of 87% in the volume traded in Mobile Automatic Insecticides, Cars for the Insecticides, Fertilizers Gasoline Insecticides, Cars for the the previous year, and all this in a context of lower Telephones Machines for Herbicides, Transportation Herbicides, (3,1%) (16,1%) Herbicides, Transportation (cellular) Data Processing Fungicides of Persons Fungicides Fungicides of Persons economic activity. (31,8%) (5,0%) (3,7%) (4,4%) (3,7%) (5,7%) (5,3%)

China Brazil Argentina (34,0%) (20,9%) (9,0%)

Source: BCP

54 Paraguay Investment Guide Paraguay Investment Guide 55 Country Traits Country Traits

Global, Regional and National Economic Outlook Regional comparative ranking of the Tax scheme main competitiveness indicators Paraguay has the most competitive and simplified The world economy was hit by several unfavorable However, due to the impact of prolonged trade In the 2019 edition of the (Global Competitiveness tax and benefit regime in the region. The current factors, including the covid-19 pandemic, as well conflicts, the global economy has experienced its Index 4.0), which assesses the competitiveness taxes** are: as the trade war between the United States and lowest growth in a decade, estimated by the Inter- landscape of 141 economies, providing a unique in- China. There were geopolitical tensions, especially National Monetary fund (IMF) at 2,9% in 2019. sight into the drivers of economic growth in the •Value Added Tax, VAT 10 %. between the United States and Iran; the United era of the fourth industrial revolution, Paraguay •Business Income Tax, IRE 10 %. Kingdom’s exit from the European Union, political Prolonged fragility in global economic activity can ranked 97th, scoring 53,6. •Personal Income Tax, IRP 10 %. and economic complications in Argentina and Bra- lead to significant setbacks to sustainable devel- •Tax on Dividends and Profits, IDU 8 % when the zil, events that deepened the economic slowdown opment, including the goals of poverty eradication This rating is very close to the average of 55 points recipient of the dividends, profits or income is an for most of 2019. and the creation of decent jobs for all. At the same (out of 100) for upper-middle income countries*. It individual, legal entity or resident in the country; time, prevailing inequalities and the deepening cli- is also in the average for Latin American and Ca- or 15 % when the recipient of the dividends, profits At the end of 2019, the United States reached a mate crisis are fueling growing discontent in many ribbean countries. As for the Mercosur countries, or income is an individual, legal entity or non-res- “phase one” agreement with China regarding the parts of the world. they fell back in the ranking with respect to 2018, ident in the country, including those obtained by trade dispute, to which market indicators were fa- with the exception of Brazil, which climbed one the parent company from abroad. vorable. position. In this sense, Paraguay dropped two po- •Income tax for non-residents, INR 15 %. sitions. (**)in force since 01/01/2020 The aspects that the World Economic Forum rated as strongest in Paraguay were health (81,4 Paraguay’s Most Competitive Sectors points), macroeconomic stability (74,8 points) and infrastructure (59,8 points). The least valued factors were innovation capacity (22,4 points), airport Performance Highlights connectivity (24,7 points), quality of road infrastructure (26,7 points), institutions (44,3 points)

rd th th and market size (47,3 points). 3 4 4 4th 6th

WORLD LARGEST WORLD WORLD WORD The top places in the 2019 ranking went to: Sin- EXPORTER OF BARGE FLEET EXPORTER OF EXPORTERS OF EXPORTER OF STARCH gapore with 84,8 points, United States with 83,7 SOYBEAN AND YERBA MATER LEATHER DERIVATES points and Hong Kong with 83,1 points.

In South America, Chile obtained the best ranking, placing 33th, followed by Uruguay as 54th, Colom- bia as 57th, Peru as 65th, Brazil as 71th, Argentina as 83th, Ecuador as 90th, Paraguay as 97th, Bolivia at th th 6th 6 8th 8th 9 107th and Venezuela at one hundred and 133th.

WORLD WORLD EXPORTER WORLD EXPORTER WORLD EXPORT WORLD EXPORTER EXPORTER OF OF RICE WITH OF VEGETABLE- OF COW MEAT OF GRAPEFRUIT (*) The World Bank classifies the Republic of BLANKETS SHELLS ORIGIN COAL Paraguay in the group of upper-middle income countries.

Source: REDIEX – 2019

56 Paraguay Investment Guide Paraguay Investment Guide 57 Country Traits

Tax regime As of January 1, 2020, the new Tax Reform Law Likewise, a simplified regime is created for medium 6.380 comes into effect for taxpayers. and small enterprises, with fixed monthly payments for small taxpayers, according to the amount of in- The changes in the Tax Reform Law are: increases voicing in the previous year; Income Tax for Non- in the maximum rates of the Selective Consump- residents (IRNR) is established, and VAT refunds tion Tax (ISC), the unification of the IRACIS with to agro-exporters are eliminated, among other tax the IRAGRO through the creation of the Corpo- adjustments. (See table below) rate Income Tax (IRE), at 10%; creation of the Divi- dend and Profit Tax (IDU), with rates of 8% and 15%; elimination of some deductible expenses in the Personal Income Tax (IRP), with a fixed annual incidence range of G. 80 million, and progressive rates from 8% to 10%.

Tax Regime

Taxes PY AR UY BR

Corporate Tax Rate (IRE) (Maximum) 10 %* 30 % 25 % 34 % 2 Personal Tax Rate (IRP) (Maximum) 10 % 35 % 36 % 28 % MAJOR INVESTMENT Value Added Tax (IVA) and related taxes 10 % 21 % 22 % 18 %

Total Aggregate Taxes and Social 38 % 106 % 42 % 68 % Contributions (according to World Bank) SECTORS

Sources: FDI Intelligence, Ministry of Finance / Internal Revenue Service (SET)

*Observation: In the case that dividends are distributed, a tax of 8% is applies (IDU) over the net utility. If dividends are remitted overseas, a tax of 15% is applied. Exceptionally, until October 2020, the profits of which distribution was approved before Law 6.380 / 2019 and whose payment was made will be covered by the IDU, on which a unique and extraordinary rate of 5% for residents and 10% for non-residents must be applied.

58 Paraguay Investment Guide Major Investment Sectors Major Investment Sectors

2.1. GENERAL INFORMATION Evolution of Foreign Direct Investment (FDI) (In Millions - USD) Contextualizing the scenario for investors, with Comment: The original NDP was subjected to a regards to the favorable sectors for investment in review process in December 2018 and was com- 8.000 6.735 Paraguay, it is appropriate to emphasize that the pleted in 2019, providing four strategic axes: pov- 6.172 National Government has implemented a ten year erty reduction and social development; inclusive 7.000 5.707 strategic plan, called the National Development economic development; Paraguay’s projection to 5.390 6.000 Plan 2030 (NDP 2030), with the vision of “being the world, and finally strengthening institutional 4.956 4.916 4.781 a food production powerhouse with additional policy. Axis 3.1 includes objectives that refer to the 5.000 3.906 value; be the logistical center of the region; and strengthening of international cooperation. As of 3.254 4.000 be a country led by young people.” the date of publication of this material, the revision 2.293 2.564 is subject to a new decree. 3.000 2.051 1.616 Vision Paraguay 2030 1.127 2.000 1.013 A Paraguay in which everyone can live with dig- Investment Attraction 964 nity within a democratic, supportive, and transpar- The country’s main aspects attracting investment 1.000 ent state which promotes individual freedom and are connected to its macroeconomic stability, low 0 equal opportunities, through a broad alliance be- social/labor burden (compared to other countries 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017* 2018* tween an Open Government, socially responsible in the region), and the various tax benefits that private enterprises, and an active civil society. A the government offers investors. Other significant Source: MIC/ BCP (*) Preliminary numbers competitive country, among the most efficient aspects include Paraguay’s abundant fertile land, The FDI balance in the country reached a value of The average annual investment over the last 10 food producers in the world, with thriving and in- 41 million hectares suitable for food production, USD 6,7 billion in 2018. Compared to the balance in years was USD 4,8 billion. novative industries, employing a skilled labor force, and a highly favorable climate for agriculture, so 2017 of USD 6,2 billion, the growth was 9.12%. providing products and technological services, the agribusiness and food production sector is un- progressing towards a knowledge-based econo- doubtedly the area of most potential. Its strategic my; with rates of social development at the high- geographical location offers a platform for indus- 2.2. COUNTRIES INVESTING IN PARAGUAY est rank for South America; connected and open trial production, with access to the markets of the to neighbors and the world; environmentally and region and the world, at advantageous costs, also Composition of Foreign Direct Investment (FDI) economically sustainable; with high rates of legal the opportunity to be a logistics center of the re- security for citizens, with attention to indigenous gion, combining the road and river networks allow- Graph: In millions USD, at the end of 2018. peoples, strong prominence of women; with young ing for high transport capabilities. and trained visionaries leading the country. Main Countries Main Investment Sectors

1.400 1.400 NDP 2030, approved by Presidential Decree N.° 1.266

2.794/2014, has three strategic axes consisting of: 1.200 1.200 1.154 poverty reduction and social development; inclu- 1.091 1.000 1.000 sive economic growth; and the insertion of Para- 904 916 800 800 guay into the world. From these axes are 12 strat- 735 713 780 egies to achieve development and increase the 600 600 489 quality of life of the population. Strategy 2.2. in- 431 400 400 387 355 309 307 326 314 363 cludes targets to attract more international foreign 269 264 252 294 222 220 237 205 direct investment and diversify exports. 200 150 200 155 140 124 99 0 0

Chile Oils Beef EE.UU SpainBrazil Trade Mexico Others Paper Others Holland Panama Uruguay Textiles Colombia Finances Guatemala Argentina Transport Chemicals Luxembourg Switzerland Agriculture United Kingdom CommunicationsHousing Rentals

Non Metallic Products Beverages and Tobacco Machinery and Equipment Source: MIC/ BCP

60 Paraguay Investment Guide Paraguay Investment Guide 61 Major Investment Sectors Major Investment Sectors

Corn also stands out in national agriculture, al- fruits and vegetables for self-consumption, pea- 2.3 INVESTMENT SECTORS though the farming system is inter-cropping. In nuts, beans, sesame, tobacco and tartar. 2018, production was 4.6 million tons in an area of Agriculture 925 million hectares. The cultivation area is in sev- Below are the projected values for 2020 / 2021 of Agriculture plays an important role in Paraguay’s The Union of Guilds of Production (UGP) estimat- eral regions of the country, with greater concentra- the following items: economy. According to a report of the Central ed that the campaign 2019/2020 was 10,5 MM ton tion in the departments of Alto Paraná, Caaguazú, Bank of Paraguay (BCP in Spanish), the sector rep- in an area of 3,63 MM ha and yield of 2.800 kg/ha. Canindeyú, Itapúa and San Pedro. Soy resented 6,8% of the GDP in 2018 and 7,8% in 2019. • Producer sales price: 300 USD/t. Soybean cultivation has been developed, mainly, in Corn production is also destined for export, with • Production cost: USD 520 x ha. A large part of agriculture is developed in the East- the extreme east of the Eastern Region with two Brazil being the main market. • Yields: 2.700 kg/ha. ern Region (which occupies almost 40% of the ter- productive focuses outside the traditional area, ritory), although in recent years agricultural crops one in the northern portion, in the departments Wheat is also positioned as one of the most im- Corn have been successfully developed, with the ap- of San Pedro and Amambay, another in the south, portant crops in the country. In 2019 its production • Producer sales price: 120 USD/t. plication of technology, in the Western Region or in the department of Misiones. The highest yields was 1.2 MM ton in an area of 430 M ha (CAPECO • Production cost: USD 475 x ha. Chaco (which occupies 60% of the territory). per hectare are found in the departments of Alto statistics). The area of wheat cultivation is devel- • Yields: 5.000 kg/ha. Paraná, Canindeyú, Itapúa and Caaguazú. oped in the east and south of the country, in the The country’s main agricultural crops are soybean, departments of Alto Paraná, Canindeyú, Itapúa. Wheat corn, wheat and rice. Paraguayan soybeans are mainly destined for the • Producer sales price: 190 USD/t. foreign market. Paraguay is one of the world’s lead- Finally, the production of rice in 2017/18 was 897.2 • Production cost: USD 400 x ha. Soy is the main agricultural product and one of the ing soybeans exporters. In 2019, it ranked fourth. metric tons and the sowing area reached 143 mil- • Yields: 2.300 kg/ha. main foreign exchange producers for the country. lion hectares. Rice farming is concentrated mainly According to a report by Paraguayan Chamber of In terms of markets, Argentina is the main destina- in the departments of Itapúa, Misiones and Ñeem- Rice Cereal and Oilseed Exporters and Traders (CAPE- tion for soya with 68,2% of the total, followed by bucú. According to data from the Federation • Producer sales price: 200 USD/t. CO in Spanish), in the 2018 / 2019 campaign, pro- Russia with 15,6%. of Rice Growers of Paraguay for the year 2019 it • Production cost: USD 900 x ha. duction was 8,5 million tons in an area of 3,54 mil- reached a production of about 1.0 million tons in • Yields: 7.000 kg/ha. lion hectares (ha), with a yield of 2.401 kg/ha. an area of 165 metric hectares, with average yields Source: the Chamber of Commerce Paraguay Brazil of 5.900 and 6.000 kilograms per hectare. The production is mostly for export (85% of the total International markets was for the external market). The main destination Livestock is Brazil, with 60% of exports; Chile, with 8%; the The cattle population in Paraguay rose by about Soybean Exports (December 2019) United States, with 6%; and Iraq and other Asian 20% in the last 10 years. According to SENACSA’s countries with about 5%. register, the cattle balance in 2019 was 13.8 million ISRAEL BRAZIL 2 % heads. The plan for 2020 is to reach 15 million 2 % OTHERS Favorable factors for agriculture: Rainfall, abun- head of cattle. The Rural Association of Paraguay 2 % dant water reserves, soil fertility and comparative- (ARP in Spanish) is prioritizing among its actions EU 8 % ly low costs in regional terms have made Paraguay the procreation rate program, or the artificial in- a prosperous agricultural country. There are nu- semination of animals from small and medium pro- RUSIA merous investment opportunities in grain collec- ducers as well as improvements in the handling of 17 % tion, road and port infrastructure and commercial animals and pastures. chains. Paraguay has begun an ambitious hydro- ARGENTINA carbon exploration plan that if successful could Paraguayan livestock breeding has an interesting 69 % significantly improve existing infrastructure. Some spectrum of development. The main advantages other crops in which Paraguay stands out are cot- are the natural conditions and production capac- ton, sorghum, sweet potato, sunflower, cassava, ity, however, the biggest local challenge is to introduce full traceability of all its herds in a fast and Others: Turkey, Lebannon, Peru, Egipto, Bangladesh, Uruguay, Japan, South Korea, Srilanka. well-planned way, as well as the opening of new Source: CAPECO (http://capeco.org.py/exportaciones-por-destino-final-es/) markets.

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Investments in cattle breeding are carried out in Meat production Auto parts and assembly fields with lower productivity rates where mega Paraguay is among the top 10 exporters of bovine This has been a growing sector in Paraguay in re- The auto parts sector represented more than 50% thermal pastures perform less, both in the East- animal protein. In 2019, it ranked 8th in the world cent years. Currently there are several multination- of the total volume exported under the Maquila Re- ern Region and in the Chaco region, especially in as a beef exporter. In 2018, beef production was al industries in the auto parts sector installed in the gime in the years 2016, 2017 and 2018 and 48.4% in the basin of the Paraguay and Pilcomayo rivers, in 449.232 tons of beef and 257.414 tons were ex- country, mostly under the Maquila Regime, among 2019, leading the ranking of exported products, ac- the department of Presidente Hayes. An extensive ported, equivalent to approximately 57%, generat- them: Yazaki (Japanese), Leoni (German), THN cording to reports from the National Council of the production system is used in the field with ade- ing a total of USD 1 billion. In 2019, beef production (Korean), Sumidenso (Japanese), MSK S.A. (Brazil- Maquila Export Industry (CNIME in Spanish). quate veterinary and sanitary control, with access was 436.226 tons and 247.167 tons were exported, ian), BP Américas (German), Kromberg & Schubert to genetic improvement, via artificial insemination. about 56% of the total. (data from the Department (German) and Fujikura (Japanese). The production of Statistics DPE – SENACSA, Department of sta- is intended for export, expanding to over 12 coun- Genetic improvements have made it possible to tistics and National Service of Quality and Animal tries in America, Europe and Asia. take advantage of crosses with Zebu, Brahman or Health). Nelore, which are widely used because they adapt Exports under the Maquila System year 2019 better to the climate. The Braford and Brangus The main export destinations for meat and offal: Accumulated exports 2019 (In %) breeds are very well established and have produc- Chile, Russia, Israel, Brazil, Republic of China-Tai- tivity rates per hectare of artificial pasture of pani- wan, Kuwait, Vietnam and the European Union. Auto parts 48,4 % cum maximum varieties, which adds much higher For the year 2020, there are negotiations to export Clothing and Textiles 23,2 % yields than other more traditional livestock areas, to USA, Saudi Arabia, Japan and Turkey. Plastics and their manufactures 11,8 % such as the humid pampas of Argentina. Pharmaceutical Products 4,2 % Relevant Fact: Leather and its manufactures 3,4 % The area of greatest livestock growth in the last Related to the new agreement signed between Shoes and their parts 2,2 % decade has been the Chaco, with a growth of 83%, Mercosur and the European Union and the Hilton Miscellaneous manufactures 1,9 % especially in the departments of Boquerón and Quota, which will represent a strategic opportunity Pet Foods 1,3 % Alto Paraguay. for Paraguay, since it is one of the countries that Pigment, paint and dyes 1,0 % exports the least to the Euro zone. In the case of Metals and its parts 0,8 % The following are the projected values for 2020: beef, the South American bloc will have a quota Intangible services 0,8 % of some 99.000 tons (carcass weight), which is Wood and its manufactures 0,5 % • Average purchase cost of a weaner: equivalent to approximately 70.000 tons shipping Food products 0,4 % USD 300. weight for Mercosur, with a preferential tariff of Rubber and its manufactures 0,0 % 7,5%, of which 55% will be for chilled meat and 45% 0,0 % 10,0 % 20,0 % 30,0 % 40,0 % 50,0 % 60,0 % • Cost of animal production / year **: USD 75. for frozen meat. Source: CNIME • Average sale price of steer: The degree of benefit for Paraguay will be deter- The assembly industry includes vehicles, motor- •Trucks: Timbó Group for Sinotruk; Alex SA for USD 640. mined by negotiations at the regional level for the cycles, trucks and buses. The assembly companies Star and Reimpex S.R.L. for Forland and Changhe. distribution of this quota, and the country’s posi- • Average selling price of bull: are: tion will be to ask for equitable distribution, ac- USD 850. Factors conducive to investment in the sector, as cording to information from the Paraguayan Meat •In the utility vehicle line: AM Reguera SA, for mentioned by some industries are low tax burden, Chamber and the Rural Association of Paraguay • Over-the-hook price: USD 2.85. Changan-Yamazuky; Alex SA, for Star; and Reim- low cost of labor and energy compared to other (ARP). If it obtains 25% of the quota established pex SRL for JAC, Changhe, Forland. countries in the region. for Mercosur, which is what will be considered, ** Not including initial investment of the field. •In the bus line Ruvicha, by the Lince Group. Paraguay will be the most benefited as it currently •On the motorcycle assembly line: Inverfin – brands The auto parts industries are mostly concentrated Source: the Chamber of Commerce Paraguay Brazil only has a preferential quota of 1.000 tons per year Taiga; Reimpex S.R.L for Leopard; Alex SA, for Star; in the Central and Alto Paraná departments. in the Hilton quota. and Chacomer for Kenton.

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Relevant facts: Bioceanic Route, Bioceanic Bridge, Paving in the Cost of the m. in Asunción: G. 1.057.416 (without In October 2019, Paraguay and Argentina signed a Among the most important issues are: free trade Chaco’i- Gral. Bruguéz, Sovereignty Route (Fon- considering the costs of the client, general expens- bilateral free trade agreement to regulate produc- in automotive products between the two coun- plata), East and West Export Route, Integration es and business profits) tion and trade in the automotive sector, valid until tries; preferential access to the Brazilian market for Bridge (between Presidente Franco, in the Up- General expenses / profit / other: G. 63.444.982 2029, for the administered exchange of vehicles. goods manufactured in Paraguay under the Ma- per Paraná area, and the Brazilian city of Foz de Administrative expenses: G. 27.168.977 The agreement establishes the continuity of trade quila Regime; and, preferential access for vehicles Iguazú), Intervention on Route PY01 (project in- Total labor cost: G. 344.393.890 compensated with a percentage of flex vehicles with alternative motorizations and for high-end cludes intervention, duplication, and reconstruc- Source: Revista Costo, Ed. Dec 2019. and parts exchange. The “flex” percentage is de- vehicles. tion and maintenance), among other works. Exchange rate as of 12.30.19 BCP: 1 USD = G. 6.453 creasing year by year until it reaches free trade in 2029. Disclaimer: As of the date of publication of this b.Housing: In 2018 and 2019, private sector invest- Electrical and electronic devices Guide, the agreement is available on the web page ments were made in housing for segments A/ B/C This area has attracted foreign investors, mainly On February 11, 2020, Paraguay and Brazil signed of ALADI’s General Secretariat, where its imple- /D, although several constructions and projects manufacturers of automotive wiring and electrical an agreement for the auto parts sector. This agree- mentation will be established, once the internal le- were decisions made two or three years earlier. conductors, in the model of export maquila indus- ment highlights the incorporation of opportunities gal procedures in each of the parties to this agree- try. for the development of vehicles with new engines ment and its first additional protocol are fulfilled. According to data from the Permanent Household (electric, hybrid, gas, hydrogen, etc.), with Spe- Survey (EPH in Spanish) for the year 2018, con- Favorable factors for investment in the sector also cial and Differential Treatment - S&D for Paraguay, Agreement with Argentina ducted by the General Directorate of Statistics, refer to the benefits on the tax side, low labor and starting with a regional content index of 30%. In http://www2.aladi.org/nsfaladi/textacdos.nsf/ca05a6ae01cc96 Surveys and Censuses (DGEEC in Spanish), only electricity costs compared to other countries in addition, preferential access for maquila products 9583257d8100416d1e/7e1f2e3cddafb696032567ec007c6823? 79,5 % of the population owns a home. It is esti- the region. with Regional Index of Content (ICR in Spanish), OpenDocument mated that close to 100.000 people in the country less than 50%, for an initial amount of USD 350 do not have their own home. The electrical and electronic products industries million in the year 2020 and ICR 40%, with an an- Agreement with Brazil are concentrated in the Central and Upper Paraná nual increase in the amount, and a gradual increase http://www2.aladi.org/nsfaladi/textacdos.nsf/4d5c18e55622e1 Through Law 5.638* on “Housing Development”, departments. in the ICR, and by 2027, the final amount of USD 040325749000756112/84ab9046789ed22703258367004758d the Ministry of Urban Planning, Housing and Habi- 750 million, ICR 50%. 4?OpenDocument tat - MUVH, has planned 10,000 housing subsidies Creative Economy to be implemented until 2023, which will be allo- Also known as the orange economy, it offers an It also provides for preferential access for both Negotiations with Uruguay are scheduled to begin cated to the construction of housing for the mid- infinite opportunity, with clear potential in Para- countries for 1.000 passenger vehicles with a rein 2020. dle and lower middle class. guay. According to data from the Diagnostic Study duced regional content index, with special treat- carried out by the IDB LAB/CIRD Project “Orange ment for Paraguay (30% ICR for Paraguay and 35% Construction (*) Disclaimer: At the date of publication of this Economy, Creative Force”, the creative sector has for Brazil). This sector is divided into two groups: Guide, the Act is not yet regulated. an impact of 2.5% on the national GDP and employs a.Infrastructure: with greater government contri- around 50.000 people directly. The creative indus- The commitment also sets out the definitions of bution for large works, mainly roads in different The following are the reference values for con- tries are all activities that have intellectual property tariff preferences, preferential trade, convergence parts of the country. In 2019, the investment was struction in 2019: as their fundamental basis, in other words, the raw to the Common External Tariff (AEC in Spanish), USD 812 million. Most of the works are carried out b.1.Single-family housing material is creativity, as well as intellect and ideas. which will allow the export and import of automo- under the modality of public bidding, although Covered surface: 360 m. Architecture, performing arts, audiovisual, music, tive products. This allows local assembly industries there is also the modality of Public-Private Alliance Total cost of construction: G. 653.094.083 video games development, software, design, 3D to aspire to start an export process with a fairly (APP in Spanish). General expenses / profit / other: G. 293.892.337 programming are part of the orange economy, un- competitive content index. Administrative expenses: G. 95.687.047 derstanding that they all produce a specific prod- Important projects will be implemented over the Total cost of the work: G. 1.042.673.468 uct or service despite having particular processes. These agreements provide legal coverage for the next four years, the most important of which are: In order to increase this economic activity, the Au- current exchange of automotive products that Botanical Road Corridor, Government Buildings b.2.Storage shed diovisual Promotion Law was created in July 2018 were not included in Mercosur, and lay the ground- (five buildings for six ministries), Costanera Sur, Covered surface: 240 m. and regulated in October 2019. work for regional integration, with a free trade 3 Bocas Tunnel, Asunción - Chaco’i Bridge, Dou- Total cost of construction: G. 263.779.930 model and creating opportunities for production bling of the PY09-Transchaco Route, Milk Route, integration.

66 Paraguay Investment Guide Paraguay Investment Guide 67 Major Investment Sectors Major Investment Sectors

In 2018, the Federation of Creative Industries (FIC Economy with the aim of coordinating with similar Hydroelectric potential with medium CHE in inland rivers in Spanish) was created seeking to bring together institutions and providing support to the sector. Total Power the different industries and promoting the creative Emplacement (Nominal) economy in the country. The FIC currently brings The National Government, through the Ministry of together nine guilds from eight sectors (audiovi- Industry and Commerce, recognizes the audiovisu- Yguazú 200 MW sual, software, fashion design, video games, visual al sector as an industry, which will allow the com- Acaray III 150 MW arts, inventions, music, advertising). panies linked to the sector to access all the existing Monday 180 MW benefits for the industries at a national level: in- Ñacunday 160 MW Entrepreneurship and creative economy: vestment incentives (Law 60/90), tax exemptions, Paraguay River I and II 168 MW •The Ministry of Industry and Commerce (MIC in credit lines from the National Development Bank, Total 858 MW Spanish), through the Vice-Ministry of SME´s and etc. Source: MIC / REDIEX according to the provisions of Law 5.669/2016 “On the Promotion of Entrepreneurial Culture”, must Renewable Energies In this context, in the near future, Paraguay will be The year 2019 can be taken as a good reference, as promote the entrepreneurial spirit and culture. In According to the Energy Balance for 2018, issued a place for investments in power generation plants, there were no major frosts and prices did not vary this sense, by means of ministerial resolution N.° 912 by the Vice-Ministry of Mines and Energy, the which is complemented in a framework of sustain- significantly. In that year, petrol required a mixture dated 26/10/2018, the institutional operation of the country’s energy consumption matrix is composed ability, with great energy potential, not only hydro- of 25% ethanol (RON 85, 90 and 95) it reached a National Directorate of Entrepreneurship is formal- of 44% biomass (almost native wood, not reforest- electric, but also other renewable sources such as total of 1.223.132.935 liters marketed (of the mix- ized (DINAEM in Spanish). ed), 40% imported fossil fuels, and only 16% elec- biogas and solar energy. ture), whose 25% fraction in demand yielded a •REDIEX has a Creative Industries and Services tricity. Of this electricity, 60% is used in residences, total of 305.783.234 liters of ethanol. In the same platform with the purpose of diversifying the ex- 25% in industry and the rest in commerce. Another niche with great potential for investment year, the mixture of E85 petrol (with a composi- portable offer, opening new markets and position- in Paraguay, in terms of renewable energies, is that tion of 85% absolute alcohol + 15% RON 85 pet- ing the country as a destination for foreign invest- At present, hydroelectric power forms almost 100 % of electric transport. Only the import of electric ve- rol) - also commercially known as FLEX - reached ment in this sector. Since last year we have been of total electricity production in Paraguay; the pro- hicles and the transformation of the public trans- a total sale of 9.577.835 liters of mixture, the 85% working mainly with the audiovisual, advertising, duction of this energy is renewable in installed ca- port network (buses and taxis) will have a posi- absolute alcohol fraction which added to 8.141.159 video games, music and software sectors. pacity of 9.000 megawatts (MW). tive impact in terms of better use of energy that is liters. The total of both figures (RON 85, 90, 95 and •The National Plan for SME´s includes the The- not being consumed today. The initial concept of E85) added up to a demand of 313.924.393 liters of matic Tables on Entrepreneurship and the Creative buses and taxis can be extended to the individual ethanol for the automotive market. transport and, even more, this need can be com- bined with the national industry of auto parts and The market for biodiesel is still in its early stages, Power plant potential in MW assembly, for example, so that assemblers of auto with a demand for a 2% blend in diesel, and an es- Total Power Power for Py Damn parts and batteries, come to the country for both timate growth of up to 5%. At present, with de- (Nominal) (Nominal) the local market and Latin America (considering mand for 2% diesel blend, the installed production Itaipú 14.000 MW 7.000 MW the advantageous geographical location of Para- capacity is sufficient to meet the demand for 2% guay). This is a virgin market full of opportunities. diesel blend. There is no greater demand because Yacyreta 3.200 MW 1.600 MW the price of biodiesel is high. We need large scale Acaray 210 MW 210 MW Biofuels production of biodiesel and varied raw materials Total installed power 8.810 MW Considering that 100% of fossil fuels in Paraguay (not only soybean oil and animal fat), to be com- are of foreign origin, the inclusion of biofuels in petitive in price. It does not exclude the possibility Source: MIC / REDIEX both transport and industry is an opportunity to of biodiesel processors being installed in Paraguay, Hydroelectric potential in rivers in shared with Argentina develop and to achieve national autonomy. Cur- with a view to both the local and export markets, Total Power Power for Py rently there are producers of ethanol and bio- thus justifying large-scale production. Damn (Nominal) (Nominal) * diesel, the former to serve the local market and for

Aña Cua 270 MW 135 MW export, and the latter with sales of their entire production in the local market. Itacorá-Itati 1.660 MW 830 MW

Corpus Christi 2.880 MW 1.440 MW

Total 2.405 MW

Source: MIC / REDIEX

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Food industry The metal industries are mostly concentrated in According to data from the Paraguayan Restau- Paraguay offers abundant raw materials, qualified •Warrants issued on different products according the Central and Upper Paraná departments. rant Association (ARPY in Spanish), for every new labor, applied technology, fiscal incentives, inter- to net asset value. establishment that opens, two, three or more are national business, quality and variety of products, •Stand-by letters of credit issued by leading finan- Chemical products closed at the same time. Generally, 60% of new productive capacity, new growing businesses, cial institutions. Overall, the chemical industry is made up of sever- gastronomic ventures are closed before the first which give the country enough competitiveness. •Subsidiary guarantees issued by first line financial al sub-sectors. Some chemical product industries year. entities. operating locally are involved in household prod- Currently, national companies produce a wide vari- •Pledged bank deposits issued in favor of the fi- ucts, manufacture of paints, enamels and other The main investments carried out in the last four ety of high-quality foods, such as beef, poultry and nancial entity granting the loan. chemicals, household products, pharmaceuticals years to 2019 were: pork, dairy products, peanuts, flour, rice, medicinal and plastics. herbs, mate tea, vegetable oils, organic sugar, fruit The financial entities with foreign investment are: •Negroni – Rooftop Dazzler Hotel: opening in De- juices, mineral waters, soft drinks, cassava starch, Banco GNB, Banco Itaú, Banco do Brasil, Banco Some existing industries in the sector are: cember 2016, with a capacity of up to 200 people spices, and high-quality processed foods. BBVA, Citibank and Sudameris Bank. •Puras pinturas paraguayas S.A (Venezuelan), and an approximate investment of USD 500.000. •Inesfly (Spanish), •TAJ: opened in July 2017, with a capacity of 240 In terms of the industrial exportable supply, the Paper products •XPlast (Brazilian), people. Investment USD 900.000. agro-industrial items stand out, more specifically According to a 2018 FDI report by the Central Bank •Nova Par S.A. (Uruguayan), •Alma Cocina con Fuegos: inaugurated in Septem- vegetable oils and pellets (USD 1,4 billion in 2018), of Paraguay, investment in the paper and paper •Estelar S.A. (Brazilian), ber 2017, with a capacity for 194 people. Invest- beef (as mentioned above) and other food prod- products industry sector was USD 124,4 million. •Amamplast (Brazilian), ment not disclosed by the company. ucts (USD 199,6 million in 2018) In this area, the production and export of craft pa- •Uniplast (Brazilian), •Luna 21: opened in October 2017, capacity approx. The food industries are mostly concentrated in the per or cardboard, corrugated cardboard and tech- •Megaplásticos (Brazilian), among others. 150 people. Investment USD 1.200.000. Central Department. nical paper for the manufacture of gypsum boards •Zulu: opening in August 2018 with a capacity of are noteworthy. The chemical, pharmaceutical, domestic and cos- 200 people Investment USD 1.000.000. Financial Intermediation metic industries are located in the Central De- •Hard Rock Café, reopening on 10 December 2019, This sector had the highest and best yields in the The national paper industry is supplied with the partment, with branches in the borders. They also with a capacity of 340 people. Approximate in- last 20 years in Paraguay. According to the Central raw material paper or cardboard for recycling export to several countries such as Bolivia, Peru, vestment of USD 3.000.000. Bank of Paraguay (BCP), the financial intermedia- (waste and scrap) from the local market for the Ecuador, Brazil, Argentina, Uruguay, Dominican tion sector represented 5,8% of GDP in 2018 and production of paper and cardboard. Republic, Costa Rica, Nicaragua, Guatemala, Mexi- Hotel industry: 5,9% in 2019. In turn, according to the BCP’s re- co, as the main destinations in Latin America, some In 2017, Paraguay registered a boom in the hotel port on foreign direct investment, this sector was Metallic products African countries and the Middle East. sector with many new projects in the country’s the one with the largest share of the FDI balance This sector has an incipient participation in the ex- main cities. According to the National Secretariat (17,1%) of the total in 2018. port of manufactured goods. The products manu- Restaurants and hotels of Tourism (Senatur in Spanish), between 2013 and factured are diverse and range from materials ap- These two sectors played an important role in Par- 2016 the number of hotel establishments in Par- The financial sector is well regulated. The rate of plied to construction, containers or items for the aguay’s economy, with significant foreign invest- aguay grew by 38%, a trend that was reinforced non-payment (default and late payments) is low. beverage industry, car manufacturing accessories, ment. during 2017, with the expansion and improvement Although financial institutions have a loan limit per machinery, among others. of existing ones. One of the main reasons for this client of 20% of their net worth, this limit can be Restaurants: increase was due to the country’s sustainable mac- increased to 30% of the net worth of the financial There are several foreign capital industries in- The boom in the opening of restaurants occurred roeconomic indicators. institution, depending on the existence and type of stalled in Paraguay, mostly under the Maquila Re- between 2016 and 2017, mainly in the city of Asun- collateral securing the loan, including: gime, some of them are: Xplast (Brazilian), Barbieri ción. A phenomenon that accompanied this was the (Argentinean), Brascaps (Brazilian), Compañía Sur In 2019, the restaurant sector was affected by the growth of corporate tourism. More and more inter- •Mortgage guarantee for up to 70% of the as- Americana de Aceros SA (Brazilian), Real Metales economic slowdown that the country experienced national events are being organized in Paraguay, sessed value. (Brazilian), HCSA (Brazilian), Egea SA (Uruguay- and the retraction in consumption, however, new which leaves an important economic flow in the •Collateral up to 50% of the appraised value. an), Enercorp S.A. (Brazilian), Ball Corporation premises were opened. The opening pace is not country. Its great advantage is that tourism for •Guarantees included in the ALADI (Latin Ameri- (American - USA). The destinations of the produc- the same as in previous years (2016-2017). meetings or congresses does not depend on sea- can Integration Association) Agreement on Recip- tion go mainly to Brazil and Argentina. sonality, generating hotel occupation throughout rocal Payments and Credits). the year with average stays of four days or more.

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The main investments carried out in the last four This happened due to different factors, where we The main investments were: Grupo Texcin S.A. These routes will undoubtedly demand an increase years to 2019 were: can highlight the increase in the Paraguayan mid- (Brazilian), San Antonio Textil S.A. (Brazilian), in transport capacity, primarily for cargo. The en- dle class that occurred as a result of the reduction Queen Anne S.A. (Brazilian), Soft Dreams S.A. try of oil trucks is still under study, which will dou- •Aloft: opened in January 2016, with 120 rooms. In- in poverty levels, which has served to boost de- (Brazilian), Salinas Textil Import Export SACI (Bra- ble the capacity of cargo transported and reduce vestment: USD 12.000.000. mand and generated significant supply in the real zilian), Sudamerica Textil SA (Brazilian), Compañía the logistical cost. •Dazzler: opened in April 2016, with 300 rooms estate sector, mainly in the country’s capital. Textil Guaraní S.R.L., Hogar Textil – Grupo Alten- and an investment of USD 35.000.000. burg (Brazilian), Lunelli Industria Textil SA (Brazil- Water transport: •Esplendor A Wyndham Grand Hotel: opened in In Asunción’s corporate sector, between Santa Te- ian), Asturias (Brazilian). River transport is used for the logistical movement April 2017, with 206 rooms. Investment: resa and Aviadores del Chaco avenues, over USD of exports and imports, largely for the transport of USD 25.000.000. 1 billion was invested in private development of The textile and clothing industries are mainly lo- agro-industrial products, beef, grains and products •Río Hotel By Bourbon Ciudad del Este: opened in shopping centers, offices and residences, accord- cated in the Central, Alto Paraná and Amambay of the maquila industry. October 2017, with 116 rooms. Approximate investing to data from the Paraguayan Chamber of Real departments. ment of USD 15.000.000. Estate Developers (CAPADEI in Spanish). Also, ac- Paraguay’s river barge fleet is the third largest in •Hotel Five Asunción: opening in February 2018, cording to the Chamber, 10.000 new homes are Transportation the world, after the U.S. and China, and is oper- with 40 rooms Investment USD 5.000.000. needed each year. The challenge for the sector is Investment by private companies in the last five ated by some 46 international and seven national •Holiday Inn: opened in February 2019, with 116 access to long-term credit, mainly for the middle years has become more dynamic, especially in companies, with more than 3.000 active vessels. rooms. Investment: USD 12.000.000. and lower classes. land transportation, both for public transport and The guilds that make up the Paraguayan shipping •Palmaroga Hotel (Grupo Barcelona): opened in trucks for logistics services, and in river transport industry are responsible for 2.3% of the Gross Do- May 2019, has 107 rooms, with an investment of Through Law 5.638 on Housing Development, (barges). The railroad is one of the least devel- mestic Product in services. USD 12.000.000. passed in 2016, one of the objectives is to allow oped means of the Paraguayan sector, but it could Private investment in this sector exceeds USD 5 for access to decent, affordable housing in urban change in the medium term if the Bioceanic Train, billion, invoicing some USD 800 million per year These large hotels renovate the areas where they areas through a financing system geared to mid- which will connect the port of Santos in Brazil with in freight and generating more than 5.000 direct are installed: Ycuá Satí, San Jorge, Villa Morra and dle-income families, with loans and preferential that of Ilo in Peru, is completed. jobs. above all Manorá, which also has the presence of conditions. This will make it possible to carry out the Del Sol Shopping Center and the World Trade a program to enable people in the middle-class to Ground transport: According to data from the Paraguayan Shipown- Center, and has positioned itself as the business have access to their first home, once the decree In terms of infrastructure, the work of doubling the ers’ Center Association, 38 companies (owners of and financial area of Asunción. In addition to the regulating the Law has been adopted. PY02 Route stands out, which once completed will the vessels) represent 90% of the total warehouse large chains, there are also small boutique hotels reduce by 50% the travel time between Asunción on the Paraguay and Paraná rivers. with more guest driven service. On weekends the Currently, there are two real estate franchises in and Ciudad del Este, which will represent an in- hotels also receive tourists who come to shop for Paraguay: RE/MAX (operating since 2011) and crease in efficiency in transport and logistics, con- This 90% transports approximately 95% of all the technology devices in downtown stores. Century 21 (operating since 2018). sidering that 70% of the country’s economy flows cargo that moves through the Paraguay - Paraná in the Central-High Paraná Corridor. Waterway. Not only from and to Paraguay, all in- Real estate services Textile and clothing tra-zone imports and exports, that is, from all the This sector represents the national economic The textile sector ranges from cotton fiber pro- Likewise, the Bioceanic Route is considered strate- countries that sign the agreement for the use of structure, in 2018 it had 6.6% share of the GDP and cessing to clothing. It had growing private invest- gic and aims to transform the Western Region of the rivers, which are: Brazil, Bolivia, Paraguay, Ar- in 2019 it had a 6.7% share. ment, mainly in the industry under the Maquila Paraguay into an important International Logistic gentina and Uruguay. In the last 10 years, Paraguay has developed a Regime, and is the second most important item in Center. This route, in its journey through the Para- great amount of real estate, marked by an impor- exports. According to data from the BCP, in 2018 guayan territory will involve a road of 277 km of tant evolution in terms of construction and private it represented 25.6% of annual exports, with a vol- pavement (from the city of Loma Plata - Boquerón investments in the real estate market, focused ume of USD 107.2 million, and in 2019 it was 18.7%, to Carmelo Peralta - Alto Paraguay). mainly on the upper-class population and the cor- approximately USD 108.9 million. porate sector. The competitive advantages pointed out by the entrepreneurs, highlight lower costs in terms of energy and labor, compared to the region.

72 Paraguay Investment Guide Paraguay Investment Guide 73 Major Investment Sectors

2.4. INVESTMENTS

Investments carried out during 2019 under the incentives regimen of Law 60/90 and the Maquila Law according to sectors

National Foreign Overall Sector Investment In Investment In Investment Potential Jobs USD USD

Metal products 2.769.772 205.445.017 208.214.790 976

Building Materials 197.552.344 - 197.552.344 234

Textile and clothing 18.329.371 27.447.239 45.776.609 2.147

Food and Beverage 23.943.994 11.543.956 35.487.950 295

Chemical and 16.605.539 8.390.405 24.995.944 283 pharmaceutical Agricultural and 17.034.988 4.755.049 21.790.037 145 livestock farmer 3 Plastics 5.708.573 5.308.389 11.016.962 202

Paper and cardboard 1.596.584 7.440.595 9.037.180 133 products INCENTIVES FOR Services 3.750.038 4.562.706 8.312.744 580 Auto parts 107.149 6.670.526 6.777.675 337 FOREIGN INVESTMENT Recycled 1.188.988 833.400 2.022.387 29

Mining and quarrying 1.114.198 - 1.114.198 32

Fuels and Energy 478.466 522.233 1.000.700 41

Furniture and wood 389.209 359.205 748.414 28 products

Others 20.211.116 633.084 20.844.200 141

Total 310.780.331 283.911.804 594.692.135 5.603

Source: Vice-Ministry of Industry (*) Includes investments made through Law 60/90 and the maquila regime

74 Paraguay Investment Guide Incentives for foreign Investment Incentives for foreign Investment

3.1. FOREIGN INVESTMENT 3.2. INCENTIVES OFFERED BY PARAGUAY TO

Paraguay has several laws and regulations that •Reduction of real estate taxes, industrial patents THE INVESTOR provide extensive benefits to investors, including: and VAT exemption, in the development of facto- The purpose of Law 117/91 on Investment is to But these guarantees are subject to investors, both ries that allows to stimulate the establishment of stimulate and guarantee, within a framework of national and foreign, complying with both the Tax •Expedited process to set-up companies. industrial companies in areas that need to gener- total equality, national and foreign investment to Regime and the Labor and Social Security Regime ate development and therefore jobs and social and promote the economic and social development of in force in the country. •Guarantee to the right to property, equal treat- economic welfare. Paraguay. ment of national and foreign investments, freedom •Universality: foreign investments are welcome in of exchange and free trade. In addition, Paraguay has an open economy, a free The law also establishes the following principles: all sectors of the economy, except for the excep- exchange market, with the possibility of using bank tions established in specific local laws such as the •Expedited residency documents in the country accounts in various currencies such as the US dol- •Equality: foreign investment is treated as domes- hydrocarbon sector, mining, telecommunications, via short procedures. lar, the Euro and the Real; a strategic geographical tic investment. Consequently, no discriminatory or forestry, among others that require permits, licens- position from a logistical point of view, abundant more favorable conditions or treatment may be es or concessions, especially granted by the com- •Exemption or temporary suspension of customs and affordable energy, and a young workforce ea- imposed on foreign investors. petent authority. duties on imports of raw materials and machinery. ger to learn and work.

•Property right: for national and foreign invest- •Automaticity: Except for the above-mentioned, •Exoneration or temporary suspension of the Val- ments, without any other limitations than those foreign investors are authorized to invest in the ue Added Tax applied to the import of machinery established by the Constitution and the laws. other sectors of the economy without prior autho- and raw materials for industries. rization, unless they are subject to a special frame- •Exchange freedom: the entry and exit of capital work. In this case, the investor abide with the rules •Exemption from all national taxes in exchange for is guaranteed, as well as the remittance abroad of laid down for such investments. a single tax in the cases of the Free Trade Zone dividends, interest, commissions, royalties for the Law and the Maquila Law. transfer of technology and other concepts without •Exchange regulation: The Investment Law, among restrictions, with the exception that all exchange, its guarantees includes freedom of exchange, •Public-Private Partnership Law, for public-private remittance or transfer operations will be subject to among others. By virtue of which exchange opera- partnership contracts. the taxes established by law. tions are carried out within a free exchange market. The exchange rate will be freely established •Value Added Tax exemption on exports. •Free insurance contract: of investment in the by the parties, according to supply and demand. country or abroad. Exchange operations are the purchase and sale of •Recovery of the tax credit for Value Added Tax foreign currency and, in general, obligations pay- payments made locally to local suppliers. •Free trade: free trade is guaranteed which in- able in such currency, even if they do not involve cludes: the transfer of funds or drafts from the country to •Reduction or exemption of national taxes, rates abroad or vice versa. Legal acts, obligations and and contributions. a.Freedom to produce and market goods and ser- contracts made in foreign currency are valid and vices in general, enforceable in the agreed currency. •Guarantee of tax stability for a period of up to 20 b.Free pricing, except for those goods and servic- years, depending on the amount of the investment. es whose production and trade are regulated by Paraguay has signed investment guarantee agree- law, and ments with several countries. There are many in- •More favorable Mercosur rules of origin in relation c.freedom to import and export goods and servic- centives, such as the maquila program, the Invest- to the percentages of use of raw materials from es other than those prohibited by law. ment Incentive Law, the free zones, among others. outside the zone.

•Reduction of Value Added Tax on sales in the local market.

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3.3. INVESTMENT GUARANTEE ACT 3.4. INTERNATIONAL AGREEMENTS

Law 5.542/15 on “Guarantees for Investment and As a prerequisite for the execution of such con- Agreements for the reciprocal promotion and protection of investment and other Promotion of Employment Generation and Eco- tract, the investors will set up a company, created Paraguay has signed investment guarantee agreements with several countries. nomic and Social Development” institutes the pro- for the development of the activity that is the ob- tection of capital investment in the creation of in- ject of the contract with the State. In this company, dustries or other productive activities established the term for the integration of the capital will be Signed Ratifications Effective date Signed with: MM/DD/YYYY in the national territory, when they contribute to calculated from the approval of the investment Date Date Place Law N.° create employment and the economic and social project by Resolution of the Authority of Applica- MM/DD/YYYY MM/DD/YYYY development of the Nation, mainly through the tion. In the case of existing public limited compa- Brazil Asuncion 10/27/1956 127 03/02/1957 09/06/1957

incorporation of added value to the local or im- nies, they will have the same requirement for the Argentina Buenos Aires 08/20/1967 18 10/22/1968 10/03/1969 ported raw materials. adaptation of their statutes and compliance with South Africa Pretoria 04/03/1974 443 08/09/1974 08/16/1974 the deadlines relating to the increase in capital. This benefit is available to national and foreign in- The regulations shall lay down the procedure to be Uruguay Montevideo 03/25/1976 575 06/11/1976 08/01/1976 dividuals and legal entities investing capital in the used for that purpose. France Asuncion 11/30/1978 804 08/19/1980 01/12/1980 creation of companies, which meet the above- London 04/05/1981 92 12/20/1991 04/23/1992 Great Britain mentioned requirements, or which adapt existing The contracts shall specify the period within which Asuncion 06/17/1993 798 12/27/1995 06/13/1997 companies to these requirements. the undertakings must complete the integration of Switzerland Bern 01/31/1992 17 31/08/1992 28/09/1992 the capital. This period may not exceed five years China Taipei 06/04/1992 29 09/11/1992 05/25/2001 The approval of the investment project within the for investments of more than USD 5.000.000 (five United States of framework of this law shall be set out in contracts million US dollars) or its equivalent in national cur- Asuncion 09/24/1992 155 05/03/1993 05/19/1993 America between the State and the company. These con- rency and two years for investments of less than Luxembourg Brussels 10/06/1992 200 07/07/ 1 9 9 3 01/09/2004 tracts will be drawn up by public deed and signed this amount. The Netherlands The Hague 10/29/1992 349 06/08/1994 08/01/1994 by the representative of the Paraguayan State and the legal representatives of the company. Korea Asuncion 12/22/1992 225 08/19/1993 08/06/1993 Hungary Asuncion 08/11/1993 467 11/14/1994 02/01/1995

Germany Asuncion 08/11/1993 612 06/30/1995 08/03/1998

Austria Asuncion 08/13/1993 1180 12/02/1997 12/01/1999

Spain Asuncion 10/11/1993 461 10/21/1994 11/22/1996

Ecuador Quito 01/28/1994 469 11/11/1994 09/18/1995

Peru Lima 01/31/1994 468 11/14/1994 12/13/1994

Romania Asuncion 05/21/1994 527 12/30/1994 04/03/1995

Chile Asuncion 08/07/1995 897 08/04/1996 12/17/1997

Venezuela Asuncion 09/05/1996 1058 06/16/1997 11/14/1997

Costa Rica San Jose 01/29/1998 1319 09/11/1998 05/25/2001

San Salvador San Salvador 01/30/1998 1316 09/15/1998 11/08/1998

Czech Republic Asuncion 10/21/1998 1472 09/13/1999 03/24/2000

Portugal Lisbon 11/25/1999 1722 06/28/2001 11/03/2001

Cuba La Habana 11/20/2000 1900 05/31/2002 12/06/2002

Bolivia Asuncion 05/04/2001 1891 05/24/2002 09/04/2003

Italy Rome 07/15/1999 4904 04/25/2013 06/30/2013

Arab Emirates Abu Dhabi 01/16/2017 6633 11/19/2018 01/20/2019

Qatar Doha 02/11/2018 6271 02/13/2019 01/25/2019 Source: Ministry of Foreign Affairs

78 Paraguay Investment Guide Paraguay Investment Guide 79 Incentives for foreign Investment Incentives for foreign Investment

Agreements to avoid double taxation, signed by Paraguay 3.5. GUARANTEE OF INVESTMENTS Paraguay has signed agreements with several Resolution N.° 87/2012 SET - regulates the issu- countries to avoid double taxation, listed below: ance of certificates accrediting the permanent es- Overseas Private Investment Corporation (OPIC) Alternative Dispute Resolution: tablishment in the national territory of internation- Paraguay signed an investment incentives agree- It was not until 2002 that mediation and arbitra- Law 1.087/1984 - between the Republic of Para- al air, river and land for transportation companies, ment with the government of the United States tion were introduced in Paraguay as a means of guay and Germany to avoid double taxation on in accordance with the provisions of Law 1.105/97 of America, under which, among other things, the resolving disputes. However, as early as 1992, with the revenue from the operation of international air “Which approves the agreement to avoid double Paraguayan government accepts the terms and Investment Law 117/91, national and foreign inves- transport routes. taxation between the Republic of Paraguay and conditions of the Overseas Private Investment tors, as well as State entities contracting with the the Republic of Argentina in relation to interna- Corporation (OPIC), an organization that aims to foreign investor, were able to agree to submit their Law 1.236/1987 - between the Government of Par- tional air, water and land transportation.” promote U.S. investment in developing countries. disputes to national or international arbitration tri- aguay and the Government of Belgium. To this end, it finances and insures investment proj- bunals. Law 2.965/06 - between Paraguay and Chile to ects to be signed with any Paraguayan public en- Law 55/1991 - Approving and ratifying the Agree- avoid double taxation and to prevent tax evasion tity against risks such as currency exchange rate The Arbitration and Mediation Center of Paraguay, ment to Avoid Double Taxation of Income from the in relation to income and wealth tax, and the re- inconvertibility, expropriation, political violence, a private non-profit entity, was established by the Operation of International Air Transport Lines be- spective additional protocol. among others. National Chamber of Commerce and Services of tween the Governments of Paraguay and Uruguay, Paraguay to promote the application of alternative signed in Asuncion on May 14, 1991. Law 3.972/2010 - between Paraguay and the Re- Multilateral Investment Guarantee Agency (MIGA) dispute resolution methods for the resolution of public of China to avoid double taxation and pre- Paraguay is a member of the Multilateral Invest- conflicts in Paraguayan society since 1998. Law 6.276/2019 - between Paraguay and Uruguay vent tax evasion with respect to income taxes and ment Guarantee Agency (MIGA), an agency of the to avoid double taxation and prevent tax evasion the agreement by supplementary reverse notes World Bank. It is a multilateral agency that provides Judicial System: and avoidance in respect of income and wealth thereto. guarantees to foreign investment against non- The Paraguayan judicial system is governed by the taxes. commercial risks, such as currency inconvertibility, following principles: Law 6.230/2018 - between Paraguay and the discriminatory expropriation and similar measures, •Principle of equality governing all Paraguayans Law 1.105/1997 - to avoid double taxation in con- Government of the United Arab Emirates for the breach of contract, war and civil disturbance. and foreigners, whether they are individuals or le- nection with international air, river and land trans- Avoidance of Double Taxation and the Prevention gal entities. port, between Paraguay and Argentina. of Tax Evasion on Income. International Center for Settlement of Investment Disputes (ICSID) •Principle of three-tier jurisdiction (Trial Court, Paraguay ratified the convention establishing the Court of Appeals and Supreme Court of Justice) International Center for Settlement of Investment Disputes (ICSID) between states and between na- •Principle of the separation of powers whereby tionals of other states, in order to have access to neither the legislative nor the executive branch a mechanism for international conciliation and ar- has the authority to influence decisions made by bitration. judges.

80 Paraguay Investment Guide Paraguay Investment Guide 81 Incentives for foreign Investment Incentives for foreign Investment

b.Consignment of the person authorized by the •Extension of resolution without micro and SME’s, 3.6. INVESTOR BENEFITS firm for the procedures, telephone and/or fax 3 (three) wages. TAX INCENTIVES REGIME number. •Extension of resolution without micro and SME’s, c.Presentation of a project concerning the invest- 3 (three) wages. LAW 60/90 Establishing a Tax Incentives •Seven (7) years when investments come from do- ment project. Hiring responsible technicians or •Investment project approval certificate of with System for Investments of Domestic and mestic capital goods. Foreign Capital professionals is necessary for investments over and without MSMEs, 1 (one) day’s wage. USD 5.000.000. In this case, the name, address •Explanatory certificate (of the capital goods) with Tax considerations and professional title of the applicant must be in- and without MSMEs, 1 (one) day’s wage. Concept, objectives and operation of the rules Depending on the characteristics of each invest- dicated. •Registration of consultants with and without This law is one of the oldest regarding the promo- ment project, approved investment projects may d.Articles of Association or commitment to incor- MSMEs, 1 (one) day’s wage. tion of foreign investment and its main objectives be exempt from the following taxes: porate the company authenticated by notary pub- are: lic. •Value-added tax on the acquisition of imported e.Balance sheet for the last financial year endorsed MAQUILA •Increase the production of goods and services. capital goods (as well as capital goods produced by the Directorate General for Taxation, as well as LAW 1.064/9 “Maquiladora Export •Creation of permanent jobs. in Paraguay) used in the facility for industrial or the number of the Single Taxpayer Registry. If the Industry” •Promotion of exports and import substitution. agricultural production company is new, an opening balance sheet or a •Incorporation of technology to increase produc- •All taxes levied on the incorporation and registra- sworn statement will be required. The Maquila Regime in force in Paraguay allows tive efficiency and enable greater and better use tion of companies and enterprises. f.Certificate of Tax Compliance. a foreign company to set up in the country, or to of domestic raw materials, labor and energy re- •Tariffs and internal taxes on imports of capital g.Invoice in Spanish, or translation by a registered subcontract existing Paraguayan companies, to sources. goods, raw materials and inputs to be used in in- professional. process goods and services to be exported with •Investment and reinvestment of profits in capital vestment projects for the manufacture of capital h.Machinery and equipment catalogue. added value. This includes importing raw materials, goods. goods. i.Environmental impact license granted by favor- machinery and necessary inputs under the tempo- •Taxes and other charges on remittances, and pay- able resolution of the Secretariat of the Environ- rary admission regime (suspension of customs du- The exemptions established in the law apply, ments abroad for interest, commissions and capi- ment. ties) and exporting the product to the regional or among others, to investments in: financing, capital thereof when the investment is financed from j.In the cases of civil works and installations, the international market. tal goods, specialized technical assistance, mining, abroad and is at least USD 5.000.000 (five million presentation of the pertinent plans will be manda- hotels, leasing, provision of services in air cargo dollars), and the tax on such dividends and profits tory, with the corresponding spread sheets, esti- Maquila operations are exempt from any tax or and passenger transport, river transport, land car- is not a tax credit for the investor in the country mates in the metric system and budget prepared fee that affects the process from the import of go transport in general, public passenger trans- from which the investment originates. by a competent professional in the subject matter. raw materials and inputs, the manufacture of the port, health, radio, television, press, rural and urban products, to the export of the same, including VAT. fixed telephony, mobile communications, scientific Frequently Asked Questions What is the time frame for project approval and The law establishes a single tax, with 1% applied to research, silos, storage, and data transmission ser- What are the requirements to apply for the ben- authority in charge? the value of the invoice for services issued by the vices. efits of the law? Approval is granted by a resolution of two minis- maquiladora to the head company, or to the value tries (Industry and Trade - Treasury) within 75 days of the export invoice when the goods are sold di- The duration of the benefits granted by the law is •Presentation of the investment project. of the presentation of all required documents. rectly to the head company’s end customer (on its 5 (five) years, however, it can be extended in the •Filing of application signed by one of the entre- own account and order). The tax is applied to the following cases: preneurs and responsible for the project, indicat- What are the administrative costs? value that is greater. ing: The cost are: •Ten (10) years when investments come from capi- a.Name and surname (attaching a photocopy of •Project up to USD 5 million, without MSMEs, 6 (six) These operations are carried out under the maqui- tal repatriation resources or when investments are the police identity card), address, role in the com- days’ wages. ladora contract, signed between a company locat- located in preferential development areas or when pany, specifying the activity that the project will •Project up to USD 5 million, with MSMEs, 1 (one) ed within the country (maquiladora) and another investments exceed USD. 5.000.000 (five million develop, location of the establishment, the ad- day’s wage. company located abroad (head office). dollars). vantages for the country, details of the benefits •Project greater than USD 5 million, without requested, their justification and quantification of MSMEs, 7 (seven) days’ wages. Through maquila, national or foreign investors can the amounts subject to exemption when appropri- •Expansion of investment project without MSMEs, introduce raw materials into the country to be as- ate. 4 (four) days’ wages. sembled, repaired, improved, worked or processed •Expansion of investment project with micro and for export once the value is added. SME’s, exempt.

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Paraguayan legislation does not impose restric- cil of Maquiladora Industries for Export (CNIME in The products resulting from the maquiladora ser- Types of maquila tions on the types of products or services covered Spanish) states that the main items exported in the vice are sent back to the head company or to the Paraguayan legislation provides for the following by the maquiladora industry. National policy on aforementioned period were: auto parts with 48,4 %, clients indicated by the head company; or as part types of maquila: maquiladora activity in Paraguay is regulated and clothing and textiles with 23,2% and plastics and of the program they may be exported temporarily Maquila by idle capacity: for operating companies controlled by the National Council of Maquiladora their manufactures with 11,8 %. to carry out complementary processes abroad. that have the possibility of implementing maquila Export Industries (CNIME in Spanish). production processes with remaining, surplus or Concept and operation of the regulation By-products and waste can be exported, destroyed idle factors to those normally used. Individuals or legal entities, national or foreign, do- Maquila: is a special production regime seeking or nationalized for further donation or sale in the miciled in the country, may avail themselves of the to generate labor, the transfer of know-how and local market. Nationalization implies the payment Sub-maquila: maquiladora companies are autho- benefits granted by law. the increase of industrial activity in the country of all suspended taxes. rized to enter into submaquila contracts, when through the granting of customs and tax benefits. these involve a complement to the production The most important benefits are: The entry and exit of all goods under the maquila process of the activity covered by the program, in •1% Single Maquila Tax (on the national added The “contract” is made between two people: program is managed by a system of current ac- order to later reintegrate it into the maquiladora value, or on the export invoice value issued by 1.The Head Office: individual or legal person who counts that handles temporary admission, pro- that originally contracted the service and that will the maquiladora on behalf of the head company, resides abroad and contracts the services of the cessing and return abroad, and where the maqui- complete the product for export. Companies dedi- whichever is greater) maquiladora so that the latter can manufacture ladoras are structured as production cost centers. cated exclusively to submaquila operations may •Exemption of tariffs and taxes on imports of raw the requested products. The guarantee offered by the maquiladora must be established. materials and inputs, and capital goods. always be sufficient to cover the sum of the tem- •Recovery of VAT (tax credit) paid on the purchase 2.The Maquiladora: person or company in Para- porarily suspended taxes, indicated by the balance Maquiladora of intangible service: intended to of goods and services in the domestic market. guay, set up in any part of the country and which in the current account. The same records debit provide intellectual or other similar value-added •Possibility of developing maquila in Paraguayan provides manufacturing services for the head of- with each import and credit with the respective to intangible goods temporarily imported by any industries with idle capacity. fice. exports, destruction or nationalization; in a con- electronic means. It includes the import of tangible tinuous process. or intangible goods for processing, adding local The Paraguayan maquila is now operational and in The maquiladora can in turn subcontract another value, for export by electronic means (for tangible full expansion, with the joint work of the private company (sub-maquiladora) in order to develop Both maquila and sub-maquila contracts are sub- and intangible goods) or tangible (only for intan- and public sectors, through the National Council processes contemplated in the maquiladora project to a single tax of 1% (one per cent) on the value gible goods). of Maquiladora Industries for Export (CNIME in gram contract. added in the national territory or on the turnover Spanish), the Chamber of Maquiladora Companies made on behalf of the head company, whichever Maquila with hostel program or “Shelter”: consists of Paraguay (CEMAP in Spanish), and other inter- The head office may send capital goods, raw mate- is greater. of the approval in favor of a company of a program ested unions. rials and inputs to the maquiladora directly or from that serves to carry out export projects by foreign other countries; these goods enter the country un- “Value added in the national territory” means the companies that provide technology and produc- The Maquila Regime, together with other compar- der the figure of temporary admission for the time sum of the goods acquired, the services contract- tive material, without directly operating them. To ative advantages of the country, offers investors established in the program, which may not exceed ed, the wages paid to comply with the maquila and carry out this program, foreign companies must excellent conditions linked to lower tax and pro- 12 months, extendable by the same period for duly submaquila contract, the depreciation of the capi- set up a branch in Paraguay or form a consortium duction burdens that make Paraguay a strategic justified cases, with tax payment suspension (Law tal goods of the maquila or submaquila and the with a Paraguayan company. In the latter case, it ally for production and participation in internation- 5.408/15, extended the maximum period initially price of performing the maquila and submaquila is not necessary for the company to be based in al trade. established in the law). It is important to note that service. Paraguay. the suspended taxes must be secured by an insur- Exports registered during 2019 under the Maquila ance policy. The maquila contract and the activities carried out Regime amount to USD 722.652.168, registering an in execution thereof are exempt from any other na- increase of 7%, compared to 2018 when it reached The maquiladora, in turn, may contract goods, ser- tional, departmental or municipal tax. the sum of USD 675.067.080. The National Coun- vices, labor and others within Paraguayan territory or import capital goods, raw materials and inputs from other countries.

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Tax considerations of the maquila Frequently Asked Questions Value Added Tax Exempted taxes Who is eligible for this benefit? What is the process and time frame for approval As for the Value Added Tax (VAT), the maquilado- For the purposes of the exemptions provided for Any person, individual or legal entity, national or of a maquila program? ra is exempted from paying for imports of capital in Article 30 of the law, mentioned above, the fol- foreign, domiciled in the country and who is autho- •The interested party must present the maquila goods, raw materials and inputs that it makes in or- lowing taxes are included: rized for commerce may request the approval of a program to the CNIME and the latter will proceed der to produce the goods included in the program. maquila export program. to evaluate and issue a prior opinion. Their sales are also exempt from VAT. However, lo- a.Customs taxes established in Law 1.173/85 “Cus- •If the opinion is favorable, it will send the file so cal suppliers and service providers will invoice the toms Code” and its amendments. Where can they set up? that the Ministry of Industry and Trade and the maquiladora including VAT. All the VAT paid will be b.Payment of fees for customs valuation services. In any part of the national territory, with the only Ministry of Finance grant their approval for the im- recovered by the company as tax credit. Maquila- c.Consular fees. limitation given by the national, departmental and plementation of the “Maquila Program” by issuing doras are exempt from any other national, depart- d.Fee of the National Institute of Indigenous Af- municipal programs for urban development and the corresponding bi-ministerial resolution. mental or municipal tax, except for the 1% flat tax. fairs (INDI in Spanish). environmental issues. •The deadline for government approval or rejec- e.Port and airport taxes. tion of the program is 120 consecutive days. The VAT exemptions provided for in the Maquila f.Payment of computer fees. Under which figure? •From the delivery of the bi-ministerial resolution Law extend to: g.Any other tax, rate or contributions existing or Any person, individual or legal entity, national or approving the maquila program, the maquiladora a.The import of goods provided for in the maquila to be created, that tax the income and/or expen- foreign, domiciled in the country and who is autho- company has a period of 120 days to present the contract. diture of the goods protected under the Maquila rized to carry out acts of commerce may request maquila contract (in case that at the time of sub- b.The re-export of goods imported under such Regime. the approval of a maquila export program. mitting the application it has only added a letter of contract. h.All taxes, rates and contributions on guarantees intent from the head company), this presentation c.The re-export of goods processed, elaborated, granted by companies and/or third parties related How must the ownership be comprised? is an indispensable requirement to start the opera- repaired or assembled under such contract. to the Maquila Regime. It can be 100 % foreign capital, 100 % national capi- tions. i.All taxes, rates and contributions levied on loans tal, joint ventures. Law 117/91 “On Investments” of- •Once all requirements have been met, the com- to finance maquila operations. fers the same guarantees to foreign investments. pany must begin maquila operations, with the corresponding monitoring and supervision by the How are environmental aspects governed? CNIME. Everything related to environmental issues, are derived from the laws, regulations and ordinances The maquila program does not require the hiring Investment Scheme concerning it. of external consultants.

How the labor aspects are governed? FREE ZONES Everything in this area is derived from the Labor LAW 523/95 Which Authorizes and Es- Only Tax 1% Code in matters of substance and the Labor Pro- tablishes the Free Zone cedure Code. PRODUCT Concept, objectives and operation National Market What is the maquila program? Free trade zones are defined geographical areas in . Pure Maquila . Spare Capacity Maquila It is the project through which the characteristic of which different customs regulations apply to the EXPORT the industrial or service process is described, de- rest of the territory of a country (customs terri- MARKET MAQUILA tailing imports, production, exports, employment tory). Generally, free trade zones enjoy certain tax generation, value added, percentage of loss and benefits, such as non-payment of import taxes. waste, time period covered by the program and The main objectives of the free zones in Paraguay MATRIZ National Supply others specified in the corresponding regulations are to develop business centers, prevent smug- . Goods and Services . Labor (the model program is provided by the Executive gling and piracy, and increase the competitiveness Secretariat of the National Council of the Export of exports. Other Countries Maquila Industry, CNIME in Spanish). . Capital Goods . Raw Materials . Components

Current regime valid until 2023, subject to negotiation. Sources: MIC/REDIEX

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In the free trade zones of the Republic of Paraguay, Tax considerations of the regime Process taxes, except for fees for services provided, ma- all types of commercial, industrial and service ac- •The introduction of goods into free trade zones, Obtaining a concession terials, goods and equipment necessary for the tivities can be developed, according to the guide- whether from third countries or from customs ter- The applicant must submit to the National Coun- development and the activities established in the lines of Law 523/95 on Free Trade Zones. ritory, is exempt from any national, departmental cil of Free Trade Zones, an investment project that project. or municipal tax, except for fees for services ren- reliably demonstrates the economic feasibility and The free trade zone is operated and administered dered. the benefits it will bring to the region, which must The concessionaire must notify both the Director- by a concessionaire granted by means of a con- •The goods may be introduced from any customs include the following: ate General of Customs and the Free Trade Zone tract signed with the Executive Branch, for a pe- office in the country. Council of the date on which work will begin and riod of 30 years, which can be extended according •The companies or industries that are beneficia- •Determination of the legal form of the company the list of goods to be introduced. to the legislation in force at the time of the exten- ries of the regime will pay a sole tax called “Tax through which the operation will be carried out. sion. of Free Trade Zone”, whose rate will be of 0.5% •The location of the property and the area in which User: (half percent), the taxable base is the total value the project is to be developed. The free trade zone user is the individual or legal In turn, this concessionaire concludes contracts of its gross income coming from the sales to third •Causes and consequences for its location. person, of private nature, national or foreign, that with the end users who will be the natural or legal countries. •The possibility of its future expansion. acquires the right to develop any of the activities persons that will carry out the different operations •Special regime for sales to tourists (according to •The services to provide, amount of investment in mentioned in this chapter. within the zone. Art. 30 Law 523/95) services, indicating the responsibilities of execu- •Convergence of services and infrastructure for tion. The activity of the users of the free trade zone will By Decree N.° 952/18 the Government authorized the importer/exporter. •Description of the infrastructure investments begin when the concessionaire has the internal the following service activities for the international (roads, fences, constructions, etc.) to be carried regulations approved by the National Council of market: The products manufactured within the free zones out. Free Trade Zones and the infrastructure. are NOT considered to be made in Paraguayan •Sources of financing. • Logistics, transport, handling, packing, repack- territory, therefore, great care must be taken in •Estimated time needed to carry out the project However, user contracts may be authorized for ing, packaging, labelling, classification and quality the analysis of the feasibility of industrial projects and date when work will begin. In case the project companies whose activity is the construction of control of goods or merchandise. within these areas. is developed in stages, the area involved in each the infrastructure of the free trade zone or the pro- • Technical assistance, repair and maintenance of stage, infrastructure works and services to be provision of services that make up the infrastructure ships, aircraft, machinery and boats. The Paraguayan experience vided in each of them and the time of completion necessary for the operation of the free trade zone. • Testing and calibration in laboratories, inspection There are currently two areas designated for this must be determined. and certification in general. activity: The user may assign his contract to third parties • Technical and scientific training, distance educa- Beginning of activities with the prior consent of the concessionaire, in tion in general. International Free Trade Zone Concessionaire: accordance with the legal provisions in force, and • Telecommunication services, telematics, informa- It was awarded for commercial, industrial and ser- The concessionaire is the private company that shall communicate for registration to the Execu- tion technology systems for data capture, process- vice activities by the Executive Power through De- through a contract with the Executive Branch active Directorate of the National Council of Free ing, storage and transmission, organization, man- cree N.° 17.003/02. It is located at km 10.5 of Route quires the right to enable, manage and operate a Trade Zones. agement or operation of databases and software 7, in Ciudad del Este. It has 30 (thirty) hectares ini- private free trade zone, supervised by the National development. tially, with 400 hectares more available and to date Council of Free Trade Zones, through its executive RAW MATERIAL REGIME • Production, post-production and realization of has 24.000 m2 built in warehouses and offices. management. Concept, objective and operation of the regime photography, cinema, video and multimedia in The activity of the user of the free trade zone may The regime of raw materials is a special customs general. Global Free Trade Zone of Paraguay only begin when the concessionaire has the inter- benefit that aims to free from tariffs the definitive • Civil constructions, design, planning, real estate It was awarded for commercial and service ac- nal regulations approved by the National Council import of raw materials used by industries installed management, direction, supervision and mainte- tivities by the Executive Power through Decree of Free Trade Zones and infrastructure (Art. 22 De- in the country if there is no production of them nance of works, structures, engineering projects N.° 17003/02. It is located at km 4.5 of Route 7, cree N.° 15.554/96). within the domestic market. and architecture and infrastructure in general. in Ciudad del Este, with 4.5 hectares available and • Tourism agencies. houses about 40 companies. So far it has an esti- Once the concession contract is registered, the The aim is to encourage the import of raw materi- mated occupation of 70% concessionaire is authorized to begin working in als and goods not produced in the country and to the free trade zone. The same may enter free of stimulate the creation and growth of SMEs.

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To obtain certification, certain requirements must •Once these requirements have been met, the What are the costs? be met, such as: Ministry of Industry authorizes the import of these Concept SME´s Large Periodicity products, which expire on 31 December each year. • The raw material or supply to be imported must Application for Approval of not be available in the country. •Once the program has been approved, beneficia- Annual Production Programs 10 minimum daily wages 20 minimum daily wages For each approval request (PPA in Spanish) ries must submit bimonthly reports showing the • The value of the import should not be less than quantity of raw materials used and the quantity For each expansion of PPA 10 minimum daily wages 20 minimum daily wages For each approval request USD 1.500. (FOB) of the product processed. They must also submit Approval of bimonthly proof of compliance with the Institute of Social Se- 5 minimum daily wages 7 minimum daily wages For each approval request reports • Raw materials and supplies must be part of the curity (IPS in Spanish) to see the number of em- production process and be an integral part of the ployees and to corroborate the agreement with 1 minimum daily wage for CIF 5 minimum daily wages for declared final product. what was declared. import amounts less than or CIF import amounts less than For each approval request equal to USD 5.000 or equal to USD 5.000 Request for Release of Raw This is currently regulated by Decree N.° 11.771/00 The requests of import of raw material are digi- Materials or Inputs 3 minimum daily wages for 7 minimum daily wages for and is in force until 2020. tally authorized through the VUE, webpage for its CIF import amounts greater CIF import amounts greater For each approval request later officialization before the National Direction of than or equal to USD 5.000 than or equal to USD 5.000 Tax considerations Customs. Source: MIC Through this, industries will be able to enjoy the benefit of importing raw materials and supplies with a customs tariff of zero percent (0%), when Note: The “daily wage” is calculated based on the current minimum wage determined by the Ministry of Labor, it is demonstrated that they are used as such in Employment and Social Security and published in https://www.mtess.gov.py/documentos/resolucion-mtess-n-229419 their own productive processes and that they do not register national production. AUTOMOTIVE POLICY The industries that operate in this way will pay the Value Added Tax for the import of raw materials. LAW 4.838/12 That sets the National Automobile Policy General considerations Frequently Asked Questions The law is intended to benefit national or foreign •Incorporation of technology that makes it pos- What are the requirements and procedures? companies that produce or assemble goods within sible to increase production efficiency and enable the Mercosur Common Nomenclature (NCM) 87, greater and better use of national raw materials, •To be registered in the Industrial Registry (RIEL) which includes “motor vehicles, tractors, veloci- labor and energy resources. and in the Sole Window for Exports (VUE), both pedes and other land vehicles, their parts and ac- •Export promotion and/or import substitution. Ministry of Industry and Trade. cessories”, including auto parts in general. •Development of support programs for social sectors, especially in the area of education, to be reg- •Present an annual production program which The requirements to access the benefits are: ulated by the competent enforcement authority. includes the tariff nomenclatures of the raw ma- •Production and/or assembly of goods covered by •Present an investment project in plants for the terials to be used, their origin, and the estimated NCM 87. production and/or assembly of goods that in- quantity of production. •Creation of permanent sources of labor, which cludes an assembly line, testing infrastructure and must be made up by a minimum of 50% (fifty per- equipment for marking the Vehicle Identification •Submit a certificate issued by the Paraguayan In- cent) of Paraguayan citizens. Number (VIN), for the cases that apply. dustrial Union (UIP in Spanish) indicating that there •Gradual and increasing incorporation of national •In the case of investments already made in the is no domestic production of those raw materials. added value, through the application of basic pro- sector, submit the latest ministerial resolutions, for ductive processes related to the annual production each activity item, of the investment projects and program. annual production programs previously approved under Law 60/90, which will be valid to demonstrate that they have already made investments

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in capital goods and are producing and/or assem- Access to National Automotive Policy (PAN in PUBLIC PRIVATE PARTNERSHIP (APP in Spanish) bling the goods covered by the law. Spanish) • Development of programs for the promotion of The following procedure must be carried out: Law 5.102/13. On the Promotion of Investment in Public Infrastructure and the Ex- research, technological development and innova- •Note to the Minister of Industry and Trade. pansion and Improvement of Goods and Services under the State. Amended by Law tion in the sector, together with public and/or pri- •Presentation of an investment project. 5.567/2016. vate educational entities. •Presentation of the industrial register and the en- General considerations Which are the competent administrations? vironmental impact certificate. The purpose of this law is to establish rules and These are the State agencies and entities, as well Tax considerations mechanisms to promote, through public-private as companies with State shareholdings that have The tax benefits for industries operating under this Project information for the PAN participation, investments in public infrastruc- the competence to enter public-private partner- system are: •Company data: name, person in charge, address, ture and in the provision of the services for which ship contracts. telephone number, e-mail, other information. they are intended, or which are complementary •Import of capital goods, raw materials, compo- •Location of the industrial plant. to them. The production of goods and the provi- The contracting administrations, within the scope nents, kits, parts, pieces and industrial inputs free •Number of employees by area, hiring method. sion of services that are specific to the purpose of of their respective competences, may develop of import duties. agencies, entities, public enterprises and compa- projects through public-private participation con- •Importation of capital goods, raw materials, com- Project nies to which the State is a party. tracts. They may work together to develop pub- ponents, kits, parts, pieces and industrial supplies •Production schedule. lic-private participation projects jointly; in which with an 80% reduction of the value added tax •Import schedule. The law establishes the legal figure of public-pri- case, they shall conclude the corresponding agree- base, except for those goods that are within the •Compliance with incorporation of national added vate participation contracts, contemplates the ments, contracts or arrangements to that end, in tariff nomenclature 87.11 where the tax base will be value figure of private initiative and regulates the use of accordance with the regulations. 100%. •Detailed plan of industrial plant, machinery lay- trusts for the purposes established in this law. •80% reduction of the taxable base of the Value out, and an execution program. Public-private partnership contracts must express- Added Tax applied on the sales of the final product, •Program of incorporation and specifications of They may include projects such as: ly set out, for specific and agreed situations, the except for those that are within the tariff nomencla- the capital goods for the assembly line, for the •Road, rail, port and airport projects. risks, commitments and benefits assumed respec- ture 87.11 where the taxable base will be 100 %. cases that correspond. •Waterway projects, dredging and maintenance of tively by the State and the private participant. •Document authorizing the license of the product river navigability. to be manufactured and marketed. •Social infrastructure. Recent case: •Electrical infrastructure. In 2019 a major public-private partnership (PPP) Costs •Improvement, equipment and urban develop- contract has been signed under Paraguay’s PPP Concept SME´s Large Periodicity ment projects. Law, which seeks to attract foreign direct invest-

Application for Approval of •Drinking water supply and sanitation. ment to the country, for the project to duplicate For each approval Annual Production Programs (PPA 10 minimum daily wages 20 minimum daily wages •Other investment projects in infrastructure and the lanes of routes 2 and 7. request in Spanish) - New Projects services of public interest. Application for Approval of For each approval The financing was provided by IDB Invest, with Annual Production Programs (PPA 10 minimum daily wages 20 minimum daily wages request Frequently Asked Questions a bond issue of USD458 million and a term of 17 in Spanish) How is it applied? years, carried out by the concessionaire Ruta del For each expansion and/or For each approval 10 minimum daily wages 20 minimum daily wages It is applied through public-private participation Este. IDB Invest’s financial structure, for an amount extension of PPA request contracts initiated ex officio by the contracting of up to USD 200 million, is made up of a guaran- For each approval Approval of quarterly reports 1 minimum daily wage 7 minimum daily wages administration or originated through private initia- tee, which assumes the construction risk associat- request tive. The law also regulates the use of trusts or fied with the use of the bond’s resources, and a loan Application for issuance of NPV For each approval 1 minimum daily wage 5 minimum daily wages duciary assignments for the established purposes. certificate request of the same duration and source of repayment as the bond. National automobile policy 1 minimum daily wage for CIF 5 minimum daily wages for For each approval All contracts must include a maximum term, which, certificate Issuance import amounts less than or equal CIF import amounts less than request including extensions, may not exceed thirty years, valid for 3 months to USD 5.000 or equal to USD 5,000 except for exceptional extensions provided for in 3 minimum daily wages for CIF 7 minimum daily wages for the cases established by law. In the absence of a For each approval import amounts greater than or CIF import amounts greater request stipulation of the term in the contract, it shall be equal to USD 5.000 than or equal to USD 5.000 understood that the contract is governed by said maximum term. Source: MIC

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ASSEMBLY OF GOODS INDUSTRIAL PARKS

LAW 4.427/2012 Assembly of High Process LAW 4.903/2013 Industrial Parks •Authorization of industrial parks, one-time fee of Technology Goods Submit a note to the MIC requesting this benefit, 0.025% on the value of the investment project. attaching the pre-project. General considerations •Registration of industrial parks, one-time fee of Important Note: This law does not have a regula- The purpose of this Act is to establish the regu- 0.025% on the value of the investment project. tory decree, therefore, the procedure for its appli- Frequently Asked Questions latory framework for industrial parks in terms of •Verification of industrial parks, annual fee of cation has not been established. What are the requirements to access the bene- their creation, promotion, construction and opera- 0.025 % on the value of the investment project. fits? tion in harmony with the environment, as well as •Certification of industrial parks, fee every 5 years Concept and functioning In the case of foreign individuals, they must have to encourage the establishment of industrial parks of 0.025% on the value of the investment project. This law covers all individuals and legal entities, been permanent residents in the country for at through the granting of incentives and other ad- national or foreign, legally registered and making least two years prior to the submission of the pro- vantages, in order to expand industrial activity and investments in capital goods, raw materials, com- gram application. contribute to the economic and social progress of Procedures and documents required for authori- ponents, kits, parts and pieces, whose objective is the Republic. zation the production, development and/or assembly of In the case of national or foreign legal persons, at In accordance with the corresponding regulations, high-tech goods in the electronics, telecommuni- least 10% (ten percent) of their capital stock must Industrial parks can be: those interested in creating, installing and building cations and computer sectors. be held by an individual or legal person of national •From the State (governments and municipalities). an industrial park must prove the following to the origin. •Private (individual or legal persons, national or implementing authority: The goods produced under the protection of this foreign). law have a preference margin of 40% in the prices As for the investment, it must: •Mixed, and its recognition will be granted solely •The ownership of the property or another right offered within the bidding processes and acquisi- •Produce high-tech goods. and exclusively by the Ministry of Industry and that allows him to manage it, as well as the fact tion of goods by State agencies and entities. •Create permanent integrated jobs with a mini- Commerce. that the property is within the area allowed ac- mum of 50% (fifty percent) of Paraguayan citizens. cording to Art. 7 of this law. Tax considerations •Incorporate added value with a minimum of 20% Tax considerations •Detailed description of the project, type of indus- •Exemption from customs duties on imports of (twenty percent) to the basic productive process- The industrial parks and the industries installed in tries to be developed on the site, land intended for raw materials, components, kits, parts and pieces es. them will benefit from the following tax incentives: industrial facilities, forests or wooded areas, com- that will be used in the production process. •Incorporate technologies that facilitate produc- mon areas, infrastructure and services; waste man- •Reduction of 85% of the taxable base of the Value tive efficiency. •Reduction of the percentage of property tax agement and disposal system; plan for the protec- Added Tax in the import of raw materials, compo- •Develop plans for the transfer of technology, edu- agreed by the municipality concerned. tion and management of water and other natural nents, kits, parts and pieces of the customs enclo- cation and training of the labor force. •Reduction of the percentage of municipal taxes resources; conditions for the sale, lease or rental sure. •Establish cooperation plans with educational enti- on construction, subdivision, building and proper- of the plots; construction deadlines and schedules. •Reduction of 90% of the taxable base of the Se- ties aimed at training, education and employment. ty transfer agreed by the respective municipalities •Economic study of the feasibility and profitability lective Use Tax in the first sale at the factory. A rate •Develop support programs for social sectors. in which the industrial parks are located. of the project, as well as the impact on the nearby of 1% will be applied on said base. •Present an investment project, which in order to •Reduction of 50% (fifty percent) on the industrial and local population. •Disposals of goods that have significant value for be considered as such should include an assembly patent to be paid to the Municipality. •Evaluation of the environmental impact duly ap- cultural or educational dissemination and are pro- line, testing infrastructure or quality control and fi- •100% (one hundred percent) exemption from Val- proved with the corresponding environmental im- duced in the national territory by the beneficiaries, nal product packaging capacity. ue Added Tax (VAT) for the lease of plots or indus- pact statement. and recognized as such by the Ministry of Educa- trial plants housed in the parks. •Administration regulations or of co-ownership. tion and Science, through a Ministerial Resolution, •Any information or documentation that may be shall be exempt from the payment of the Value The Ministry of Industry and Commerce will col- required by the corresponding regulation that ac- Added Tax (VAT) and the Selective Use Tax (ISC in lect fees for verification, authorization, registration credits compliance with the relevant legal stan- Spanish) in cases where this applies. and certification services. These are charged to the dards and the suitability of the project. •80% reduction of the taxable base of the Value owners of the parks and are: Added Tax in the sales of the goods manufactured and sold in the national market.

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Costs 3.7. OTHER BENEFITS Tax %Max Periodicity Generalized Preference System (SGP in Spanish) Authorization of Industrial Parks 0.025 % For one time only The GSP is a system of preferential tariffs, applied able to negotiate better prices for the product with by developed countries (DCS), known as prefer- the buyer. In this way, the financial benefits of tar- Industrial Park Registration 0.025 % For one time only ence-granting countries to eligible products im- iff reduction or removal of duties on the products ported from developing countries (LDCS), known are shared between the exporter and the importer, Industrial Park Verification 0.025 % Annual as preference-receiving or beneficiary countries. rather than going to the importer alone. GSP provides more favorable treatment for the Industrial Park Certification 0.025 % Every 5 years duty-free entry of products processed or obtained Products eligible for preferential treatment under Source: MIC. in developing countries. a GSP are defined by their tariff classification, according to the Harmonized Commodity Descrip- The tax amount will be determined by the Ministry the investment project submitted by the applicant, The benefit is given in the form of a reduction or tion and Coding System (SA). If there is difficulty of Industry and Trade by applying the percentage considering the size of the service provided. elimination of the duties applicable to the export in detecting the tariff of the products being ex- described in the table above to the final value of product which makes the product more competi- ported, assistance may be sought either from the tive for the importer. The importer has an incen- country’s customs authorities or, through an im- tive to stop buying from non-beneficiary countries porter, from the customs authorities of the pref- Other investment support and incentive laws: and to start buying from beneficiary countries. The erential-granting country concerned. In Paraguay, tariff preference helps products from developing the institutions to which recourse may be had are In addition to the laws listed in the previous pages, See more at: https://www.bacn.gov.py/leyes-paraguayas/8845/ countries to enter the market of preference-grant- the Ministry of Industry and Commerce, especially we cite other complementary laws for the promo- ley-n-6324-otorga-garantia-del-estado-paraguayo-por-medio- ing countries or to increase the volume of prod- REDIEX or the National Chamber of Commerce tion of investment: del-tesoro-publico-a-obras-de-distribucion-y-transmision-de- ucts already in it. On the other hand, if the product and Services of Paraguay. energia-electrica-realizadas-por-la-administracion-nacional-de- has already been placed on the market, it may be •Law 3.009/ 2006. Independent Energy Produc- electricidad-ande-bajo-la-modalidad-de-licitacion-publica-con- tion and Transportation (PTIEE). financiamiento-prevista-en-el-articulo-17-modalidades-comple- See more at: https://www.bacn.gov.py/leyes-paraguayas/2092/ mentarias-de-la-ley-n-205103-de-contrataciones-publicas de-la-produccion-y-transporte-independiente-de-energia-electrica- Generalized systems of preferences granted to Paraguay ptiee Paraguay is a beneficiary in several countries as shown in the table below, according to UNCTAD.

•Law 5.074/2013. Which Modifies and Extends Law 1.302/1998 Which Establishes Special and GSP DONORS Complementary Modalities and Conditions to Law 1.045/1983 Which Establishes the Public Works Regime

See more at: https://www.bacn.gov.py/leyes-paraguayas/4726/ JAPAN TURKEY CANADA ICELAND NORWAY BELARUS ley-n-5074-modifica-y-amplia-la-ley-n-130298-que-establece- AUSTRALIA OF AMERICA

modalidades-y-condiciones-especiales-y-complementarias-a-la- GSP BENEFICIARIES KAZAKHSTAN SWITZERLAND NEW ZEALAND UNITED STATES UNITED STATES ley-n-104583-que-establece-el-regimen-de-obras-publicas EUROPEAN UNION GSP GSP- GSP GSP GSP GSP AGOA RUSSIAN FEDERATION RUSSIAN •Law 6.324/2019. That grants a guarantee from the LDCs + Paraguayan State, through the Public Treasury, to (EBA) works of distribution and transmission of electric energy ANDE, under the modality of public bidding with financing foreseen in Article 17 “Com- Paraguay x x x x x x x x x x x x plementary Modalities” of the Law 2.051/2003 of Public Contracting. Source: https://unctad.org/en/Pages/DITC/GSP/GSP-List-of-Beneficiary-Countries.aspx

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Within this framework, the products selected by JAPAN Eurasian Customs Union, Belarus, Kazakhstan It also provides temporary or permanent residence each of the countries or economic blocks granting The GSP products are listed by the Government of And Russia visas, which enable the employer to enter con- these preferential arrangements require compli- Japan in different columns next to the MFN tariff The GSP granted to developing countries (LDCS) tracts for the acquisition, administration or provi- ance with various requirements in order to qualify and the GSP preferential tariff. covers more than 2700 products, in a single list sion necessary for relocating, with family members for such benefits. However, these requirements, and classified by tariff chapters (HS), where pref- when pertinent. while common in all cases, offer certain character- NEW ZEALAND erential treatment of 0 % tariff is granted for the istics depending on the country or economic block Tariff preferences are covered by New Zealand’s goods covered by the list. To grant investor visas it will not be required to granting them, in order to enter their market under Tariff Working Paper and regulate two types of prove prior establishment of a company in Para- the GSP. tariffs under: References: guay. https://unctad.org/en/Pages/DITC/GSP/Generalized-System- It is important to mention that this GSP scheme •Column I: standard rate. This establishes the clas- of-Preferences.aspx?Pu=1,10, Requirements applies quantitative limits to preferential imports sification of all goods and the rates of import du- •To meet the status of an entrepreneur described https://www.customs.govt.nz/globalassets/documents/tariff- of certain products that are considered sensitive ties. documents/the-working-tariff-document-introduction.pdf in the following three ways: for domestic products of equal or directly com- •Column II: concessions. This describes the re- petitive products, it is therefore essential to verify duced categories of concession that apply, instead https://unctad.org/en/Pages/DITC/GSP/Generalized-System- a.Person or company that carries out productive the conditions of each country, as well as the origin of those contained in Part I of the document, to of-Preferences.aspx activities. regime, the specific requirements of origin, permit- products from countries enjoying tariff preferenc- https://www.wto.org/english/news_e/news20_e/ b.Individual member of the board of directors, ad- roi_05mar20_e.htm ted volume and required documentation. es. ministrator, manager and legal representative of a

https://hts.usitc.gov/current company benefiting from this agreement, in the Search method: To find the preferential tariffs applicable to prod- http://www.sice.oas.org/TPD/GSP/GSP_Schemes_s. service, trade or industry sectors, including intra- AUSTRALIA ucts under the GSP framework, the word “free” ASP#GSP_Schemes corporate transfers. The acronym DCS will appear on the customs tar- should be noted in the second column “Preferen- Aladi, Publication DAPMDER/N° 02/17 c.Individual member of the board of directors. iff list of this country. Tariff will be applied if that tial Tariff”, unless otherwise indicated, the product •For categories b and c, a certificate issued by a abbreviation is specified, otherwise the tariff will will have 0 % tariff. competent authority is required, certifying the ex- be 0%. In case the abbreviation does not appear MERCOSUR BUSINESS ACTIVITIES istence of the undertaking(s) to which the appel- in the corresponding column, the general tariff is NORWAY LAW 6.213/18: Which Approves the Agree- lant belongs or is a member. applied. Products benefiting from tariff preferences are ment for the Facilitation of Business Activi- • Commercial and bank references are required for identified in the general rule by the acronym GSP ties in Mercosur categories a and c. CANADA in the Norwegian Customs Tariff Regulation. • In the case of investors, the following is required: Tariff preferences are covered by the Customs Tar- Importante Note: This law does not have a regula- a.A minimum amount equivalent to US dollars thir- iff Act indicating preferences granted with the ac- SWITZERLAND tory decree, therefore, the procedure for its appli- ty thousand (USD 30.000), proven by the transfer ronym APG (GPT). The preferences granted to the To find the preferential tariffs in the preferential cation has not been established. of resources from the investor’s country of origin products will be indicated with the acronym GPT customs for Switzerland, the items indicated with through banking institutions. in the last row which, in the line of the tariff item, the word “exempt” should be noted in the column Concept and use b.An affidavit indicating that said amount will be shows if it is included in the preferential regime, as “Taux Preferetiel”, the first one entitled “Applica- Paraguay signed and ratified the agreement to fa- used for business activities, which must be made well as the preference granted. ble”. cilitate business activities in Mercosur, by means within a period of 2 years. of which, individuals of the Member States will be •Activities allowed under the protection of the visa UNITED STATES TURKEY able to come to Paraguay, to carry out their activi- granted by this law: In the Official Harmonized Tariff System of the The Turkish GSP comprises tariff preferences ties, without other restrictions than those estab- a.Carrying out all types of banking operations per- United States, the tariff list by classification chap- reaching 0% for a total of 556 items and other tar- lished in the provisions that govern business activi- mitted by our legislation. ter can be seen. In order to identify GSP-covered iff reductions ranging from 0% to 5% on the MFN ties in our country. b.Directing and/or managing companies in accor- products that have tariff preferences for entry tariff. dance with the company’s bylaws. into the United States market, the letter “A” or “A*” Another aim of the agreement is to speed up the c.To have the legal representation of the company. should be noted in the Special column indicating procedures to grant residency and to issue the re- d.Carrying out foreign trade operations. that the product is covered by the GSP for Para- spective identity and work documents. e.Signing balance sheets together with the autho- guay. rized accountant.

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Mercosur - European Union Agreements Mercosur Agreements - Efta (European Mercosur and the European Union signed a histor- Free Trade Association) ic agreement in June 2019 at a ministerial summit The Trade Agreement between Mercosur and the in Brussels. The agreement states that Mercosur European countries grouped in the EFTA (Iceland, will open its market within 15 years, while the EU Norway, Switzerland and Liechtenstein), is a new will do so within 10 years. Respecting the special milestone in the process of international integra- and differential treatment for the countries of the tion of the Mercosur countries, comprising Argen- South American block. tina, Brazil, Paraguay and Uruguay and the Euro- pean continent. With the emphasis placed on the The agreement will implement the highest stan- promotion of exports with greater added value, dards of food safety and consumer protection, as especially those related to knowledge, and on the well as worker and environmental protection, with creation of new trade and employment opportuni- the implementation of the Paris agreement. ties for the four countries.

With specific regard to the interests of Paraguay, More than 97% of Mercosur exports to EFTA coun- this agreement implies, first of all, direct access to tries are covered by this agreement. It offers tariff the market of 28 European Union member coun- advantages for exports, reaching 99% coverage for tries and the adoption of rules that are more ben- Paraguayan export products. Another advantage eficial than those of the World Trade Organization obtained by Paraguay is the possibility of export- (WTO). ing organic sugar to Switzerland with the benefits of the Generalized System of Preferences (GSP), Main relevant points: which this country grants. •Access to a market of more than 500 million in- 4 habitants. The agreement also covers issues such as invest- •GDP per capita of USD 34.000. ment, government procurement, customs co- •Concentration of more than 20% of the world’s operation, sanitary and phytosanitary measures, LEGAL FRAMEWORK GDP. sustainable development, trade defense, among •The European Union is the world’s leading inves- others. tor. With the implementation of the document, Merco- sur will have immediate access for almost all manufactured exports. On the other hand, Switzerland and Norway offer trade quotas for products such as meat, butter, honey, oils, rice, etc., which they did not grant to other countries in previous trade agreements, as mentioned by their authorities.

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4.1 TAX REGIME Corporate Income Tax (IRE in Spanish) Unifies the Income Tax on Commercial, Industrial •Any withdrawal of funds or the allocation of per- or Service Activities (IRACIS) Agricultural Income sonal use or consumption of goods or services Since January 2020, the new tax system that National Taxation Modernization and Tax (IRAGRO), broadens the tax base by extend- by the owner, consortium, partner or shareholder, brings with it the unification of taxes on com- Simplification Act (Tax Reform) ing the concept of “Paraguayan source”, and al- without due consideration. Including the payment mercial activities, with the aim of facilitating the The Executive Branch passed Law 6.380/19 on the lows tax losses to be carried forward for up to five of personal expenses in favor of those and their formalization of micro and small enterprises, has Modernization and Simplification of the Tax Sys- years. families. been in force. tem, which came into force in January 2020.

The Corporate Income Tax provides for two spe- Contributors to this tax will be: The Corporate Income Tax (IRE in Spanish) enters Therefore, the tax system is restructured as fol- cial regimes for Micro, Small and Medium Enter- •Individuals, legal entities and other entities, resid- into force as part of the simplification of the na- lows: prises (MSMEs in Spanish), according to Decree ing in the country or not, that receive dividends, tional tax system. The Undersecretariat for Taxa- N° 3.182/19. profits or income, in their capacity as owners, con- tion (SET in Spanish) replaces three taxes that sortiums, partners or shareholders of the entities were applied separately until 2019: Income Tax •The simplified regime for medium-sized compa- referred to in the first paragraph of the previous on Commercial, Industrial and Service Activities Corporate Income nies (SIMPLE) for those sole proprietorships whose article. (IRACIS in Spanish), Agricultural Income Tax (IRA- Tax (IRE) 10% income earned in the previous tax year does not GRO in Spanish) and Taxpayer Income Tax (IRPC exceed G. 2.000.000.000. •Those who make available or pay the profits, divi- in Spanish). •The simplified regime for small enterprises dends or income to the taxpayers of this tax shall The Income Tax on Personal Service (IRSCP in (RESIMPLE) for those sole proprietorship compa- act as withholding agents and shall be jointly liable Spanish), in force until 2019 for simple companies with a gross income earned in the previous tax for the payment of the tax. nies or individuals, was replaced. Thus, in the case Tax on Dividends and year not over exceed G. 80.000.000 of sole proprietorships, the obligation will be the Utilities (IDU) 8% to 15% •When the shareholder, partner or beneficiary is Corporate Income Tax (IRE), while the Personal In- Tax on Dividends and Profits a legal entity, transparent legal structure or one come Tax (IRP in Spanish) will be for individuals. Tax Regime INCOME TAX (IDU in Spanish) of the consortiums is a sole proprietorship, the Profits, dividends or returns made available or paid amount of the tax paid will become tax credit, to the owner, members of the consortium, partners which will be used exclusively in the liquidation Tax on Non-Residents (INR) 15% or shareholders by sole proprietorships, corpora- of this tax when it in turn distributes profits, divi- tions, limited liability companies, limited partner- dends or income in favor of the owner, its partners, ships, capital and industrial companies, consor- shareholders or beneficiaries. Also, the collection tiums and other companies or private entities of a of social contributions, the income from the sale similar nature with legal status, incorporated in the of tickets to cultural and sports events organized Personal Income Tax country, as well as the permanent establishments only by these entities is exempt. Rate (IRP) 8%, 9% and 10% of entities incorporated abroad, will be taxed by the Tax on Dividends and Profits (IDU). The Tax on Dividends and Profits will be determined on the profits, dividends or net earnings In addition, the following facts shall be presumed made available or paid to the owner, the consor- to constitute distribution of profits, dividends, sur- tium, the partners or shareholders. The profits pluses or revenues: destined to the legal reserve account, to optional reserves or to capitalization, will not be subject to •The granting of loans to the owner, syndicate, this tax, except in the redemption of the capital. partner or shareholder, unless the corporate purpose is financial intermediation and the latter does The rate is 8% when the recipient of the dividends, not exceed 2% of its loan portfolio. profits or income is an individual or legal entity resident in the country and 15% when the recipient •A shortfall of over 10% of the amount of the “cash” of the dividends, profits or income is an individual account exposed in the financial statements of the or legal entity not resident in the country, including company, partnership or entity. those obtained by the headquarters abroad.

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Non-Resident Income Tax •The transfer of use of goods and rights, when The obligation will arise at the time the funds are •30% on the amount of the sale of real estate lo- (INR in Spanish) they are employed or exploited in the country, made available, the remittance abroad or the pay- cated in the country. It taxes Paraguayan-source income obtained by even partially. ment, whichever occurs first. Compensation, nova- •50% on the amount of the lease of real estate lo- natural and legal persons that are non resident in •Operations with derivative financial instruments, tion, transaction and other means admitted for the cated in the country. the Republic of Paraguay from activities covered when the investing or beneficiary entity is incorpo- cancellation of the obligation shall be considered •70% of the gross amount for personal, profession- by the Corporate Income Tax and the Personal In- rated or based in the country. available. al or other services. come Tax. •The operations of international transport of goods •When the transaction concerns the sale of shares or persons, when they are carried out between The net income from Paraguayan sources will be or shares in companies, the difference between the A rate of 15% is established on net income, the ba- Paraguay and another country. determined according to the following criteria: sale price and the nominal value of the securities sis of which will depend on the activity carried out •Services provided from abroad by an individual, or 30% of the sale price, whichever is lower. by the regulated entities. whether professional or not, when they are in- •30% of the gross amount corresponding to: •100% of the gross amounts made available, remit- volved in obtaining income taxed by the Corporate ted or paid to partners, shareholders, parent com- The taxpayers of this tax shall be individuals, legal Income Tax. a.Interest or commissions on loans or credit opera- pany, companies or related entities, excluding the entities and other entities resident, domiciled or in- Services provided in the national territory, in whole tions carried out by public or private entities and items mentioned in the preceding paragraphs and corporated abroad and which do not comply with or in part, by natural persons, professional or oth- multilateral credit organizations, located abroad subparagraphs. the condition of resident or have a permanent ad- erwise, regardless of their connection with obtain- (unrelated). Placement of bonds abroad. •100% of the gross amounts made available, remit- dress in the country. The condition of taxpayer is ing income taxed by the Corporate Income Tax. b.The performance of international passenger ted or paid under any other item excluded or not satisfied when they obtain taxable income, profits •Services provided by legal persons and other en- transport operations; sea, river, air or land freight. mentioned in the preceding paragraphs. or benefits, regardless of whether these taxpayers tities not residing in the country, carried out from c.The cession of the use of containers. act through an agent, proxy or representative in abroad or in the national territory, insofar as they d.Remuneration for performing arts services of Personal Income Tax (IRP in Spanish) the country. are related to obtaining income taxed by the Cor- public shows, live performances of artistic expres- It taxes Paraguayan source income obtained by in- porate Income Tax. sions of theatre, dance, music, circus, magic and dividuals. Profit resulting from activities carried out, from •Digital services when they are actually used in the all their possible derived practices, which bring to- assets located or rights used economically in the country, including entertainment or gambling ser- gether people outside a merely domestic environ- The following income is included: country are considered to be income from Para- vices, regardless of who provides them or whether ment. •Income and capital gains, excluding income taxed guayan sources. In addition, income from: or not the service is linked to obtaining income e.The premium and other income from insurance, on dividends and profits (IDU). taxed by the Corporate Income or the Personal In- co-insurance or reinsurance operations, which •Income derived from the provision of indepen- • Interest on loans or any other investment made come Tax. For this purpose, it will be understood jointly cover risks in the country and abroad. dent personal services or in a relationship of de- by the parent company or other branches or agen- that the service is used or exploited in the country f.The telephone call; the performance of radio- pendence. cies abroad, royalties and technical assistance. when any of the following are located in Paraguay: gram operations, the audio or video transmission • Interest or commissions from financing or loans, the IP address of the device used by the customer service; the sending and receiving data over the when the issuing or lending institution is incorpo- or the country code of the SIM card; or the cus- Internet and other digital or similar services; which rated or is located abroad. tomer’s billing address; or the bank account used are provided from abroad to the country. • Interest, commissions, revenues, profits or capital for payment remittance; or the customer’s billing g.The disposal of movable property, registrable or gains derived from securities and movable proper- address held by the bank; or the financial institu- not, located in the country. ty from legal entities or other entities incorporated tion issuing the credit or debit card with which the or based in Paraguay. payment is made. • Capital gains from sales or leasing of assets lo- •Any amount made available, remitted or paid cated in the country; assignment of rights; and from the country abroad, under any other concept the sale of securities, shares and capital quotas of not mentioned above, excluding those related to companies incorporated in Paraguay. the import of goods. • Insurance or reinsurance operations covering risks in the country, or involving persons or entities resident in the country at the time of signing of the contract.

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The tax assessment will be made separately for Selective Excise Tax (ISC in Spanish) The main rules under this law are as follows: it sets To this end, these regulations establish general each of the income categories, without the pos- It taxes the importation of certain goods and the a ceiling for the fiscal deficit or the excess of pub- rules of fiscal behaviour aimed at the stability and sibility of allocating expenses or profits from one first factory sale of those goods when they are do- lic expenditure over total central government rev- sustainability of public finances. They will make it to the other. mestically produced. Goods include fuels, tobacco, enue of up to the 1.5% of the estimated GDP for possible to provide predictability to both public in- alcoholic beverages, high sugar content beverag- the fiscal year; in addition, it determines that the come and expenditure. In the case of income and capital gains, the rate to es, high calorie packaged foods and luxury goods. salaries of public servants can only be readjusted be applied is 8%. The rate ranges from 1% to 50%. one year after the minimum wage for private sec- Benefits tor employment has been readjusted and at most One of the main benefits of having permanent fis- The tax applicable to income for personal services Tax on Documents and Deeds up to the same percentage of this readjustment; cal rules is to generate an environment of trust is determined through the application of progres- (IAYD in Spanish) and determines that current expenditure may not for markets and economic agents, ensuring that sive rates connected to a scale of net income. The It taxes bills of exchange, drafts, local cheques, increase by more than 4% plus the inter-annual in- the evolution of public accounts has a predictable portion of the net income included in each section money orders, credit notes and in general any flation projected by the Central Bank of Paraguay path, regardless of the administration in office. of the scale will be as follow: transaction involving the transfer of funds within from one year to the next, comparatively. the country when the beneficiary of the trans- Net Income Applicable Rate action is a person other than the issuer, and the Objectives Up to G. 50.000.000 8 % transfer of funds or foreign currency abroad. The This law aims to ensure the sustainability of public G. 50.000.001 9 % rate is 1.5% (one point five per thousand) when finances in the medium term, aiming at fiscal re- to G. 150.000.000 transferred locally and 2% (two per thousand) sults that do not cause negative effects on mac- Same or more than 10 % G. 150.000.001 when transferred abroad. roeconomic stability, preserving the balance between public revenues and expenditures. Taxpayers shall be national or foreign natural persons Property Tax resident in the national territory. The tax valuation system of urban real estate located in Asuncion and in the municipalities of rest OTHER TAXES of the country, is determined by the National Ser- vice of Cadastre of the Ministry of Finance, which Value Added Tax (IVA in Spanish) establishes the tax valuation expressed in guara- It taxes the sale and import of goods and the pro- nies per square meter for urban properties, ac- vision of services carried out on national territory, cording to whether the property is in the capital, including those of a personal nature carried out or other departments of the country. The values of by professionals and independent individuals. Al- each also depend on whether they are located in though the general rate is 10%, differential rates of urban areas, rural areas and, whether they are on 5% are applied for the lease of property intended asphalt, cobbled or unpaved streets. exclusively for housing; for the sale of property; on interest, commissions and surcharges on loans and Fiscal Responsibility Act financing and on the sale and import of medicines Law 5.098/13 on Fiscal Responsibility is a pub- for human use that is registered with the Ministry lic policy instrument, an institutional framework of Public Health and Social Welfare, as well as on to guarantee the sustainability of public finances the sale of some staple items including rice, noo- over time, aiming at fiscal results that do not cause dles, vegetable oil, yerba mate tea, milk, eggs, flour negative effects on macroeconomic stability, pre- and iodized salt; for the sale and import of agri- serving the balance between public revenues and cultural, horticultural and fruit products; and for expenditures. The three branches of the State, the sale and import of livestock products and their its agencies and departments are responsible for primary derivatives, provided that they have not complying with the principles and rules estab- undergone any alteration or transformation other lished by law. than that necessary for their preservation.

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The rights recognized by the Labor Code and the schedule that will be approved by the labor admin- 4.2. LABOR SYSTEM labor laws to the workers cannot be subject to res- istration authority. The employer’s contribution to ignation, transaction, or conventional limitation, the social security system is paid out of what the In Paraguay, the working age population, aged 15 Labor guidance service for investments voiding any agreement to the contrary. worker actually receives. and over, is 5.066.043. The Directorate of Labor of the Ministry of Labor, Employment and Social Security provides general Duration of the employment contract •Contract for day labor: this is the contract in When speaking of Paraguay’s demographic struc- guidance on all matters relating to the regulation The duration of an employment contract can be of: which compensation is agreed upon on the basis ture, the country is distinguished by a high propor- and implementation of labor relations and services •Indefinite duration. of a unit of time. The maximum daily duration is tion of young people. Twenty-seven per cent of the provided to companies and foreign investors in the •Determined term (no more than one year for 8 hours. The employer’s contribution to the social population is in the 15-29 age range, and 20.6 per labor field. workers and five years for employees). security system is paid for a minimum of 18 days cent in the 30-44 age range. •For a specific work or service. The last two are per month, calculated on the basis of the minimum Current minimum wage: exceptions and may only be entered into when the wage. These figures characterize Paraguay as a young The current minimum wage for miscellaneous un- at-will or temporary nature of the service or work country, whose population is mainly concentrated specified activities is G. 2.192.839 per month. requires it. •Fixed-term contract: micro and small enterprises in the working age. Six out of every 10 residents may establish fixed-term employment contracts are in the 15-59 age group, which allows for adapt- Form of payment of the salary: Form of payment: for up to 12 months, which may be extended for an ability to the labor market, with great capacity to Wages may be paid by: For the form of payment of the compensation; additional 12 months, at the end of which the con- acquire and employ new knowledge. •Time unit (monthly, biweekly, weekly, daily or the contract can be: tract is terminated without any obligation to give hourly). a.Salary. prior notice or pay compensation. In this case, the According to statistical projections, Paraguay will •Per unit of work (piece, task or piecework). b.A daily wage. Directorate of Labor may authorize the payment maintain this characteristic in the coming decades, •By commission. c.A commission. of salaries to microenterprises on a basis of not so there is undeniably a concrete opportunity for d.A part time wage. less than 80% of the current legal minimum wage. growth based on the demographic base. Employees’ salaries must be paid in legal tender, e.In exchange. and payment in vouchers, promissory notes, cou- Also, among the special contracts are: Although Paraguay’s human capital in terms of pons is prohibited. Payment may be made in part Contractual Arrangements: a.Teleworking. qualifications is somewhat lower than the stan- and exceptionally in kind up to 30 %, provided that In addition to the aforementioned individual em- b.Work at home. dards of the region, it has a system of training for it is appropriate for the personal use of the employment contracts, there are also various so- c.Rural work. work, financed by the business sector, designed to ployee and his/her family, and is established in the called special employment contracts: d.Work in land motor transport companies, among implement training plans and qualify the workforce employment contract in an exhaustive manner, at •Part-time contract (part time): it must be con- others. required by the job market and foreign investment. a fair and reasonable value. Article 23 of the Labor cluded in writing and a minimum of 16 hours and This system of training for work is attached to the Code. a maximum of 32 hours per week may be agreed Probational Period: Ministry of Labor, Employment and Social Security upon as a condition of employment. The worker The Labor Code provides for a probational peri- (MTESS). Legal regulation: may enter into contracts with 2 or more employ- od during the initial stage of the contract ranging Law 213/93 Labor Code and Law 496/1995 amend- ers. Hourly pay is calculated on the basis of the from 30 to 90 days, depending on the training of Labor market and labor legislation ing it, regulate the relations between dependent minimum wage. The employer’s contribution to the worker hired, and is intended for the employer Wages in Paraguay may be freely established by workers and their employers. the social security system is paid on the basis of to assess the skills of the worker, and for the em- agreement between employers and workers, but what the worker actually receives. ployer to verify the suitability of the working con- may not be lower than the legally mandated mini- It does not apply to directors, managers, admin- ditions for which the worker was hired. mum. It is set by the Executive following a propos- istrators and other executives of a company, who, •Apprentice contracts: these may be estab- al by the “National Council on Minimum Wages”, due to the character of their position as represen- lished for the training and employment of 16- and During the trial period either party may terminate made up of a representative of the State, the em- tatives of the company, the magnitude of their 17-year-olds and 18- to 25-year-olds. The maximum the employment contract without incurring any ployer and the employee sectors. compensation, the nature of the work and the high working hours are 6 hours a day and/or 36 hours liability. During the probational period, workers technical capacity, enjoy considerable indepen- a week for adolescents. Apprentices will be paid must enjoy all the benefits provided for by law, ex- dence in their work, nor does it apply to indepen- no less than 60% of the minimum legal wage in cept for notice of termination and compensation dent workers governed by the Civil Code. force and must attach to the contract a teaching for unjustified dismissal.

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Job Security: The calculation of seniority shall include notice, if f.Adolescents: from 15 to 18 years of age may work e.Maternity leave: After the probationary period is over, the worker the worker served during that time. in accordance with the rules established in inter- acquires general security. However, a special sta- national agreements and the Code for Children •Maternity leave (salary covered by the Social Se- bility is acquired by the worker after ten uninter- If the employer chooses to dismiss the worker and Adolescents. They have special working hours curity Institute): every pregnant worker has the rupted years of service with the same employer. without notice, i.e. without prior communication, and may not work at night or in dangerous or un- right to suspend her work, for 18 uninterrupted he is obligated to pay the worker an amount equiv- healthy places. Nor may they work overtime. They weeks (126 calendar days). During her maternity Termination of a Job Contract: alent to his salary during the term of the notice may enter into individual work contracts and ap- leave and in any additional period between the In general, job termination can be done by mutual (30, 45, 60 or 90 days). prenticeship contracts provided that they are on anticipated date and the actual date of birth, the agreement, by unilateral will of the employer (dis- the Adolescent Worker Registry (RAT) of the Min- worker must receive medical assistance and ben- missal) and by unilateral will of the worker (resig- In addition to the notice, and regardless of wheth- istry of Labor. efits from the social security system. As soon as nation). er or not notice has been given, the employer is the employer has been notified of the employee’s Specifically, the causes can be given by: obliged to pay the worker 15 days wage for each Vacations: pregnancy and as long as the employee is on ma- a.Death of the worker, physical or mental incapac- year of service or fraction thereof exceeding 6 All workers are entitled to a period of paid leave ternity leave, any notice and dismissal decided by ity. months, as compensation for unjustified dismissal. after each year of continuous work for the same the employer shall be null and void. b.Incidental case or force majeure. employer, the duration of which is governed by the The woman shall enjoy the right to hold her job un- c.Expiration of the term or termination of the work. Working Day: following scale: til one year after the birth or adoption of the child. d.Bankruptcy of the employer or judicial liquida- The normal working day, in general, may not ex- •Adoption leave: the mother agrees to 18 weeks tion ceed, except in special cases, 8 hours per day or a.For workers up to five years of seniority, 12 con- leave when the adoptee is under 6 months of age, of the company. 48 hours per week when the work is done during secutive working days. and 12 weeks when the adoptee is over 6 months e.Total closure or definitive reduction of activities. the day, or 7 hours per day or 42 hours per week b.For workers with more than five years and up to of age. f.Justified withdrawal. when the work is done at night. ten years of seniority, 18 consecutive working days. •Breastfeeding leave: working mothers are allowed g.Termination of the contract decreed by the com- c.For workers with more than ten years of senior- 90 minutes of breastfeeding leave (paid by the petent authority. a.Day work: the ordinary working day may not ex- ity, 30 consecutive working days. employer) during the working day, during the first ceed 8 hours per day or 48 hours per week. d.Vacations cannot be accumulated unless agreed 6 months of life, and this leave can be extended. Dismissal: b.Night work: the ordinary working night cannot upon and for a maximum period of two years. The employer may notify the employee of dismiss- exceed 7 hours per night or 42 hours per week and Bonus: al if the grounds set out in article 81 of the Labor must be authorized by the Ministry of Labor. Paraguay has ratified the International Labor Or- A supplementary annual remuneration is estab- Code are met. An employer who fires an employee c.Mixed schedule: (covering periods of time be- ganization’s Convention C052 (convention on paid lished that the employer must pay the worker be- for just cause does not incur any liability or assume tween day and night) may not exceed 7.5 hours vacations), which allows for paid vacations to be fore 31 December, equivalent to one twelfth of the any obligation to give prior notice or to pay com- per day or 45 hours per week. divided. To this end, the Ministry of Labor, Em- compensation received during the year in favor of pensation. d.Overtime: once the period of normal working ployment and Social Security provides a digital the worker for all positions. The bonus cannot be time (night, day and/or mixed) has elapsed, the communication service through the REOP system garnished and is part of the worker’s preferential In the event that the dismissal is without just cause, employer is obliged to pay the worker for over- (Registro Obrero Patronal) for the communication credits. the employer shall be responsible for providing no- time. Overtime may not exceed 3 hours per day, of paid vacations. The bonus may be paid on a prorated basis. tice and the corresponding compensation. nor cause the total weekly working hours to exceed 57 hours. Work which by its nature endan- Leave: Family Allowance: When contracts are for an indefinite period, neither gers the health or life of workers may not exceed Employers are required to grant leave and/or ab- Any worker who does not earn more than 200% party may terminate without giving prior notice to daily hours or 36 hours per week. sences to salaried workers in the following cases: of the statutory minimum wage is entitled to an the other, in accordance with the following rules: e.Exception: the following are excluded from the a.Marriage leave (3 days). allowance equal to 5% of the minimum wage for a.Once the trial period has been completed, up to limitation of the working day and may work up to b.Leave due to death of spouse, children, parents, each married, unmarried or adopted child (under one year’s service, 30 days’ notice. 12 hours per day with one and a half hours’ rest, grandparents or siblings (3 days) 17 years of age), to be paid by the employer at the b.More than one year and up to five years of ser- which is counted as part of the 12-hour working c.Annual leave for workers to carry out Papanico- same time as the wage and in full. vice, 45 days notice. day: managers, supervisors, administrators, secu- laou and Mammography studies (2 days)” c.Over five and up to ten years of service, 60 days’ rity guards and others with discontinuous or sin- (Law 3.803/2009). Note: there is no maximum number of children, notice. gle-attendance duties; commission agents, agents, d.Leave for the father in cases of birth or adoption they are considered as a whole. d.Over ten years of service, 90 days’ notice. etc.; those who perform domestic and rural work, (14 days for the father), the leave is non-waivable. etc.

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Medical examinations: Nursery - breastfeeding room: f.All establishments must have an Occupational The employer shall arrange for the regular, licensed Nursing rooms shall be properly equipped so Health and Safety Officer (ASSO) registered by medical examination of each worker, at his own ex- that working mothers who are breastfeeding can the company with the Ministry of Labor’s REOP pense. breastfeed or express their milk, ensuring ade- system (Employer Registration Office). quate hygiene and conservation. Trade unions: Social Security: The right of workers and employers without dis- Public institutions and public and private sector The following are subject to mandatory social se- tinction as to sex or nationality to form trade enterprises in which more than 30 women work curity: salaried workers who provide services or unions without prior authorization from the State shall implement breastfeeding rooms authorized execute a work under a verbal or written contract is recognized. Workers who are members of the by the Ministry of Public Health and Social Wel- of employment, regardless of their age and the trade union management committee enjoy trade fare, in accordance with the regulations in effect. amount of compensation they receive; apprentic- union stability, that is, the guarantee that they will Industrial or commercial establishments employ- es and personnel of decentralized state entities or not be dismissed, transferred, suspended or have ing more than 50 workers are required to set up or joint ventures. their working conditions altered without just cause contract childcare services for children under two previously approved by a competent judge. years of age. The Ministry of Labor is the supervi- The Legal Statute of Mandatory Social Security sory body for these obligations. of the Institute of Social Security (IPS) covers the Labor management authority: risks of non-occupational illness, maternity, acci- The Ministry of Labor, Employment and Social Occupational health and safety: dents at work, occupational diseases, disability, old Security is the administrative authority for labor, In accordance with Law 5.804/17 “Establishing the age and death. which acts as a supervisor of compliance and en- National System for the Prevention of Occupa- forcement of labor laws, through a service of in- tional Risks”, the National Policy on Occupational Any employer with one or more employees is termediation, formalization, inspection and moni- Risks guides the development of the sector at the obliged to: toring. Its legal purpose is to act as a labor police national level. It must be established from a sys- a.Register with the IPS’s employers’ registry and force, and its political and social purpose is to temic and integral vision by the Ministry of Labor, with the Ministry of Labor, Employment and Social promote the protection of labor rights through Employment and Social Security. Security’s (MTESS) Employers’ Registry (REOP) at the collaboration of employers and workers in the the beginning of their activities. enforcement of collective bargaining agreements The employer must guarantee the hygiene, safe- b.Pay the mandatory social security on a monthly and labor laws and regulations. ty and health of workers in the execution of their basis. work activity. It is also required to notify the arrival of its work- Conflict resolution in the workplace: ers at the beginning of the contracted tasks, their The Labor Department of the Ministry of Labor, Any employer with one or more employees has the departure and any change of name or company Employment and Social Security resolves individ- obligation to: name, address, type of activity and/or cessation of ual and collective conflicts through mediation car- a.To arrange for an admissible and periodic medi- activity of the company. The employer’s firm that ried out in the administrative headquarters. cal examination at its own expense. deducts the contribution to the social security sys- b.Provide workers with information on the risks to tem from its workers and does not deposit it with Violations: their safety and health to which they may be ex- the IPS is liable to fines and criminal sanctions. Penalties for violation of labor regulations are es- posed. tablished by prior administrative summary and c.Every establishment with 150 workers or more The percentage of worker-employer contribution through resolutions of the highest authority of the must organize and maintain a scheme of occupa- in effect is 25.5% per month of the workers’ ac- Ministry of Labor. tional safety, industrial hygiene and occupational crued salary, with 9% corresponding to the work- medicine services. ers and 16.5% to the employers. The resolution establishing the sanction may be d.Every establishment with 100 to 150 workers appealed to the highest institutional authority by must set up an Internal Commission for Accident The IPS social security system does not currently means of a reconsideration appeal, and subse- Prevention (CIPA). apply to employers. quently to the Labor Appeals Court by filing an ap- e.Every establishment with less than 100 workers peal within 3 days of notification of the resolution. must have an occupational health and safety program carried out by an industrial safety technician registered with the Ministry of Labor.

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4.3. OCCUPATIONAL HEALTH AND SAFETY j.Displays the recommendations and telephone Instructions for the application of cov- numbers of the MSPYBS in common areas. id-19 prevention protocols POLICIES OF COVID-19 k.Common areas have soap dispensers, disinfec- There are specific indicators for establishments in tant gel, paper towels, constant cleaning of toilets different areas, whose guides are available on the The Ministry of Labor, Employment and Social Se- c.Whether or not the designated employee is a and taps MTESS website. curity (MTESS in Spanish), in the context of the professional. l.Applies or guides workers on machine washing • Industrial Instructions covid-19 pandemic, has drawn up an occupational d.Telephone number of designated agents. uniforms with water from 60 to 90 degrees celsius. https://www.mspbs.gov.py/dependencias/portal/ health and safety policy to be observed by compa- m.Applies to cleaning staff and their individual adjunto/135b1f-InstructivoINDUSTRIAS01.05.20.pdf nies and labor establishments for the purposes of •Checking working conditions protection equipment. their operation. Regarding the verification of working conditions, n.Applies to attendance control system, different • Establishment Instructions the MTESS, in accordance with the recommenda- from fingerprint clocking. https://mtess.gov.py/application/files/2615/8681/2349/0bbb8c- Formation of the Occupational Health tions of the Ministry of Public Health and Social o.It has an adequate ventilation system. Instructivoparaestablecimientos.pdf and Safety Agents Network Welfare (MSPYBS in Spanish), establishes general p.Applies or guides workers on washing and disin- • Commercial Venue Instructions measures applicable to all types of commercial es- fecting uniforms. https://mtess.gov.py/application/files/5715/8681/2466/8c7307- The Ministry has decided to set up a network of tablishments, as well as specific measures for dif- q.Applies teleworking or preventive isolation InstructivoparaLocalesComercialesuv1.pdf Occupational Health and Safety Officers (ASSO in ferentiated sectors, which must be complied. to personnel at risk: older adults, pregnant and Spanish) in all companies registered as such with breastfeeding workers, and workers with chronic • Public Works Instructions the MTESS, in order to control compliance with co- Compliance with the relevant protocols may be diseases. https://mtess.gov.py/application/files/4015/8679/9159/Instruc- vid-19 prevention measures. subject to inspection by the Ministry of Health, and r.It implements rotating shifts and digital media for tivo_Obras_Publicas_12_abril.pdf violations of the protocols and mandatory mea- the performance of the tasks if it can be done re- • Civil Works Instructions •Register of Occupational Health and Safety sures may be subject to sanctions. motely “home office” (telework). https://www.mspbs.gov.py/dependencias/portal/ Agents (ASSO in Spanish) s.The worker has received information and train- adjunto/93dfb4-InstructivoOBRAS01.05.20.pdf The measures established in general terms and ing on covid-19 on preventive and hygienic mea- The employer, through the REOP site (https:// which may be subject to control in the event of sures, training on the use and disposal of gloves • Delivery Instructions regobpat.mtess.gov.py/dbmt/output/menu.php) an audit are: and masks. https://www.mspbs.gov.py/dependencias/portal/ must proceed to appoint a worker as an Occupa- a.There are stations for hand washing before en- t.The worker has received guidance on avoiding adjunto/38cddd-InstructivoDELIVERY01.05.20.pdf tional Safety and Health Officer (ASSO), and an- tering the establishment, and inside, at least every touching his eyes, nose and mouth. • Shelter Instructions other worker as a substitute agent. two hours, washing with water and soap is request- u.The worker has received guidance on how to https://mtess.gov.py/application/files/6415/8681/4529/fbef3d- ed (for 20 seconds). Paper towels are provided for cover his or her mouth with the forearm when Instructivoparaalbergues.pdf The Board of Occupational Health and Safety of hand drying and gel based on 70% alcohol. coughing or sneezing and avoid sharing utensils. • Supermarket Instructions the Ministry of Labor will contact each agent to b.There is a social distance of 2 meters between v.The worker has received information on the pro- https://mtess.gov.py/application/files/5215/8681/4211/22829c- work online, train them remotely and clear up que- workers. tocol of action of the Ministry of Labor for cases of Supermercados.pdf ries, in order to install the covid mode of working, c.Workers use the mask correctly (mandatory). workers with symptoms of covid, with automatic and thus prevent work environments from being d.Temperature of all persons entering the work referral to their home and placing a call to 154 in • Gas Station Instructions sources of infection. center is taken, without contact. case of respiratory difficulties. https://mtess.gov.py/application/files/8115/8681/3931/740d4e- e.A system of team and shift work is established to w.The designation of the Occupational Health and EstacionesdeServicio.pdf The worker designated as ASSO may or may not ensure employee rotation. Safety Agent (ASSO) is verified and communi- • River Transport Instructions be an occupational safety technician registered f.Shoe disinfection device is used before entering cated to the Ministry of Labor, Employment and https://mtess.gov.py/application/files/6615/8681/2750/81f69f- with the Ministry of Labor. The ministry will be the workplace. Social Security through the Employer Registration Instructivoparatransportefluvial.pdf responsible for training the agents designated as g.There is a disinfection system with sodium hypo- Office site. such for the control of the corresponding protocol. chlorite (bleach) at 5-6 %, for domestic use, diluted x.The set up of a pandemic response team is veri- • Passenger Transport Instructions in water, applied between shifts, in the workplace fied, which should be made up of the administra- https://www.mspbs.gov.py/dependencias/portal/ The information to be provided when the agents and on office furniture, computers, doorknobs, etc. tive head and/or heads of line (perishable, room, adjunto/633a6f-InstructivoTRANSPORTEDEPASAJE- are appointed is as follows: h.Safety signs on preventive measures (hand store) and should never be the manager or the ROS01.05.20.pdf a.First and last name of the employee designated washing, distancing and/or those published by the person in charge of prevention. • Cold Storage Instructions as ASSO. MSPYBS) are observed. https://www.mspbs.gov.py/dependencias/portal/adjunto/ b.Type of agent (main or substitute). i.The Ministry of Labor’s covid protocol is displayed e812f2-ProtocolodeBuenasPracticasfrigorificos04.05.20.pdf in common areas.

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Legal Framework Constant training 4.4. IMMIGRATION LAWS Compliance with the provisions relating to safety, As stated by the MTESS, through the Occupational medicine and hygiene at work is covered by the Health and Safety Agents Network in working es- Paraguay’s immigration law is regulated in order The duration of the temporary residence is 1 (one) labor legislation, Law 729, in articles 273 to 280. tablishments, the MTESS will proceed to train the to control the entry of foreigners into the country. year, which can be renewed up to five times, for designated agents for the application of the cor- The nature, procedure, requirements, validity, expi- periods equal to the authorized period, depend- The provisions on occupational safety, medi- responding protocols and will work jointly and per- ration and other aspects related to obtaining a visa ing on the profession, activity and/or reason for cine and hygiene are supplemented by Decree manently, online, in the training and instruction of are explained below. settling. For residents of Mercosur, the temporary N.° 14.390/92 (General Technical Regulation the agents for the purposes mentioned. residence will be valid for 2 (two) years, to extend on Occupational Safety, Hygiene and Medicine), The admission, entry, stay and departure of for- the residence in Paraguay it will be necessary to which regulates the organization of occupational It also foresees the implementation of organiza- eigners from Paraguayan territory are specifically opt for a Temporary Settling (according to Law health in work establishments (articles 271 to 276). tional structures recommended by the Ministry regulated by Law 978/96 and its regulatory de- 978/96) or, to apply for a Permanent Settling, be- of Health to apply rotating shifts in workplaces, crees - Decree N.° 18.295/97, Decree N.° 11.026/00, fore the expiration of the card. The document is- The regulations issued by the MTESS together among other actions aimed at preventing the ex- Decree N.° 1.726/09, by Law 3.582/08 and by Law sued is the Temporary Admission Card. with the recommendations of the MSPYBS should pansion of covid-19 in the workplace. 2.406/04. be considered essential for maintaining the occu- In turn, the designated agents may make daily con- pational health and safety of employees in their sultations that will be cleared through the Occupa- Non-residents and precarious residence Foreigners can enter the country as a tourist or workplaces. Consequently, failure to comply with tional Health and Safety Directorate of the MTESS Visa Categories Foreigners may be admitted to the country as resi- as an investor in order to ascertain certain aspects such regulations could eventually lead to fines for for clarification of doubts and necessary advice. dents or non-residents. Residents may be perma- related to their possible investment. As a tourist employers who do not observe the measures to nent or temporary. they may stay in the country for a period of 90 be taken. days (extendable once for the same period) and as Permanent Residency an investor they will have a period of no more than Under this category, a foreign investor who wishes five days (extendable for just cause). He/she may to settle permanently in the country may enter the not perform paid or lucrative tasks, either on his/ country. To this end, it will transfer financial and her own account or as a dependent. technological resources to develop any activity that the authorities consider useful for the coun- For non-resident foreigners or foreigners with try’s development. Once admitted, he may reside temporary residence whose periods of stay in the in the country indefinitely. The document issued is country have expired and who have been autho- the Permanent Admission Card. rized to regularize their stay in the country, the Directorate General of Migration will grant them a a.Validity: Law 2.406/04 exempts the renewal of precarious residence for a period not exceeding 6 the residence permit issued by the Directorate- (six) months, extendable only once for the same General of Migration, unless it is due to any of the period. causes that may lead to the cancellation of the stay or to the expulsion. The documentation issued in this case is the Cer- b.The Paraguayan Identity Card must be renewed tificate of Precarious Residence. every ten (10) years. Procedures and required documentation Temporary Residency The foreign investor must take the necessary steps This is the category under which foreign entre- to obtain permanent or temporary residence at preneurs, directors, managers and officials from the General Directorate of Migration. These proce- abroad may enter the country and remain in it for dures can be done abroad (through the Paraguay- the duration of the activities that originated their an Consulate) or in Paraguay. admission.

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To apply, one must submit: b.This deposit may be waived if the applicant has Visa Waiver Agreement Bilateral Visa Waiver Agreements any of the following documents: According to the Ministry of Foreign Affairs (MRE Country Passport Country Passport a.Passport or identity card from his/her country of b.1.University professional degree with promise to in Spanish), Paraguay has signed bilateral visa Peru (*) (**) D.C.O Greece D.O.C. origin, current. practice the profession. waiver agreements with 76 countries, a fact that C. D.O.(Paraguay) b.Birth, marriage or divorce certificate to justify b.2.Deferred compliance labor contract, with No- is taken into account not only by foreigners visit- Uruguay (*) ID or Passport Portugal D.E. (Portugal) the marital status. tary Public signatures certification, mentioning the ing Paraguay, but also by Paraguayans planning to D.O. Paraguay c.Certificate of criminal or police record from the amount to be received, attaching other necessary travel abroad. D.S. Czech Brazil (*) ID or Passport Czech Rep. C. country of origin or residence for the last 5 years, documents from the employer. current. b.3.In the case of farmers, title for production of at (*) A civil identity card is only required for travel Chile (*) ID or Passport Vatican (**) D.S. d.Police Records, for foreigners issued by the least 5 hectares. under the agreement on travel documents of Mer- Ecuador (*) D.O.S.C. Estonia (**) T. Computer Department of the National Police. b.4.In case of being a shareholder, deed of incor- cosur and associated States. Argentina (*) ID or Passport Latvia (**) T. Venezuela (*) D.O.E.C. Slovenia (**) T. e.Health Certificate, issued by an authorized doc- poration, Tax Identification Number (RUC in Span- (**) tor and endorsed by the Ministry of Health, men- ish) and municipal patent of the company. (**) Decree of the Government of Paraguay de- Bolivia (*) (**) ID or Passport Irland (**) T. tioning psychophysical health and no infectious termining unilaterally the exemption of visas, with Colombia (*) D.O.C Malta (**) T. diseases. Observations: reciprocity. Guatemala D.O.C. T. Cyprus (**) T. f.Certificate of life and residence issued by the ju- All documents are presented with valid originals Costa Rica D.O.E.C. Bulgaria T. (***) Decree of the Government of Paraguay pro- T. (Paraguay) risdictional police station or court. and 2 (two) photocopies authenticated by Notary El Salvador D.O.C. T. Turkey D.S.E.C. (Turkey) g.Certificate of entry and stay in the country. Public. viding entry facilities to Japanese nationals hold- Panama D.O.E.S.C. Iceland (**) T. h.Consular visa for the countries that require it. ing all types of passports. The Government of Ja- D.O. (Paraguay) i.Two color photographs (2.5 x 2.5). Documents that are in a foreign language must be pan exempts only holders of diplomatic and official Cuba D.O.S. (Cuba) Ukraine T.

translated into Spanish by a public translator reg- passports from the visa requirement (note verbale Mexico D.O.T. Croatia (**) T. Additional requirements for temporary residence: istered by the Supreme Court of Justice, including N.° 146/2017 of 30 August 2017). Dominican D.O.T. Principality of T. Rep. Andorra (**) the passport. (Portuguese does not require trans- Honduras T Georgia D.O.S.

a.Promise of employment with salary to be relation). (****) Decree of the Government of Paraguay ex- Nicaragua T Principality of T. ceived with notary public signature certification. empting the holders of the travel document known Monaco b.Commercial patent, unique registry of the con- The documents of the country of origin or resi- as the “laissez – passer” issued by the UN. Luxembourg D.O.E.C. Montenegro D.O.S. D.O.S.C. (Paraguay) tributor, identity card of the employer. dence must be apostilled (if the issuing country Austria D.S.C. (Austria) Azerbaijan D.O.S. c.Professional title at technical level, legalized, or is a signatory of the Hague Convention) or, if not, For further information on the requirements, please Hungary D.O.C. Serbia D.O.S. certificate of studies legalized and proof of main- they must be endorsed by the Paraguayan consul- check with the relevant consulates. Spain D.O.E.C. Korea (**) D.O.C. tenance for senior people. ate abroad and legalized by the Ministry of Foreign United T. (Paraguay) D.O.E.C. Japan (***) Affairs in Asunción - Paraguay. D = Diplomatic Kingdom D.O. (Japan)

Additional requirements for permanent resi- O = Official The D.O.E.C. Israel D.O.E.C. dence: Total duration of this procedure: 4 months. Netherlands E = Special Romania D.O.T. India D.O. S = Service D.O. (Paraguay) Switzerland D.O.E.C. Morocco In addition, the financial solvency of the applicant In case the applicant is a person who will invest in C = Common D.E.S. (Morocco) must be demonstrated by the following options: the country an amount equivalent or superior to T = All Liechtenstein D.O.E.C. South Africa D.O.C.

seventy thousand US dollars (USD. 70.000) (ac- Germany D.O.E.C. China (Taiwan)(**) D.O.C. Source: https://www.mre.gov.py/index.php/tramites/ a.Certificate from a bank, cooperative or financial cording to Resolution N.° 236 of the Ministry of Denmark D.O.E.C. Egypt D.O.S.E. visas/acuerdos-de-supresion-de-visas deposit of the minimum amount of 350 daily wag- Industry and Commerce, which establishes the re- Italy D.O.E.C. Vietnam D.O. es (G. 28.438.200 or its equivalent in dollars), dur- quirements and procedures for the issuance of the D.O. (Paraguay) Norway D.O.E.C. Indonesia ing the processing of the application. In case of not Foreign Investor’s Certificate through the SUACE D.S. (Indonesia)

having an account, one must deposit the amount system), the process can be presented before the Belgium D.O.E.C. Jordan D.O. in the National Development Bank and after com- SUACE and the duration of 4 months, mentioned Sweden D.O.E.C. Lebanon D.O. pleting the procedure, the amount is returned. above, is reduced to 30 days. (according to Law Poland (**) D.O.T. Philippines D.O. 4.986/13 which creates the Unified System of Busi- Finland D.O.E.C. Singapore (**) C. Slovak Rep. D.O.T United Arab T. ness Assistance for the Opening and Closing of (**) Emirates Companies. SUACE). Russia T. Qatar DOE.

France D.S.C

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4.5. INTELLECTUAL PROPERTY What cannot be patented? There are inventions that cannot be patented be- Renovation: patents after 20 years of validity because they infringe on the environment, health, come the property of the State. The National Directorate of Intellectual Property New creations – patents ethics, morality, human and animal life. (DINAPI in Spanish) is the institution whose sole The Patent Law 1.630 / 2.000, grants protection Territory: the patent registered in Paraguay is only purpose is the protection of intellectual property to both invention and utility model patents. It ad- Matters excluded from patent protection are valid within the country. rights and is responsible for industrial property. mits the patentability of inventions relating to new plants and animals, except micro-organisms and products and procedures involving an inventive essentially biological processes to produce plants Patentability conditions Industrial property step and susceptible of industrial application, fol- or animals, which are not non-biological or micro- Inventions can be as simple as a paper clip or con- Industrial property includes patents for inventions, lowing the principle of unity of invention, so that a biological processes. sist of something as complicated as a robot, but utility models, trademarks, collective trademarks, patent application may only include one invention they must always meet certain conditions of pat- certification marks and geographical indications or a group of them linked to each other, provided Nor may products or processes included in the entability, such as: and appellations of origin. An industrial “drawing” that they constitute a single inventive concept. state of the art, as provided in this Law, be the sub- is any combination of lines and colors; and an in- ject of a new patent simply because they are put Novelty: the invention must contain a novel fea- dustrial “model” is any plastic form of lines and col- Definitions to a different use than that covered by the initial ture that is not part of the existing knowledge in ors, intended to give a special appearance to an Patent: is an exclusive right, of a temporary nature, patent. the technical field to which it relates. In the appli- industrial or craft product and serving as a type for granted by the State on an invention, through the cation, the inventor must describe the invention in its manufacture. granting of an official document. The Patent Act also states that it does not con- detail and compare it with previous technologies sider as inventions: existing in the field of the invention to demonstrate Industrial Designs The document confers the right on the inventor to its novelty. Registration of a design confers on its owner the prevent anyone from copying, using, distributing •Simple discoveries, scientific theories, mathemat- exclusive right to reproduce the design in the man- or selling the invention without his permission. ical methods. Before applying for a patent, inventors are encour- ufacture of a product, to import, to offer for sale a •Purely aesthetic creations. aged to do research in the technical field of their product which reproduces the protected design, Patents are part of intellectual property, being a •Schemes, plans, principles or methods of eco- inventions to ensure that no one has previously ap- to keep the product for the purpose of offering it legal form for the protection of a type of creation nomics, business, advertising or publicity and plied for a patent for the same invention. It is not for sale and to exclude third parties from carrying of the mind called “inventions”. those referring to purely mental or intellectual ac- easy to conduct a complete patent search, so it is out such acts for industrial or commercial purpos- tivities, or to matters of play. advisable to ask a professional for help during this es (Article 19, Law 868/81 on Industrial Designs). The principle on which the patent system is based •Isolated computer programs. stage. is that, by granting the monopoly on the imple- •Diagnostic, therapeutic and surgical methods. The owner of a registered industrial design may mentation of the invention, the state encourages •Different ways of reproducing information. The inventive level (not obvious): an invention grant a license to exploit his design. The respec- the invention. shall be regarded as having an inventive step if, to tive contract must be registered with the Director- Management and registration a person skilled or knowledgeable in the technical ate General of Industrial Property in order to be It is the product or process that offers a new way Applications for the registration of patents must field corresponding to the invention, it is neither effective against third parties, observing the same of doing something, or the technical solution to a be submitted at the entry desk of the National Di- obvious nor obviously derived from what already formalities as those established for the transfer or problem. rectorate of Intellectual Property. exists in the world. cession (Article 24, Law 868/81 on Industrial De- signs). Invention or breakthrough (from latin invenire, The interested parties or their agents must com- The industrial application (utility): The invention “encontrar” -also look inventio): is a technical plete the forms found on the website www.dinapi. can be manufactured or used in any branch of in- object or process, which has novel transformative gov.py in quintuplicate with all the mandatory data dustry or for a practical use; it cannot be limited characteristics. Some inventions also represent an required therein. to an idea or a theory. If the invention concerns a innovative creation without a scientific or techno- product, it is necessary that someone be able to logical background, which extend the limits of hu- Validity: exclusive for 20 years from the date of fil- manufacture that product. man knowledge. ing of the application in the country.

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If the invention is about a process, then it must be Main types of brands the trademark is granted by means of a resolution, Copyright and Related Rights possible to carry out that process. For example, •Denominative: consisting of words or sets of the registration number and date of grant are as- Copyright is the legal term describing the rights a time machine may be a great idea, but unless words, letters engraved in any alphabet. The guar- signed and, finally, a title is drawn up and delivered granted to creators of literary and artistic works. an inventor actually creates a machine that allows antee of this type of brand is summarized in the to the interested party. These exclusive rights allow the author to use, au- people to travel through time, the mere idea of a word itself and not in the form as it is written. Ex- thorize or prohibit the use of his works in a certain time machine cannot be patented. ample: Jar In the event that a background is found in the way, thus allowing him to control and remunerate course of the substantive examination, either a risk the use of his works. Trademark registration •Figurative: consisting exclusively of the design, of confusion or association with a trademark al- Law 1.328/98 and Decree N.° 5.199/99 grant the au- The National Directorate of Intellectual Property image or any type of graphic sign that does not ready registered, or in contravention of any of the thor of a work, by the mere fact of its creation, the (DINAPI), an autonomous and decentralized enti- contain nominal elements. Example: prohibitions laid down in the law, the Trademark original ownership of a right enforceable against ty, is the office in charge of analyzing and deciding Office is entitled to reject the application. all, which includes moral and economic rights. on matters relating to applications for the registration and renewal of trademarks. Validity period The moral rights (disclosure, paternity, integri- •Mixed: when it consists simultaneously of nomi- The validity period of a trademark is 10 years, ty and withdrawal of the work from the market) Its functions are given by Law 1.294/98 and its native and figurative elements, or of nominative el- counting from the date of granting of the registra- are perpetual, inalienable, unattachable, non-re- Regulatory Decree N° 22.365. ements whose presentation is sufficiently distinct tion and may be renewed indefinitely for periods nounceable and imprescriptible, being exercised, from the usual writing. Example: Jar of equal duration. at the death of the author, by his heirs. Product and service brands The economic rights (reproduction, communica- A trade mark is any sign which serves to distinguish Brand renovation tion and public distribution, import, translation), goods or services of a given name from those of The procedure for renewal is much simpler. The for- can be exploited under any form or procedure its competitors, which may be verbal, figurative or mal examination is carried out and the publication beneficial to the author. mixed, olfactory, three-dimensional. Registration of a trademark order is issued, which in this case is for one day. Each application is first subjected to a formal ex- Copies of the newspapers are attached and, with- Scope The marks may consist of one or more words, slo- amination to verify that it meets the requirements out waiting for the opposition period, the grant of Copyright protection applies to all works of inven- gans, emblems, monograms, stamps, vignettes, of Law 1.294/98 on Trademarks. the brand is renewed by means of a decision and tion of a creative nature in the literary or artistic reliefs, sounds, names, fancy words, letters and the title is made. field, regardless of their genre, form of expression, numbers in various shapes or combinations; com- Once the requirements have been met, a pub- merit or purpose, the nationality or domicile of the binations and arrangements of colours, labels, lication order is issued, requiring publication in Trademark Opposition author or the owner of the respective right, or the packaging and wrappings. a newspaper in the capital for three consecutive The Secretariat of Litigious Affairs is in charge of place of publication of the work. days, and the period required by law for third par- attending and dealing with all opposition files to The rights recognized are independent of the own- Once the mark has been chosen, which will serve ties who may feel their rights have been affected trademark applications filed with the Directorate ership of the material object in which the work is to designate the product or service, it is necessary to file an opposition (60 working days). of Industrial Property, which may be filed by na- incorporated, independent of the method of initial to verify that it is available, i.e. that an identical or Opposition cases are handled at the Secretariat of tional or foreign individuals or legal entities. or subsequent fixation, and their enjoyment or ex- similar sign has not been previously applied for or Litigation, which is the office in charge of process- ercise is not subject to the requirement of registra- registered for goods or services. If this step is not ing and resolving them. Registration deadline tion or the completion of any other formality. taken, the interested party could be unpleasantly The delivery time for trademark registration is cur- surprised to find that his application is rejected, When there is no opposition, after the legal dead- rently 12 months from the time of filing. It should Protected works may also qualify under other in- and consequently have to change the name, which line has passed, the applicant or his or her rep- be noted that, in practice, this period may be ex- tellectual property protection regimes, such as could cause him serious financial losses, even more resentative submits the publications made in the tended to over 18 months. patents, trademarks, reserved data on industrial so if he has already launched a campaign to adver- relevant newspapers, which are attached to the processes or other similar systems, provided that tise the brand. application, and goes to the Background Report the works or such components deserve such pro- section, which is responsible for carrying out the tection under the respective rules. substantive examination.

This examination consists of a search for prior art and an analysis of the feasibility of registering the brand. If there are no impediments, there is a second validation by the Trademark Director and then

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Types of protected works Protection of foreign works The registration may also serve as evidence before Some formalities can also be carried out through Original works in the literary, artistic and scientific Protection is granted to all works of authorship, re- a Court of Justice in the case of disputes relating the DINAPI Internet Services System, to find out fields, whatever their form of expression, medium gardless of their genre, form of expression, merit to copyright. about the forms, please visit: or means are protected, such as: or purpose, the nationality or domicile of the au- https://www.dinapi.gov.py/index.php/formularios thor or the owner of the respective right, or the a.Validity of registration a.Works expressed in written form, through books, place of publication of the work. The law provides The economic right will last for the author’s entire c.Transfer of property rights magazines, brochures or other writings, and any special provisions for audiovisual and radio works, life and more than 70 years after his death. In the The right to property may be transferred by rea- others expressed by means of conventional letters, computer programs (both operational and appli- case of anonymous and pseudonymous works, the son of death or transfer between living persons. signs or marks. cation programs, whether in the form of source or term shall be 70 years from the date of disclosure. The transfer shall be limited to the rights assigned b.Oral works, such as lectures, addresses and ser- object code), architectural works, the plastic arts and to the time and territorial scope agreed upon. mons, didactic explanations, and others of a simi- and journalistic articles. This term of protection shall allow the creators of Fixed remuneration or a share by the author in the lar nature. works to receive the economic benefits and, after income earned by the assignee may be stipulated. c.Musical compositions with or without lyrics Foreign artistic works, performances, phono- the author’s death, his/her heirs to continue to re- The owner of this right may also grant third par- d.Dramatic and dramatic-musical works, such as graphic productions, broadcasts or transmissions ceive the corresponding royalty for a reasonable ties a simple, non-exclusive and non-transferable plays and musicals. by wire, cable, optic fiber or other similar process, period of time. license to use. e.Choreographic and pantomime works, such as audiovisual recordings, photographic fixations choreography created by a teacher at school fes- and other intellectual property shall enjoy national In the case of works created by more than one au- d.Public domain tivals. treatment, regardless of the nationality or domicile thor, the end of the period of copyright protection Works that have fallen into the public domain con- f.Audiovisual works, including cinematographic of the owner of the respective right or the place of is calculated from the death of the last living co- stitute all creations whose economic rights have works, made and expressed by any means or pro- publication or disclosure. author. passed the period of protection established by law cess. and can therefore be used without permission and g.Radio works, broadcast by radio and television, Registration b.Process without having to pay the author or owner. This such as programs of the radio or television. Works and contracts relating to them may be en- Present the application for registration of the work, means that works in the public domain can be h.Works of visual art, including drawings, paint- tered in the National Register of Copyright and Re- which will include the following data: copied, distributed, adapted, interpreted and ex- ings, sculptures, engravings and lithographs. lated Rights. Such registration shall be for declara- •Title of the work. hibited in public free of charge, as if they belonged i.The plans and architectural works. tory and not constitutive purposes only, so that •Nature of the work. to everyone. j.Photographic works and those expressed by a failure to do so shall not prejudice the benefit or •Name or pseudonym of the author, publisher or process analogous to photography. exercise of the legally protected rights. However, printer. k.Works of applied art, which are works of art in- the registration is admitted as a principle of certain •Place and date of publication. corporated into utilitarian objects such as a deco- proof of the facts and acts contained therein, in •Place and date of creation. rated lamp, and a portfolio with applied designs. the absence of proof to the contrary. •Number of volumes, sizes and pages involved; l.Illustrations, maps, sketches, plans, outlines and number of copies. plastic works relating to geography, topography, In Paraguay, the National Directorate of Copyright •Address of the applicant. architecture or the sciences. and Related Rights (Dirección Nacional de Derecho •Number and photocopy of the author’s identity m.Computer programs (software), which enable de Autor y Derecho Conexos, in Spanish), which card. the functionality of a computer or a cell phone. is part of the National Directorate of Intellectual •Telephone number. n.Collections of works, such as encyclopedias, an- Property (DINAPI), is responsible for the National •E-mail address. thologies and original databases. Copyright Registry, with the aim of having a principle of certain proof of the facts and acts, in ad- Within 8 days of submitting the application to the dition to serving as a database that contributes to National Directorate of Copyright, it orders publi- statistical purposes and the promotion of culture. cation for 3 days.

Within 30 days of publication, the work is registered.

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4.6. SUMMARY OF PROCEDURES AND REQUIRE- nomic and financial capacity of the interested par- Note: for more details go to the following links: ty, in order to make an investment. MENTS TO REQUEST THE FOREIGN INVES- • The company must employ at least five workers Spanish:http://www.suace.gov.py/wpcontent/up- TOR’S CERTIFICATION VIA SUACE loads/2019/07/Manual_de_obtenci%C3%B3n_Carnet_de_Rad. Note: for more details go to the following links: Pte_15.07.2019.pdf General considerations Portuguese:http://www.suace.gov.py/wpcontent/up- Spanish:http://www.suace.gov.py/wp-content/up- The Investor’s Certificate is a document issued •1 (one) certified copy of the identity card of the loads/2018/09/Manual_de_obtenci%C3%B3n_Carnet_de_Rad. loads/2019/09/REQUISITOS-PARA-SOLICITAR-LA-CONSTAN- by the Unified System of Opening and Closing of country of origin or passport. Pte_Portugues.pdf CIA-DEL-INVERSIONISTA.pdf Companies (SUACE in Spanish) for the purpose of •1 (one) authenticated copy of the criminal records English : http://www.suace.gov.py/wpcontent/up- initiating the procedures and obtaining permanent of the country of origin, (federal not of a state), Portuguese:http://www.suace.gov.py/wp-content/uploads/2018/09/Manual_de_obtenci%C3%B3n_Carnet_de_Rad. residence as a foreign investor, in order to open a apostilled or legalized by the Ministry of Foreign loads/2019/09/REQUISITOS-EN-PORTUGUES-CONSTANCIA- Pte_Ingles.pdf company in the country. Affairs of Paraguay. DEL-INVERSIONISTA-.pdf •1 (one) authenticated copy of the Interpol certifi- English : http://www.suace.gov.py/wp-content/up- Procedures to be carried out after ob- For this purpose, the investor, by signing a sworn cate from Paraguay loads/2019/09/REQUISITOS-EN-INGL%C3%89S-PARA-SOLIC- taining the permanent residence permit statement, undertakes to open its company before •1 (one) authenticated copy of the proof of entry ITAR-LA-CONSTANCIA-DEL-INVERSIONISTA.pdf •Endorsement of original documents approved by the SUACE, and if not, the Ministry of Industry and or permanence in the country. the Personnel Department of the National Police Commerce may notify the Directorate General of •1 (one) original of the sworn declaration of com- Requirements to apply for permanent Command. Migration, the breach of such sworn statement, in mitment to open a business before the SUACE, residence through the SUACE •Endorsement of original documents by the Per- order to proceed to the cancellation of it, taking accompanied by the signature certification sheet. •Economic solvency. sonnel Department of the Central National Police into account the provisions of Article 34 of Law The number of the security sheet must be stated •Identity card. Command. 978/96 on Migration. on the affidavit sheet. •Birth certificate. •Foreigner registration card to be applied for at The minimum amount required for foreign inves- •1 (one) original of the investment project profile, •Marriage certificate or divorce sentence. the Crime Investigation Department. tors is USD 70.000 (seventy thousand dollars) or signed by the investor. For more details please •Certificate of criminal record of the country of ori- •Paraguayan identity card for foreigners to be ap- its equivalent in guaranies and with a supporting click on the following links: gin. plied for at the Identification Department. document that guarantees the economic and fi- •Migratory card of entrance to the country or nancial capacity. Spanish:http://www.suace.gov.py/wp-content/up- stamps in the passport. Note: for more details go to the following links: loads/2018/10/PERFIL-y-DECLARACION-JURADA.18.10.18.pdf •Health Certificate. The investor’s certificate will be delivered exclu- English: http://www.suace.gov.py/wp-content/up- •INTERPOL Certificate. http://www.suace.gov.py/wp-content/uploads/2019/09/POS- sively to the applicant or to a person authorized loads/2019/06/PERFIL-DE-PROYECT-06.06.19-INGLES.pdf •Life and residence Certificate TERIOR-MIGRACIONES.pdf (Spanish). by the holder, together with a photocopy of the •Certificate of computer science or background http://www.suace.gov.py/wp-content/uploads/2019/09/AF- identity card of both. •Special power of attorney in force, granted by the for foreigner. TER-M.pdf (English). holder, to the attorneys-in-fact with special pow- •Affidavit of compliance with the law. Requirements to obtain Proof of Invest- er to represent and act on behalf of the holder, if •1 (one) Passport sized color photograph ment (Authenticated by Public Notary of necessary, and a copy of the identity card of the •Payment of the fee for the residence and the es- Paraguay) attorney-in-fact. tablishment certificate once the documents are •1 (one) original form of the foreign investor cer- •For companies that are already in operation, delivered. tificate application form, which will be filled out whose partner wishes to change their immigration mechanically and signed once printed. For more status, it will also be required to present a notarized details, please click on the following links: copy of the Bylaws of the company and the minutes of the meeting where the person concerned Spanish:http://www.suace.gov.py/wp-content/up- is appointed as a member of the board, who must loads/2020/02/MANUAL-EXPL.CONST_.ESP_20.02.2020.pdf submit a copy of the amended deed. Português:http://www.suace.gov.py/wp-content/up- •The minimum amount required for foreign inves- loads/2019/08/MANUAL-EXPL.CONST_PORT-15.06.2019.pdf tors will be USD 70.000 (seventy thousand US dollars) or its equivalent in guaranies, backed by English:http://www.suace.gov.py/wp-content/uploads/2019/08/ a supporting document that guarantees the eco- MANUAL-EXPL.CONST_INGLES_15.06.2019.pdf

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4.7. ENVIRONMENTAL LEGISLATION According to the diagnosis of solid waste manage- Noise Protection ment at the country level, carried out in 2017*, the Law 1.100/1997 on the Prevention of Noise Pollution average rate of generation of urban solid waste prohibits the emission of sound into the environ- It is administered by an independent regulatory The entry of harmful substances is also prohibited, (RSU in Spanish) in Paraguay is about 1.2 kg/per- ment above the established levels, the maximum body, the Ministry of the Environment and Sustain- as is the import of industrial waste or waste clas- son/day, varying between 0.5 and 1.5 kg/person/ volume of which is 45 decibels for public areas. able Development (MADES in Spanish), for envi- sified as hazardous, in accordance with Act N.° day. In the Central Department it is estimated that ronmental matters according to Law 1.561/00 and 716/96, which punishes offences against the envi- around 2000 t/day are currently generated in ur- In Paraguay, the specialized environmental pros- Law 6.123/18. ronment. ban populations. ecutor’s office is in charge of monitoring.

Waters and watersheds Solid waste management Solid waste management is a complex task that In work establishments, the operation of machin- The Civil Code, as well as the Sanitary Code, Law Law 3.956/09 aims to establish a regulatory regime has become a common problem, due to multiple ery, engines and tools is prohibited without the 836/80, among other legal bodies are under the for the responsible management of solid waste in factors, such as: necessary precautions to avoid the propagation water regime in Paraguay. Rivers and all waters the country, in order to reduce the generation of of noise, sounds and disturbing vibrations that ex- flowing through natural channels are for public use waste and avoid risks to human health and envi- •Population growth. ceed the decibels determined by Article 9 of the and use personal use is permitted. However, the ronmental quality. In Paraguay, the competent au- •Increasing amount of waste generated. law. use of waters for profit is exclusive to the govern- thority is the Ministry of Environment and Sustain- •Low quality of the urban cleaning service. ment. The government has a monopoly on the pro- able Development (MADES), which has the power •Institutional weakness, little health education and Machinery or motors that produce vibrations must vision of drinking water and sewerage. to regulate, examine and resolve the approval or citizen participation. be sufficiently far away from the dividing walls or rejection of the Integrated Solid Waste Manage- have adequate insulation to prevent them from be- Waste / dumping into water ment (GIRS in Spanish) project. (*) At the time of editing this material, no new RSU ing transmitted to neighbors. The government, through the various health insti- report has been published. tutions, is responsible for protecting the waters. Based on the provisions of this law, the Integrated Article 9 of Law 1.100/97 considers noises and dis- Paraguayan legislation, specifically the Health Solid Waste Management (GIRS in Spanish) in- Air turbing sounds to be those that exceed the aver- Code, prohibits the disposal of industrial waste in cludes the processes as the agents involved in the The purpose of the Air Quality Law 5.211/2014 is to age levels specified in the following table: surface or underground watercourses, unless the stages of generation, collection, storage, transport, protect the quality of the air and the atmosphere waste is treated so as to render it harmless to the transfer, treatment or processing and use, until fi- by preventing and controlling the emission of DAY (Occasional health of the population or to prevent its harmful nal disposal and any other operation that involves chemical and physical pollutants into the air, in or- NIGHT DAY AREA peak) effects. The regulatory authority may also autho- them. 20.00 to 07.00 7.00 to 12.00 der to reduce the deterioration of the environment 07.00 to 20.00 rize, regulate or restrict the disposal of non-biode- and the health of living beings, to improve their 14.00 to 19.00 gradable substances. Other legal bodies, such as In addition to establishing the functions of the life quality and to guarantee development sustain- Residential areas, Law 716/96 on Protected Areas and Articles 197, MADES, it institutes competences to the munici- ability. specific 200, 201, and 202 of the Penal Code, impose signif- palities in the protection of the environment and use, public spaces: 45 60 80 icant fines and even imprisonment for those who cooperation in environmental sanitation, especial- In Paraguay, the MADES is the body that drafts the recreation areas, parks, pollute watercourses by disposing of them in such ly regarding the service of urban and domiciliary policies, carries out coordination, supervision, ex- squares and public roads. watercourses or through storm drains. cleaning, including all the phases of integral solid ecution of environmental actions, plans, programs Mixed areas, waste management. And, in that sense, the munic- and projects within the framework of the National transition Soil ipalities regulate the integral management of the Development Plan (PND 2030 in Spanish) regard- zones, city center, Law 71/96 on environmental protection not only solid residues through a local management plan. ing the preservation, conservation, recompositing specific 55 70 85 programs, protects the land from misuse by means of fertil- and management of natural resources, and is re- service areas izers, pesticides and other harmful substances, but The final disposal of solid waste generated in its and public sponsible for what might happen. buildings. also from illegal waste disposal. This type of activ- jurisdiction is the responsibility of the municipality carries with it financial penalties and also im- ity, and for it not to be reused, therefore, it must Industrial Decree N.° 1269/2019, which regulates Law 60 75 90 area. prisonment, in accordance with the Criminal Code, have an appropriate area for the final disposal of 5.211/2014 “On Air Quality” is applicable to the Article 199 on the Illicit Treatment of Soils and Ar- waste, so municipalities must identify appropriate preservation, conservation, restoration and im- Measured in decibels “A” – Db (a) 20-40 ticle 200 on the Illicit Processing of Wastes. areas for the location of infrastructure to be used provement of the environment, as well as its recon- Source: MADES for GIRS. ciliation with comprehensive human development.

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The maximum permissible daily exposure to noise •Authenticated photocopy of the identity card of and annoying sounds caused within the premises the person responsible, and in the case of a legal by work, industrial, commercial or social activities entity, the deed of incorporation of the company. should be subject to the following limit: •Certificate of tax compliance or certificate of not Duration Per Hours And Days Decibels (DB) SFL being a taxpayer.

8 hours 90 •Authenticated photocopy of the title deed where 6 hours 92 the work or activity will be carried out, titles that 4 hours 95 support the right of the party responsible. 3 hours 97

2 hours 100 •Environmental impact report.

1 1/2 hours 110 •According to the nature of the activity, the EIAp 1 hours 115 and EDE should be supported by maps, plans, top- Source: MADES ographical charts, satellite images, results of efflu- ent analysis, among other studies required accord- Environmental impact ing to the type of project presented. Both Law 294/93 and Decrees N.° 453/13 and 954/13 of regulations declare the obligation to •Special power of attorney granted by the proj- carry out the Environmental Impact Assessment ect manager to the consultant or consulting firm (EIA in Spanish) of any type of undertaking that or other responsible person designated for com- may have an impact on the environment, and the pliance with the proposed management plan and 5 procedures, documents and formalities required its proper implementation; who must be duly reg- for this purpose. istered with the CTCA of the MADES, which prepares the EIAp or EDE, to carry out procedures IMPORT AND EXPORT Procedures to obtain an environmental license with the General Directorate for Environmental The procedure for the presentation of a prelimi- Quality Control of Natural Resources; it must spec- nary environmental impact study (EIA-preliminary) ify the precise data of the project. OF GOODS and the Study of the Disposal of Effluents, liquids, solid waste, gaseous emissions and/or noise (EDE •Copy of the consultant’s registration updated in in Spanish), for the works or activities that begin the CTCA of the MADES established in Art. 9 of the EIA process, are included in the provisions of Decree 453/13. Decree N.° 453/13 and its extension in Decree N.° 954/13. •Resolution N.° 210 of 2018 orders replacing printed application forms with the management on a Any individual or legal entity responsible for the 100% digital tool called SIAM (Environmental Infor- activities or projects must submit the following mation System). documents to the General Directorate for Environ- mental Quality Control and Natural Resources of For more information, please visit: the MADES attached to the preliminary Environ- http://www.mades.gov.py/areas-tematicas/control-de-los-re- mental Impact Study (EIAp in Spanish) or Study cursos-naturales/normativa-y-requisitos-para-la-presentacion- on the Disposal of Effluents, liquids, solid waste, de-proyectos/

gaseous emissions and/or noise (EDE in Spanish), http://www.mades.gov.py/areas-tematicas/control-de-los-rein accordance with Article 3 of Law 294/1993: cursos-naturales/evaluacion-de-impacto/declaracion-de-impacto-ambiental/ •Affidavit on the veracity of the information provided.

130 Paraguay Investment Guide Import And Export Of Goods Import And Export Of Goods

5.1. REGULATORY FRAMEWORK FOR INTER- 5.2. CUSTOMS

NATIONAL TRADE The National Customs Directorate (DNA) is the in- The World Trade Organization (WTO) is the main Other important international regulatory agree- stitution in charge of applying customs legislation, international organization dealing with global ments are: collecting import and export taxes, controlling the rules governing trade between countries. Its main traffic of goods through the country’s borders and function is to ensure that trade is conducted as •The General Agreement on Tariffs and Trade airports, exercising its powers in the primary zone smoothly, predictably and freely as possible. (GATT) (goods). and carrying out smuggling control tasks in the •The General Agreement on Trade in Services secondary zone. At their core are the so-called “WTO agreements”, (GATS) negotiated and signed by most trading countries. •The Trade-Related Aspects of Intellectual Prop- The National Customs Directorate is part of the These documents set out the fundamental legal erty Rights (TRIPS) Inter-Agency Unit for the Prevention, Combating rules of international trade. They are essentially •Free trade agreements as a member of Mercosur. and Suppression of Smuggling (UIC), together agreements that compel governments to keep with the National Police, the Ministries of Indus- their trade policies within agreed limits. They are Other institutions dealing with international trade try and Trade, the Interior, National Defense, the negotiated and signed by Governments, but their are: Navy and the National Anti-Narcotics Secretariat purpose is to help producers of goods and servic- (SENAD in Spanish), within the framework of the es, exporters and importers to develop their activi- • The Organization for Economic Cooperation and plan to combat the illegal entry of goods, promot- ties, enabling Governments to achieve social and Development (OECD), where governments work in ed by the National Government. environmental objectives. a coordinated manner to respond to the economic, social and environmental challenges of interde- These agreements include goods, services and in- pendence and globalization. tellectual property. They set out the principles of • The United Nations Conference on Trade and De- market liberalization, as well as the permitted ex- velopment (UNCTAD). 5.3. CUSTOMS BROKER ceptions. They include commitments made by individual countries, such as reducing tariffs and other trade barriers, as well as opening and maintaining General concept The customs broker is the person who acts as a •To have no outstanding debts due to the tax au- open services markets. They establish procedures trade and customs auxiliary agent, authorized by thorities. for the settlement of disputes. These agreements the National Customs Directorate, who, acting on •To have passed the sufficiency exams before the are not static; they are occasionally subject to new behalf of the importer or exporter, carries out for- National Customs Directorate, with conditions and negotiations, and new agreements may be added malities and procedures relating to customs op- requirements established in the regulatory norms. to the package. erations. •To prove good behaviour. The primary purpose of the system is to help trade The National Customs Directorate will grant regis- flow as freely as possible, without undesirable side tration as a customs broker once the requirements effects, to ensure economic development and wel- established by the Customs Code and the regula- fare. This involves in part the removal of barriers. It tions have been met. also requires ensuring that individuals, businesses and governments are aware of the rules governing trade in different parts of the world so that they Requirements for registration as a cus- can be confident that policies will not be abruptly toms broker •To be Paraguayan or foreigner with permanent changed. In other words, the rules must be “trans- residence and proven roots and be legally capable. parent” and predictable. •To possess a completed high school diploma or its equivalent, completed or recognized in the Re- public.

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5.4. EXPORTS 5.5. IMPORTS

Single Window for Exports (VUE in Sp.) Single Window for Import (VUI in Sp.) It is an integral management system based on pro- •Deadline to issue the document: 24 hours The National Customs Directorate has a Single i.Bank reference from a bank in Paraguay. cedure reengineering, legal adaptation and tech- Importer’s Window (VUI), through which all indi- j.To have infrastructure in accordance with the ac- nological structure, which allows people and in- •Document issued: certificate of registration with vidual or legal persons wishing to carry out import tivity. stitutions involved in exports to act interactively, the National Exporters’ Register. operations operate. Through this single window k.To have a special address in the urban radius of making available the unique registry of exporters the institutions involved in the import process can the Customs administration where it operates, for in a brief process. Maquila Regime interact in a coordinated manner with the DNA, in the corresponding legal purposes. The Maquila Regime includes the performance, un- the management of permits, authorizations and The main services are: der contract with a foreign head company, of in- certifications, in real time, through an electronic •Deadline for issuing the document: 7 days after dustrial or service processes, in whole or in part, on management system. signing at the National Customs Directorate. •Optimized electronic procedures. tangible or intangible goods, temporarily admitted •Electronic collection. and whose product is intended for export. This system reduces processing time and costs, Customs procedures on import •Provide information. improves controls and makes the management of General aspects The products resulting from the maquila service processes involving pre- and post-import clear- The customs treatment is applicable to goods in Users/beneficiaries linked to export op- are sent back to the head company (contracting ance transparent. international trade, in accordance with the provi- erations, registrations and other services party resident abroad) or any part of the world on sions of the Customs Code and regulations. of the Ministry of Industry and Commerce behalf of and in the order of the head company. To access the window, it is necessary to carry out (MIC) are: the Single Importer Registration (RUI). Definitive import The inflows and outflows of all assets under the The customs regulations of final imports confers •Exporters, customs brokers. maquila program are managed by a system of cur- Single Importer Registration (RIU in Sp.) on foreign goods the character of free circulation, •Certification entities, public institutions, unions, rent accounts that handle temporary inflows, pro- Persons and companies involved in customs ac- through the fulfillment of the required obligations private institutions (chambers, transporters, etc.). cessing and outflows, and where the maquiladoras tivities must register with the Registration Depart- and formalities. •Ministry of Industry and Commerce , citizens. are structured as production cost centers. ment of the National Customs Directorate and must update their data before April 30 each year. The detailed declaration must be presented by the Single Exporter Registration (RUE in Sp.) importer or whoever has the legal availability of Enabling legal and physical persons to engage in The importer’s signature must be registered with the goods, within the time limits established in the export activities. the Registration Department of the National Cus- Customs Code. toms Directorate in the books authorized for that Required documents: purpose. Temporary admission regime a.Bylaws or articles of association. This is a customs procedure which allows to re- b.Registration of the trader - individual. The registration of signatures of importers made ceive in a customs territory, with suspension of im- c.RUC (in Spanish) Single Taxpayer Registry. through the SOFIA computer system shall be valid port duties and taxes, certain goods for a specific d.Identity card of the signatory/s. for five years from the date of registration, on ex- purpose and intended to be re-exported within a e.Current balance. piry of which it shall be renewed. specified period; either without having undergone f.Trade patent. transformation or having undergone processing, g.Sketch/location of the premises. Required documents: manufacture or repair. The procedure shall end h.Legal authorization of the agent. a.Deed of incorporation or articles of association. with the re-export of the goods within the pre- b.Registration of the merchant - natural person. scribed period or with their admission to another c.RUC (in Spanish) Single Taxpayer Registry. customs procedure under the conditions set down d.Identity card. in the Customs Code and the regulations. e.Current balance. f.Commercial patent. g.Minutes of the last meeting. h.Legal authorization of the proxy.

134 Paraguay Investment Guide Paraguay Investment Guide 135 Import And Export Of Goods Import And Export Of Goods

What are the time periods for the goods During the period while the raw goods remain in • Depending on the agreed Incoterm, hire the main Fees and taxes to remain under the temporary admis- the country, the industry must sufficiently guaran- transport, international insurance, port services, Concept sion regime? tee the sum of the suspended taxes. transfers, etc. Customs duties are defined as the amount of taxes It may not exceed 12 months, renewable once for • Hiring a customs broker: the broker will inform imposed on the entry and exit of goods from Cus- the same period. For goods that make up capital What do you need to be a beneficiary of the buyer of the amount to be deposited with the toms territory and include taxes, duties, charges, goods the period shall be three years, extendable the regime? National State, through the National Customs Di- penalties and other charges of a fiscal, monetary once and for the same period. The request for ex- Paraguayan individuals or legal entities registered rectorate, as payment of import or nationalization exchange or other nature. tension must be submitted to the customs author- as importers with the National Customs Director- duties. Next, the broker prepares the correspond- ity 10 working days before the expiry date. ate and with an industrial register issued by the ing documentation and presents it to the customs The elements for the determination of the import Ministry of Industry and Trade may benefit from offices of the destination port, so that the latter duty are: Temporary admission for inward pro- this regime. authorizes the entry of the goods into the territo- cessing ry. The minimum documentation required to make • The customs tariff. The customs regime of temporary admission for What is the procedure and deadline for the customs clearance is: • The origin or source of the goods. inward processing is a tool widely used by Para- approval of the regime? • The customs value of the goods. guayan industries for the export of goods pro- It is necessary to complete a form and present the a.Commercial Invoice: is the only document that duced by them. production program where the following are de- will be taken as the basis for determining the value The customs import tax is determined by applying tailed: tariff, quantity, nature, quality and customs of the transaction. One original and three copies the rate fixed in the customs tariff to the customs This regime allows the entry into the country value of the goods to be imported and the final are required. value of the goods. of: raw materials; parts and pieces that make up product to be exported. The amount of raw mate- b.Shipping document: may be bill of lading, for the final product; final products to be packaged; rial used for each product that will be manufac- sea transport; airway bill, for air transport and con- Pre-import licences packaging materials for products produced in the tured must be indicated very precisely, as well as signment letter, for land transport. Three originals Through the Directorate General of Domestic country; or even animals for slaughter. the percentage of waste and scrap that exists in and three copies are required. Trade, an agency of the Ministry of Industry and the production process. c.Packing list: details the quantity of goods con- Commerce, the registration and prior import li- The Customs Code considers the following op- tained in each package, net and gross weight and censes are for: erations as inward processing: The deadline for approval is 15 to 20 days from the their respective measurements. submission of the application to the National Cus- d.Certificate of origin: it is not always mandatory. •Registration of Sugar Importers and Preliminary •The transformation. toms Directorate. Licensing of Sugar (Resolution N.° 251/02 and •The processing, including assembly, putting to- Note: at the time the customs clearance is pre- N.° 631/08) gether and adaptation of goods. As for the duration of the program, it may not ex- sented, in addition to the above-mentioned docu- •Registry of cement importers (Decree N.° •Repair, restoration and finishing. ceed one year, and may be renewed for the same ments (Art. 57 of the Customs Code), there must 18.352/02 and Resolution N.° 962/06). •The use of imported goods for the conditioning, period for duly justified reasons. be a consular invoice, authorization from the Cen- •Registration of Meat Importers and Prior Licens- packaging or packing of the resulting product, if tral Bank of Paraguay and, if applicable, a health ing of Meat Imports (Decree N.° 8.153/06, Resolu- they are exported with the latter. Procedures for the import of goods certificate from the Ministry of Agriculture and tion N.° 538/06 and N.° 607/06). •Issuance of purchase order (issued by the foreign Livestock, the Municipality, the Ministry of Public •Registration of Importers of Wheat Flour and Pre- Tax considerations of the regime supplier) Health, the Military Industries, the Ministry of In- liminary License for Import of Wheat Flour (Reso- Raw materials enter Paraguay with total or partial •Hiring of the freight. dustry and Commerce and other special docu- lution N.° 807/07). suspension of payment of: •Customs registration: in order to carry out the for- ments, depending on the nature of the goods or •Registration of importers and dryers of yerba •Import tariffs. eign trade operation, it is essential to apply for reg- the operation. mate (Decree N.° 17.595/02). •Value Added Tax. istration as an importer with the National Customs •Prior import license for canchada yerba mate Directorate. •Customs agent arranges collection of cargo on (Resolution N.° 201/06). •Make invoice payment to the vendor according to arrival at destination. •Prior import license for personal hygiene prod- commercial agreement. •The goods arrive at the buyer’s warehouse. ucts, cosmetics, self-care and household products •Buyer pays the customs agent. of risk I and II (Decree N.° 3214/09).

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•Registration of importers of clothing sector prod- •Registration of importers of steel products and ucts and prior license to import products from the prior import license of steel products (Resolution 5.6. TARIFF PREFERENCES, TRADE AGREE- clothing sector (Decree N.° 1.421/09 and Resolu- N.° 892/11). MENTS AND RULES OF ORIGIN tion N.° 1.037/14) •Registration of the importer of wire products, •Registry of importers of beef and offal products wire rods, iron and/or steel bars, towers and der- from the poultry sector and prior import license ricks and prior import license of wire products, Definitions of beef and offal products from the poultry sector wire rods, iron and/or steel bars, towers and der- The term trade agreement refers to a broad treaty The concept of tariff preference in the field of for- (Decree N.° 1.443/09 and Resolution N.° 74/09). ricks (Resolution N.° 1.043/14). made between two or more partners to free up eign trade is related to special advantages granted •Registration of manufacturers and importers of •Registration of importers of products from the tariffs, fees and taxes. It includes free trade areas, by an importing country to certain products from polyvinyl chloride (PVC) insulated wires for nomi- footwear sector and prior import license for customs unions and economic integration agree- countries with which it has trade agreements. nal voltages up to and including 450/750 V (Reso- products from the footwear sector (Resolution ments pending services. These preferences take the form of a reduction or lution N.° 553/09 and Resolution N.° 181/10). N.° 1.029/14). elimination of tariffs compared with those applied •Registration of manufacturers and importers of •Registration for the qualification of companies to other countries. primary batteries, common carbon-zinc and alka- that manufacture containers for portable fire ex- line manganese batteries, retention act with prohi- tinguishers, assemblers, verification, maintenance bition of marketing of the products, release act and recharging services for portable fire extin- of commercialization of the products (Decree guishers and verification of containers (Resolution List of Paraguay’s trade agreements N.° 4.926/10 and Resolution N.° 970/10). N.° 916/10). Current trade agreements

Multilateral Agreement

Agreement / Signatory Party(ies) Subscription date

1 January 1995 WTO Members (Contracting Party to GATT 1947 since 6 January 1994)

Customs Unions Subscription date

Mercosur member states March 26 1991

Free Trade Agreements Subscription date Effective as of

Mercosur -Colombia AAP.CE N.° 72 July 21 2017

Mercosur - Egypt August 2 2010 September 1st 2017

Mercosur - Israel December 18 2007

Note RP/ALADI - Mercosur/4/ Mercosur - Peru (ACE 58) November 30 2005 N° 012/06 of 15/02/06

Mercosur - Bolivia (ACE 36) December 17 1996 February 28 1997

Mercosur - Chile (ACE 35) June 25 1996 October 1st 1996

Source: http://www.sice.oas.org/ctyindex/PRY/PRYagreements_s.asp#Inforce

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Required Documentation CDO Issuing Agencies Multilateral Agreement An exporting company needs to be able to sup- Certificates of origin are issued by entities au- port the local processing or transformation of thorized by the Ministry of Industry and Trade, in an exported product through the existence of accordance with the regulations in force on the Framework agreements Subscription date Effective crops, workshops, factories, and/or through im- origin regime, through the Directorate of Foreign

Mercosur - Mexico (ECA N.° 54) port invoices or local purchase of inputs and raw Trade Operations and the Regional Offices of the July 5 2002 January 5 2006 Framework Agreement materials. This documentation does not need to Ministry of Industry and Trade (ORMIC in Spanish) be presented for the processing of the GDA, but of Alto Paraná, Itapúa, Concepción and Pedro Juan Preferential trade agreements Subscription date Effective could be required later by the certification bodies, Caballero. when there are doubts about the veracity of the MIC has entrusted the processing of the CDO to Mercosur - Southern African Customs December 15 2008 April 1st 2016 exporter’s declaration. Therefore, all documenta- private sector business organizations, safeguard- Union (SACU) tion related to the processing of an exported good ing their legal powers of control and authorization. Paraguay - Colombia April 19 2005 should be kept at least until the shipment has been These organizations are: Colombia - Ecuador - Venezuela Paraguay - Ecuador April 19 2005 October 18 2004 Mercosur (AAP.CE N.° 59) Paraguay - Venezuela April 19 2005 cleared in the country of destination. • National Chamber of Trade and Services of Para- For approval of the CDO by the issuing agency, guay - CNCSP (all products except wood). Mercosur - India January 25 2004 June 1st 2009 the exporter or shipper must submit: • Industrial Union of Paraguay - UIP (all products except wood). Mercosur - Mexico (ECA N.° 55) September 27 2002 Agreement on the automotive sector •Original copy of the certificate of origin plus the • Paraguayan Chamber of Cereals and Oilseeds relevant copies stamped and signed by the export- Exporters - CAPECO (cereals and oilseeds). México (AAP.R 38) May 31st 1993 July 1st 1994 er and registered at the single window. • Paraguayan Cotton Chamber - CADELPA (cot- •Original copy of the commercial invoice plus the ton, fabrics and garments). Argentina (ACE N.° 13) November 6 1992 November 6 1992 relevant copies, signed and stamped by the ex- • Paraguayan Lumber Federation - FEPAMA (wood porter. products). Source: http://www.sice.oas.org/ctyindex/PRY/PRYagreements_s.asp#Inforce •Original copy of the exporter’s declaration (affidavit), plus two copies signed and stamped by the The procedures are carried out through the Sole Certificate of origin exporter. Window Export System (VUE). Concept and generalities The Certificate of Origin (CDO) is the document of preferences, destination countries may require Clothing exporters must also provide the title of See more at: www.vue.org.py. that aims to prove and guarantee the origin of ex- a CDO for reasons of trade policy. As there are trademarks and the commercial invoice endorsed ported goods, so that they can benefit from the different preference systems, there are different by the Paraguayan Industrial Association of Cloth- preferences or tariff reductions granted by coun- types of certificate of origin (e.g. Mercosur, ALADI, ing Manufacturers. Exporters of cigarettes must tries under international trade treaties or agree- GSP, etc.) that have specific forms. also provide brand name. Exporters of aluminum, ments or preferential regimes. copper and bronze require electronic authoriza- The Generalized System of Preferences (GSP) is a tion from the Ministry of Industry and Trade (MIC), This certificate facilitates the identification of the certificate of origin with tariff preferences granted while exporters of Petit Grain need to apply for product to be exported with the place of origin by countries with developed economies and ben- prior permission from MIC. and is presented in different formats according to efits countries with less developed or developing the respective agreement and will enable the im- economies. porter to nationalize the goods benefiting from the respective preferences. Certificates of origin are issued and endorsed for the export of products, depending on the com- The origin requirements vary for different regions mercial tariffs in the country of destination as cor- of export destination, the most common mecha- rected by Paraguay and within the framework of nisms being the minimum domestic component, the GSP regime of the World Trade Organization and the change of tariff heading for a product (WTO). processed in Paraguay. Even without the existence

140 Paraguay Investment Guide Paraguay Investment Guide 141 Import And Export Of Goods

Services offered by the issuing agencies •There is also the possibility that the nomencla- In addition to approving CDOs, the issuing agen- ture of the product to be produced is within a list cies provide advisory services according to their where the Member States have established that respective capabilities. It is advisable to use these they must meet specific requirements for the is- services to ensure the correct application of the suance of the certificate of origin. These require- most recent trade regimes and to avoid subse- ments may consist of: quent obstacles or claims during the departure or arrival of the shipment. a.Increasing the percentage of regional content. b.The overall requirement for a percentage of re- Mercosur rules of origin gional content plus a leap in tariff. The rules of origin are the set of conditions estab- It should be emphasized that in case the pro- lished by the States parties of the Southern Com- duction processes are simple tasks of assembly, mon Market (Mercosur in Spanish) to determine mounting, divisions, cuts, fractions, it will not be the national origin of a product. feasible to issue the certificate of origin.

If products manufactured in a certain country have a Mercosur certificate of origin, they will enter the country of destination with an exemption or reduction of import duties.

The main criteria for manufactured products to have the certificate of origin are: 6 •The existence of a change in the tariff heading, i.e. that the process gives the finished product an indi- viduality different from that of its components by FINANCIAL SERVICES changing the first four digits of the nomenclature and that this change occurs through a process of industrialization (not simple assembly, mounting or splitting). If this condition is not met, the options mentioned in the following points are enabled. •The proportion that “extra-zone” raw goods have over the value of the finished product. •In the case of Paraguay (unlike the other Merco- sur countries) it is possible to use raw goods from extra-zone countries representing up to 60% of the FOB value of the final product. In the other Merco- sur countries only up to 40 % can be used. This condition will be in force until 2023, after which the special arrangements within Mercosur will be reviewed.

142 Paraguay Investment Guide Financial Services Financial Services

An institution with the characteristics of the AFD The valuation of the completed work shall cover at 6.1. FINANCIAL SERVICES PUBLIC BANKING has the advantage that it can centralize the admin- least 125% of the total amount disbursed to the IFI. istration of funds from loans from multilateral or- It is the responsibility of the IFIs to have all apprais- In developing countries such as Paraguay, State in- AFD is the only public development bank operating ganizations, thus facilitating the management and als in accordance with the progress of the work, tervention in financial intermediation is important in Paraguay. Its purpose is to grant loans to com- control of part of the external public debt, in addi- which must be included in the final borrower’s file. to complement private banking and reach out to plement the funding structure of first-tier financial tion to reducing administrative and financial costs This credit is only available from banks accredited sectors that the latter does not reach, or to enable intermediaries, in order to enable the execution of through scale economies. by the AFD. access to medium- and long-term credit. short-, medium- and long-term programs through intermediary financial institutions (banks, coopera- AFD Products: •PROPYMES – Financing for small and medium With these goals in mind, the Government of Para- tives and finance companies operating with AFD). •PRODESI – Credits for real estate develop- enterprises guay promoted the reform of public banking, add- ers It is intended for interested parties that qualify as ing to the already existing Livestock Fund (FG in It is oriented to the financing of projects that seek Aimed at individuals or legal entities resident in creditors, by an Intermediary Financial Institution Spanish) the Development Finance Agency (AFD economic and social development, and has funds the national territory, with at least 3 (three) years (IFI) authorized to operate with AFD, belonging to in Spanish) and the Agricultural Credit for Promo- from State contributions, donations, capitaliza- of experience in the field of real estate develop- the sector of small and medium enterprises locat- tion (CAH in Spanish). tion of reserves and profits, and funds from vari- ment, with at least 2 (two) undertakings already ed in the country of the following categories: ous public financial institutions of the second tier developed and marketed locally or internationally, Livestock Fund (FG in Sp.) dissolved since the creation of the AFD, such as: in addition to having recognized moral and eco- a.Manufacturer: crafts, clothing, others. It is a state agency that finances livestock activities. the Farmer Development Fund, the Industrial De- nomic solvency. b.Agricultural: agriculture, livestock, fish, poultry, The credits it offers are supported by a free tech- velopment Fund, the National Housing Bank and forestry and related. nical assistance component. This is given through the Technical Unit of Project Execution of the BCP. Intended for feasible real estate development proj- c.Industrial: graphics, stationery, leather, shoes, visits to the producer’s field by a technician spe- ects, for the sale of housing units, which were ana- textiles and derivatives, metals, food, others. cialized in veterinary or agricultural engineering, AFD’s funds allocated to Financial Intermediary lyzed and approved by the Intermediary Financial d.Commercial in general: supermarkets, hardware who is responsible for guiding the producer to Institutions (IFIs) may only be used for: Institutions (IFIs). stores, convenience stores, others. achieve maximum efficiency in his production with e.Services: restaurants, mechanical workshops, the credit obtained. It is governed by Law 3.359 of •Rural development projects. A global amount will be approved to finance the tourism, others. November 7, 2007. It was created by Decree-Law •Credits for micro, small and medium enterprises project, and an advance of up to 20% of the total 20 of February 6, 1970. (Mipymes). amount to be financed may be made, to be dis- This credit can be used to finance: See more in http://www.fondogan.gov.py •Business creation and development, with empha- bursed with the approval of the credit. For this ad- a.Purchase of equipment and machinery. sis on small and medium enterprises. vance the formalization of the guarantee may be b.Acquisition of productive properties. Development Finance Agency •Export of goods and services, and imports of me- in process, but the appraised value of the property c.Expansion and improvement of infrastructure. (AFD in Sp.) dium- and long-term capital goods, especially for that will remain as a bond must cover at least 125 d.Incorporation of technology and processes. By Law 2.640 of July 27, 2005, the entity called small and medium-sized enterprises. % of the value of the advance made. e.Purchase of utility vehicles for the business. Development Finance Agency (AFD in Spanish) •Tourism development projects. was created as a second-tier bank, which does not •Investment projects in basic infrastructure, car- The following partial disbursements will be made It is possible to finance interested parties with an- provide loans directly to borrowers, but does so ried out by the private sector or awarded to it for according to the progress of the work, for which nual revenues of up to G. 15 billion, who can access indirectly through Intermediary Financial Institu- execution. the guarantee must be duly constituted, formal- 100% financing of the investment. tions (IFIs), made up of first-tier entities that are •Development of housing and urban planning pro- ized and perfected. components of the national financial system, such grams and other actions aimed at reducing the Term: up to 12 years, including the grace period of as public and private banks, cooperatives, finance housing deficit. The appraisal value of the property given as a guar- up to 2 years. companies and other entities created by law. The antee at the time of each disbursement must cover Development Finance Agency establishes financ- It is specifically prohibited for IFIs to grant, with at least 125 % of the total disbursements made to Credit available from banks and finance companies ing lines for specific sectors.(See: http://afd.gov.py) AFD resources, loans to the State, municipalities or the IFI, for which it will be necessary to make ap- accredited by the AFD. public sector entities. praisals of the property, so that the IFI can verify this coverage ratio.

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•PROREGADIO - Financing for livestock and for- The interested party can finance up to 100% of the •Photocopy of identity card of those authorized to estry investment projects This credit can be used to finance: investment, when the financing of productive real carry out procedures and consultations. This financing instrument is intended for interested Acquisition of machinery related to the following: estate is not included. The financing of 80 % of the •In the case of: pawn shops, real estate agen- parties that qualify as creditors by an Intermedi- a.Road works and communications, port routes, investment can be accessed when the financing of cies, non-profit organizations, associations, foun- ary Financial Institution (IFI) authorized to operate airports, bridges, viaducts, among others. productive real estate is included. dations, NGOs, remittance companies, natural or with the AFD, who are residents in the country and b.Mining and energy projects, electric transmission legal persons normally engaged in the trade of engaged in agricultural activities. lines, transformer stations, hydroelectric dams, Term: up to 12 years, including the grace period of jewelry, precious stones and metals, art objects quarries, among others. up to 2 years. and antiques, and persons involved in philatelic or This credit can be used to finance: c.Hydraulic and sanitation works, storm and sew- See more in http://www.afd.gov.py numismatic investment, natural or legal persons a.Implementation of drip and micro-sprinkler ir- age drains, treatment plants, dredging, aqueducts, commercially engaged in the import, purchase, rigation systems (irrigation systems for fruit or- supply, among others. Note. The AFD is a second-tier public bank that sale and consignment of motor vehicles for sale, chards, vineyards, vegetables, field crops, orga- d.Real estate development projects, buildings, ed- offers long-term loans at competitive rates that are they must register before SEPRELAD-BCP- Gate nized agriculture, among others) ucation buildings, hotels, shopping centers, among channeled through banks, finance companies and Number 4 -Phone: +(595-21) 600-435. b.Implementation of sprinkler or extended irriga- others. cooperatives. The entire credit process is carried tion systems (irrigation systems for sugar cane, out through the Intermediary Financial Institutions Opening Requirements - Legal Entities carrot, sorghum, pasture, horticulture plantations, Up to 100% of the value of the investment can (IFIs) that operate with AFD. After the credit is •Application to open an account. among others). be financed. The scope of financing is up to approved by the IFI, it is sent to the AFD for review •Registration of signatures 3 (three copies). c. Implementation of flood irrigation system (irri- USD 2.000.000 or its equivalent in guaranies per and no objection, and then disbursed to the IFI. •Attached Form 2, identification of the client - in- gation systems for rice fields). applicant. dividual. d.Implementation of portable pivot irrigation sys- National Development Bank (BNF in Sp.) •Authenticated photocopy of valid civil identity tem such as towable pivot, central pivot and lin- The terms are appropriate to each project, up to 10 It is a financial entity of the Paraguayan state cre- card of the signatory. ear advance (irrigation systems for fruit orchards, years (may include a grace period of up to 1 year). ated by Decree Law N.° 281 of March 14, 1961. It •Authenticated photocopy of the RUC. vineyards, vegetables, field crops, organized agri- The bonds are set by the Intermediary Financial operates as an investment and promotion bank for •Authenticated photocopy of the commercial pat- culture, among others). Institution and in accordance with the regulations the intensive development of the economy, to pro- ent. e.Other irrigation systems. of the Central Bank of Paraguay or the National mote and finance general programs and specific •Authenticated photocopy of the constitution of Institute of Cooperatives. projects for agriculture, livestock, forestry, industry the company and the modifications, if any, duly The interested party can access 100% financing and trade in materials and products originating in registered in the Public Registry of Commerce and of the investment. The scope of financing is up to •PROCRECER - Financing for investment projects the country. It operates with its own funds and with Individuals and Associates, as the case may be. USD 1.500.000 or its equivalent in guaranies per Intended for interested parties that qualify as cred- funds obtained from multilateral organizations. •Authenticated photocopy of the Bylaws. applicant. it subjects, by an Intermediary Financial Institution •Authenticated photocopy of the minutes of the (IFI): banks, finance companies or cooperatives Requirements to open a checking account in last meeting and distribution of positions of the le- It can be granted for a term of up to 12 years in- authorized to operate with the AFD. Guarani gal representatives. cluding a 2-year grace period. Opening Requirements - Individuals •Authenticated photocopy of the last 3 (three) This credit can be used to finance: •Application to open an account. payments of taxes (VAT, INCOME, IMAGRO). •PROINFRA - Financing for the acquisition of ma- a.Rural, industrial, commercial and service devel- •Signature registration - 3 (three copies). •Three bank references, personal or commercial. chinery to be used in infrastructure projects opment projects •Attached Form 2, identification of the client - in- •Photocopy of the identity card of those autho- Intended for individuals or compamies qualified by b.Projects to produce goods and services for ex- dividual. rized to manage the account. an IFI as creditors, residents in the country with a port. •Authenticated photocopy of the current civil •For the cases of: pawn shops, real estate agen- minimum of 3 years of experience in the sector, c.Investment projects under the Maquila Regime. identity card and that of the spouse. cies, non-profit organizations, associations, foun- which require investment in machinery for infra- Infrastructure projects. •Certificate of life and residence or last copy of util- dations, NGOs, remittance companies, natural or structure projects. d.Real estate development projects. ity bill payment issued to the name of the holder. legal persons who regularly trade in jewelry, pre- e.Capital goods import projects. •Proof of income: certified photocopy of the last 3 cious stones and metals, art objects and antiques, f.Tourism development projects. (three) tax payments (VAT, INCOME, IMAGRO) or and persons who invest in philatelic or numismatic salary payment. investments, natural or legal persons who com- •Commercial patent (commercial activities) if per- mercially import, buy, sell and consign motor ve- tinent. hicles for sale, they must present the registration •Three banking, personal or commercial referenc- record in SEPRELAD-BCP-Portón N.° 4 es. Phone: +(595-21) 600-435.

146 Paraguay Investment Guide Paraguay Investment Guide 147 Financial Services Financial Services

Funding requirements for: The purpose of the credit can be for investment or •Financial product items prioritized by MAG operating capital. Exclusive credit for financing the national program Individual Person of priority items for agriculture, of the Ministry of Initial deposit G. 2.000.000 Amount: up to G. 50.000.000 Agriculture and Livestock (MAG). For investments Minimum monthly average G. 2.000.000 related to productive activity, operating and mar- Commission for lower average balance G. 110.000 Financing limit: Based on the applicant’s ability keting expenses. to pay and the guarantees provided, if any, up to Legal Entity a maximum of 80% of the resources required for The interested party must have an investment plan Initial deposit G. 3.000.000 each project and a ‘beneficiary contribution’ com- and/or business plan certified by the MAG techni- Minimum monthly average G. 3.000.000 ponent of at least 20% of the total cost of each cian assisting the producer, which determines the Commission for lower average balance G. 110.000 project. The financing of the operating capital will level of technology and estimated cost of the proj- See more in: www.bnf.gov.py be up to 40% of the credit. ect and not be in default in the financial and/or commercial system. Agricultural Habilitation Credit Capital operating terms: up to 1 year. It is a self-governing agency with legal status, as- Investment capital terms: up to 7 years. Terms: up to 5 years. According to the income pro- sets, accounting and its own administration, which jection of the items and technology used, dead- is currently governed by Law 5.361/14 “On the Re- •Financial product for microentrepreneurs lines will be foreseen for the commercialization. form of the Bylaws”, the regulations issued by the Credit for operating capital or investment capital. Current interest rate: 10% per year on balance. Executive Branch and the resolutions issued by its board of directors. The purpose of the CAH is to This credit can be used to finance: Operational and/or marketing costs: 14% per year, finance the activities of small rural producers in the estimated according to the time of use of each agricultural and agro-industrial sector. a.Operating capital: inputs and labor required for quota. the venture to be carried out. CAH products: b.Investment capital: purchase of fixed assets re- Default interest rate: 4.5% per year on the balance •EPARE lated to the financed activity. for investments and operating and/or marketing Instrument for financing productive projects and/ c.Amount for investment and operating capital: Up expenses. or equipment and acquiring technological and/or to the equivalent of 25 minimum wages in force for See more at: www.cah.gov.py. infrastructure innovations or even the purchase of various unspecified activities. animals. The operating capital requested must be associated with the investments to be enhanced Terms. Operating capital: up to 1 year. Investment by the loan. capital: up to 5 years.

Current interest rate: 18% per year on balance.

Default interest rate: Additional 4,5% per year on balance.

148 Paraguay Investment Guide Paraguay Investment Guide 149 Financial Services

6.2. FINANCIAL SERVICES, PRIVATE BANKING AND TRUST COMPANIES

Legal regime for financial institutions Financial Institutions are subject to the provisions of the General Law 861/96 on Banks, Finance Compa- nies and Other Credit Institutions. The Super-intendency of Banks is responsible for their financial control. Private financial entities must be incorporated as S.A., except for branches and agencies of foreign banks. In order to start their operations, banks, finance companies and other credit institutions need the prior and express authorization of the Central Bank of Paraguay, which is granted based on an opinion by the Super-intendency of Banks. The law provides for minimum amounts of capital required for the incorporation of each of the types of financial institutions.

Operating entities:

• BANKS • Financial Institutions A. Direct foreign branches El Comercio Financiera S.A.E.C.A. Banco Do Brasil S.A. Financiera Paraguayo - Japonesa S.A.E.C.A. Citibank N.A. SUC Paraguay. Solar S.A. de Ahorro y Préstamo para la Vivi- Banco de la Nación Argentina. enda. Financiera Exportadora Paraguaya S.A. (FIN- 7 B. Majority foreign ownership EXPAR). Banco Itaú Paraguay S.A. Financiera CEFISA S.A.E.C.A. Banco GNB Paraguay S.A Finlatina S.A. de Finanzas. EDUCATION AND HEALTH BBVA - Banco Bilbao Viscaya Argentaria Para- Tú Financiera S.A. guay S.A. FIC S.A. de Finanzas. Sudameris Bank S.A.E.C.A. IN PARAGUAY • Trust Companies C. Majority local ownership The business and trust operations carried out Banco Regional S.A.E.C.A. by banks and financial companies are subject Banco Basa S.A to the general regulations issued by the Central Banco Continental S.A.E.C.A. Bank of Paraguay and the Super-intendency of Visión Banco S.A.E.C.A. Banks. The funds managed in this capacity are Banco Rio S.A.E.C.A. not included in the deposit protection system Banco Familiar S.A.E.C.A. provided for in Article 1 of Law 2334/03. Banco Atlas S.A. Banco para la Comercialización y Producción Banco Continental S.A.E.C.A. S.A. - Bancop S.A. Banco Atlas S.A. Grupo Internacional De Finanzas S.A.E.C.A. – Banco Familiar S.A.E.C.A. Interfisa Banco. Visión Banco S.A.E.C.A. Finlatina S.A. de Finanzas. D. State Ownership Financiera Rio S.A.E.C.A. Banco Nacional de Fomento. Grupo Internacional de Finanzas S.A.E.C.A. (Interfisa). Agencia Financiera de Desarrollo (AFD). Banco Nacional de Fomento.

150 Paraguay Investment Guide Education And Health In Paraguay Education And Health In Paraguay

7.1. EDUCATION SERVICES Note: The list cited above is for reference only. Those interested in a more thorough list of all private schools can contact the Association of Private Educational Institutions of Paraguay - AIEPP (@AIEPPara- guay) or the Ministry of Education and Science (www.mec.gov.py). Education of general Educational facilities Formal education is structured in three levels: In Paraguay there are many educational facilities, As far as higher education is concerned, there is also a great variety of universities and careers. Public the first level comprises Initial Education and Ba- mainly in urban areas, where there is also an in- universities tend to focus on technological and natural science careers, while private universities tend to sic School Education; the second level, Secondary teresting variety of options. There are both public concentrate on business and social science careers. Education, and the third level corresponds to Higher and private schools of the first level, although, in Education. general, private schools have an advantage in aggregate services, such as subjects such as foreign Universities The Ministry of Education and Science administers languages, IT, artistic activities and extracurricular • Universidad Adventista del Paraguay. • Universidad Metropolitana de Asunción. education at the initial and basic school, middle activities. From the wide array of schools, some bi- • Universidad Americana. • Universidad Nacional de Asunción. and non-university tertiary levels in the official sec- lingual ones and others stand out for having the • Universidad Autónoma de Asunción. • Universidad Nacional del Este. tor and controls the activities of the private sector. International Baccalaureate (IB), which facilitates • Universidad Autónoma de Luque. Public and private universities and higher educa- the access of students to foreign universities. • Universidad Nacional de Pilar. tion institutions are part of the education system. • Universidad Autónoma de Encarnación (UNAE). • Universidad Nacional de Itapúa. They operate in accordance with the provisions of Due to the low educational level of the public • Universidad Autónoma del Sur (UNASUR). • Universidad Nacional de Caaguazú. the legislation. schools, people with higher incomes choose to • Universidad Autónoma San Sebastián de • Universidad Nacional de Canindeyú. send their children to private schools. San Lorenzo (USASS). • Universidad Nacional de Concepción. •Universidad Católica Nuestra Señora • Universidad Nacional de Villa Rica. Most renowned private schools de la Asunción. • Universidad Nihon Gakko. •American School of Asunción (ASA) • Universidad Centro Médico Bautista (UCMB). • Uninorte. •Goethe. • Universidad Central del Paraguay. • Universidad del Pacifico. •Las Almenas. • Universidad Comunera. • Universidad Politécnica y Artística del Paraguay. •Lumen. • Universidad del Chaco -U.CH- UNICHACO. • Universidad Privada Columbia del Paraguay. •Colegio Alemán Concordia. • Universidad del Cono Sur de las Américas. • Universidad Privada del Este. •Colegio Anglo Americano CDE. • Universidad del Sol. • Universidad Privada del Guairá. •Colegio Campoalto. • Universidad del Pacífico Privada. • Universidad Santa Clara de Asís (USCA). •Colegio Cristo Rey. • Universidad Evangélica del Paraguay. • Universidad San Carlos. •Colegio Francés Margel Pagnol. • Universidad Española. • Universidad San Ignacio de Loyola. •Colegio Internacional. • Universidad Gran Asunción. • Universidad de San Lorenzo (UNISAL). •Colegio Santa Clara. • Universidad “HISPANO-GUARANÍ” • Universidad Sudamericana. •Colegio Santa Teresa de Jesús. Para el Desarrollo Humano. • Universidad Superior Hernando Arias •Colegio Salesiano Monseñor Lasagna. • Universidad Iberoamericana del Paraguay. de Saavedra. •San Andrés. • Universidad Interamericana. • Universidad Tecnológica Intercontinental. •St. Anne’s School. • Universidad Internacional “Tres Fronteras”. • Universidad Técnica de Comercialización •San Ignacio de Loyola. • Universidad de la Integración de las y Desarrollo. •San José. Américas -UNIDA. • Universidad Paraguayo-Alemana de Ciencias •Pan American International School (PAIS). • Universidad La Paz. Aplicadas. •Parroquial Rosenstiel (Pedro Juan Caballero). • Universidad Leonardo Da Vinci. •SEK - San Estanislao De Kotska. • Universidad Maria Auxiliadora. •Trinity School. • Universidad Privada “María Serrana”. •Colegio La Asunción.

152 Paraguay Investment Guide Paraguay Investment Guide 153 Education And Health In Paraguay Education And Health In Paraguay

The system offers the possibility of access to la- 7.2. PROFESSIONAL AND OCCUPATIONAL bor training courses given by Institutes of Labor TRAINING Education and Training (IFCL), as well as by Non- Governmental Organizations (NGOs) at no cost Paraguay has a vocational training system sup- National Service for Professional Promotion(SNPP) to the recipient, providing the possibility of being ported by private sector employers, who pay an The SNPP has 69 operational training units dis- trained in their own neighborhood or community additional employer contribution rate equivalent tributed throughout the nation and has more than anywhere in the country. to 1% of total wages and salaries paid, with an an- 1,000 instructors who have been trained to im- nual average of USD 33,400,000 for the training prove the skills of the Paraguayan workforce. Directorate-General for Employment - Public Em- and qualification of the Paraguayan workforce ployment Service through two institutions dependent on the Minis- Courses available: A service under the Ministry of Labor, Employment try of Labor, Employment and Social Security: the •Module courses: short courses developed accord- and Social Security. Through the Public Employ- National Service for Professional Promotion (SNPP ing to the labor demand in diverse specializations. ment Service, the National Employment Network in Spanish), and the National System for Labor •Dual training: a mixed training method, which is made up of regional directors and coordina- Training and Education (SINAFOCAL in Spanish), provides learning both in the educational center tors of the MTESS and directors of the SNPP, who whose main objective is to increase the country’s (SNPP) and in the company. The curriculum con- provide labor intermediation services in all of the competitiveness as well as satisfy the demand for tent is distributed as 30% theory and essential departments (provinces) of the country, offering national and foreign labor. knowledge for work performance according to the services for recruitment, training and selection of field and 70% practice. personnel to companies free of charge. Within this framework, Paraguay has a vocational •Technical: highly technical two year program, us- training strategy that seeks to contribute to the ing state-of-the-art equipment, in accordance with Interested companies can access the following growth of national productivity, digital adaptation, the current requirements of the country’s com- services: social progress and the well-being of Paraguayans, panies operating in these fields: industrial elec- a.Personnel recruitment and selection through through high-quality and pertinent technical and tronics, industrial electricity, refrigeration and air the development of initial and in-depth interviews, vocational training that ensures their individual conditioning, programming, industrial mechatron- psychometric testing and job reference verifica- growth and employability, based on technologi- ics and industrial plant management, automotive tion. cal competencies, personal skills and soft skills mechanics, business management and administra- b.Access to a specialized database called PA- relevant to all social strata, regions and those pro- tion, strategic management in sales, industrial me- RAEMPLEO, in which all employment applicants ductive sectors that are and will be the country’s chatronics. are registered. To learn more about the platform, growth engine. •Occupational Certification: Empirical profession- access: als from different fields are evaluated in order to https://paraempleo.mtess.gov.py/es/. Vocational training is developed through a digital certify their abilities regarding the developed ac- Highly qualified professionals in occupational educational management system called “Identity”, tivities. c. psychology and specialized skills allow us to pro- which is based on the digitalization of the entire vide a high quality recruitment and selection ser- educational process and establishes the traceabil- National System for Vocational Education and vice. ity of all recipients, until they are connected to the Training - SINAFOCAL labor force. Its mission is to regulate, certify, and accredit the d.Workshops for talent development, which aim to vocational education and training procedures, with improve the employability of applicants for the job This training program is built by the business sector an inclusive approach at all occupational levels, offered by the company. through sector-based committees that respond to guaranteeing and contributing to the productivity e.Continuous advising on contractual methods, economic niches that demand qualified labor. and competitiveness of the active labor force for education and training aimed at the company’s the labor, social, and economic integration of the employees. All courses are available at: beneficiaries in actions coordinated between the f.Shared spaces in corporate offices for interviews https://identidad.mtess.gov.py/. public and private sectors. of selected candidates.

154 Paraguay Investment Guide Paraguay Investment Guide 155 Education And Health In Paraguay Education And Health In Paraguay

7.3. HEALTH SERVICES

Paraguay’s health services are classified into public Private Healthcare and private. According to the DGEEC report for Private health activity is on the rise, due to the 2018, 26.9% of the population has health coverage. incipient development in the public sector.

The public service is grouped into: The private entities are supervised by the Super •Public health under the central administration: intendency of Health (SUPSALUD in Spanish), Ministry of Public Health and Social Welfare which is an executive directorate of the National consisting of its health centers, health posts and Health System, as the technical agency responsible specialized hospitals; Military Hospital; Police for overseeing the health service providers of the Hospital and Navy Hospital. Republic of Paraguay.

•Public health under decentralized administration: Health insurance / prepaid medicine Hospital de Clínicas, Materno Infantil, Instituto de In Paraguay, all insurance and reinsurance services, Previsión Social (IPS in Spanish)*, Hospitals of the including medical insurance, are governed by Law Governorates and Municipalities. 827/96 on Insurance.

* IPS provides a set of services to its insured indi- The Paraguayan insurance market is relatively viduals and their families to protect them in case competitive. The following are the main insurance of illness, labor related accidents and occupational and prepaid medical companies: diseases. In the case of workers covered by the 8 general system, it grants them a retirement or pen- •Asismed. sion fund once the age and seniority requirements •El Buen Samaritano. are met or upon retirement due to incapacity for •Fleming. REAL ESTATE MARKET work. •Medilife. •Migone. The contributing company must be up to date with •Medital. the payment of the corresponding contribution for •Oami. each dependent worker, so that the insured worker •Promed. can use the IPS health service. •Pro Salud. •Santa Clara. The insured can make use of the IPS service if the •Salud Protegida Medicina Prepaga. employing company is up to date with the payment •Seguro Médico San Lucas. of the dependent worker’s contribution. •SPS – Medicina Prepaga de Coomecipar. •Unimed.

156 Paraguay Investment Guide Paraguay Investment Guide 157 Real Estate Market Real Estate Market

8.1. PROCEDURE FOR REAL ESTATE PURCHASE 8.2. LAND ACQUISITION BY FOREIGNERS

The acquisition of property is governed by the Civil The fiscal value constitutes the taxable base for the Code. The transfer of ownership must be done by payment of the real estate tax, which is collected The purchase of land is open to foreigners except public deed which must be subsequently regis- by the municipalities. On that basis, the municipali- for the restriction imposed by the Border Security tered at the General Directorate of Public Records. ties calculate the tax they will levy on the owners Act on nationals of neighboring countries: Argen- Certificates of free disposition on title and tax cer- of the land. The tax value of urban and rural prop- tina, Bolivia and Brazil, or companies originating tificates are obtained prior to the drafting of the erty, which is used as the basis for collecting the from those countries, which prohibits them from deed. In addition to these formal requirements, property tax, is 2,4 %. It should be mentioned that owning land up to 50 kilometers from the border. conducting proper research on the documents is the tax base for rural property only considers the However, the restriction can be lifted by decree for key to ensuring that there are no defects in the title value of the land, while urban property is taken as reasons of public interest. deed or any land use restrictions in environmental a factor in determining the tax base for the value or wildlife conservation legislation. of the land, the type of street (land, cobblestone or Taxes on persons or entities abroad asphalt pavement) and the buildings. Notaries public must withhold 100% VAT on the Taxes and Fees sale of registrable goods by natural or legal per- In the transfer of a property, the notary’s fees and For more information about the tax to be paid, sons domiciled abroad who act without a branch, transfer costs are divided equally between the click on the link: https://www.catastro.gov.py/liquidacion_ agency or establishment in the country, or where buyer and the seller. impuestos the head company acts directly without the inter- VAT is levied at a rate of 5%, on the taxable base vention of the branch, agency or establishment. of 30% of the value of the transaction or of the amount accrued monthly in the case of term sales, VAT withheld from persons domiciled or entities in accordance with Decree N.° 3.107/19 regulating constituted abroad without a branch or establish- Law 6.380/19 “On the modernization and simpli- ment in the country shall be treated as a single, fication of the national tax system”, in the sale of definitive payment by the person withheld. real estate (Art. 90 and 85, respectively).

What was stated above refers to the purchase of a property, in return, the sale of real estate also generates a tax commitment, as stimulated by De- cree N.° 3.184/19 of Law 6.380/19, which regulates personal income (IRP), as per articles 20, 23, 25 and 26.

The land tax is assessed on the fiscal value of the property set by the National Cadaster Service (SNC in Spanish), and the rate of the land tax is 1 % of the fiscal value of the urban or rural property. An additional rate according to a sliding scale up to 1% is applied to properties of more than 20.000 hectares if in the Western Region and more than 10.000 hectares if in the Eastern Region.

158 Paraguay Investment Guide Paraguay Investment Guide 159 9 PHONEBOOK AND ADDRESSES OF PUBLIC AND PRIVATE INSTITUTIONS Phonebook And Addresses Phonebook And Addresses

9.1. Central Government •Ministry of Children and Adolescents •Ministry of Environment and Sustainable •Ministry of Foreign Affairs Avda. Mcal. López N.° 2029 esq. Acá Carayá Development (MADES) Palma esq. 14 de Mayo - Asunción •Presidency of the Republic + 595 21 207 760 Avda. Madame Lynch N.° 3500 - Asunción +595 21 493 928, +595 21 493 902, El Paraguayo Independiente entre Juan E. O´leary www.minna.gov.py +595 21 287 9000 +595 21 445 536 y Ayolas - Asunción www.mades.gov.py www.mre.gov.py +595 21 414 0200 •Ministry of Education and Science www.presidencia.gov.py 15 de Agosto entre Gral. Díaz y Haedo, Edificio •Ministry of the Treasury •Ministry of Public Works and Communications Ramón Indalecio Cardozo Chile N.° 252 esq. Pdte. Franco - Asunción Oliva y Alberdi N.° 411 •Vice Presidency of the Republic + 595 21 452 440, +595 21 444 493 +595 21 440 010 / 17, +595 21 448 283 + 595 21 414 9000 Juan E. O´Leary 222 esq. Pdte. Franco - Asunción www.mec.gov.py www.hacienda.gov.py www.mopc.gov.py +595 21 457 140, +595 21 498 199 www.vicepresidencia.gov.py •Ministry of Labor, Employment and Social •Ministry of Industry and Trade (MIC) 9.3. Executive Secretariats of the Security Mcal. López N.° 3333 esq. Dr. Weiss - Asunción Presidency of the Republic 9.2. Ministries and public institutions Luis A. de Herrera esq. Paraguarí +595 21 616 3 000 + 595 21 729 0100 www.mic.gov.py •Technical Secretariat for Economic and Social •Ministry of Agriculture and Livestock (MAG) www.mtess.gov.py Development Planning Yegros N.° 437 esq. 25 de Mayo y Cerro Corá • Network of Investments and Exports (REDIEX) Estrella 505 esq. 14 de Mayo - Asunción + 595 21 441 036, +595 21 452 316 •National Council of Science and Technology Mcal. López N.° 3333 esq. Dr. Weiss - Asunción +595 21 450 422 www.mag.com.py Justo Prieto N.° 223 entre Teófilo del Puerto y +595 21 616 3006 [email protected] Nicolás Billof [email protected] www.stp.gov.py •Ministry of National Defense + 595 21 503 226 www.rediex.gov.py Mcal. López entre Vpdte. Sánchez y www.conacyt.gov.py •National Tourism Secretariat (SENATUR) 22 de Setiembre •Single Window for Exports (VUE) Palma N.° 468 - Asunción + 595 21 249 0000 •Ministry of Information Technology and Commu- Cap. Pedro Villamayor esq. Cap. Nicolas Blinoff - +595 21 450 965, +595 21 450 964 www.mdn.gov.py nication Asunción www.senatur.gov.py Complejo Santos E2 – Gral. Santos N.° 1170 casi +595 21 513 533 / 40 •Ministry of Justice Concordia [email protected] •Secretariat of the Public Function Avda. José Gaspar Rodríguez de Francia + 595 21 217 9000 www.vue.org.py Iturbe esq. Fulgencio R. Moreno esq. EE. UU. www.mitic.gov.py + 595 21 233 999 + 595 21 447 010 •Unified System of Set-up and Closing of Compa- www.sfp.gov.py www.ministeriodejusticia.gov.py •Ministry of Social Development nies (SUACE) Mcal. López y Cnel. Pampliega Cap. Villamayor esq. Del Puerto - Asunción •National Sports Secretariat •Ministry of Public Health and Social Welfare Fernando de la Mora +595 21 525 884 / 5, +595 21 513 531 Eusebio Ayala y R.I 6 Boquerón km 4 1/2 (MSPBS) + 595 21 678 000 www.suace.gov.py + 595 21 520 675 / 6 Avda. Pettirossi esq. Brasil www.mds.gov.py www.snd.gov.py + 595 21 237 4000 •Ministry of the Interior www.mspbs.gov.py •National Fund for Culture and the Arts (FONDEC) Chile N.° 1002 esq. Manduvirá - Asunción •National Culture Secretariat 25 de Mayo N.° 972 c/ EE.UU +595 21 415 2240 EE.UU. N.° 284 •Women’s Ministry + 595 21 490 726, +595 21 498 128 www.mdi.gov.py + 595 21 442 515 Edificio Ayfra, Bloque B, Piso 13. Planta Baja, www.fondec.gov.py www.cultura.gov.py Ayolas y Pdte. Franco •Immigrations + 595 21 450 036 / 8 •Paraguayan Institute for the Caballero 201 esq. Eligio Ayala - Asunción www.mujer.gov.py Indigenous Peoples (INDI) +595 21 446 066, +595 21 442 840 Gral. Artigas esq. Tte. Cusmanich (Intendencia del www.migraciones.gov.py Ejército) + 595 21 452 280 www.indi.gov.py

162 Paraguay Investment Guide Paraguay Investment Guide 163 Phonebook And Addresses Phonebook And Addresses

•Ministry of Development for Returning Nationals •Yacyretá Binational Entity •National Chamber of Trade and Services of •Paraguayan Chilean Chamber of Commerce and Refugees De Las Residentas N.° 1075 - Asunción Paraguay Avda. Aviadores del Chaco N.° 2050, Torre 3, Piso 7 25 de Mayo N.° 1091 casi Brasil +595 21 222 277 Estrella 550 casi 14 de Mayo - Asunción [email protected] + 595 21 226 880 www.eby.gov.py +595 21 493 321 www.repatriados.gov.py [email protected] •Paraguayan Colombian Chamber of Commerce 9.6. Business organizations www.ccparaguay.com.py Camilo Recalde N.° 1623 esq. Avda. Eusebio Ayala, 9.4. Local authorities 2 .° Piso • ABP - Association of Banks of •Paraguayan Chamber of Exporters (CAPEX) [email protected] •Development Finance Agency (AFD) Paraguay (ASOBAN) Dr. César López Moreira N.° 1030 esq. Campos Cervera N.° 886 casi Aviadores del Chaco Andrade N.° 1.060 casi Bulnes, Villa Morra Federación Rusa - Asunción •Paraguayan Brazilian Chamber of Commerce Edif. Australia, 2.°, 3.° y 4.° Piso - Asunción Asunción +595 21 606 220 Avda. Aviadores del Chaco N.° 2050, WTC Torre 1, +595 21 606 020 +595 21 603 600, +595 21 603 594 [email protected] Piso 14 - Asunción www.afd.gov.py [email protected] www.capex.org.py +595 21 612 614, +595 21 614 901 www.asoban.org.py www.ccpb.org.py •Central Bank of Paraguay (BCP) •Paraguayan Chamber of Cereal and Oilseed Federación Rusa y Augusto Roa Bastos - Asunción •Association of Financial Entities Exporters (CAPECO) •Paraguayan Spanish Chamber of Commerce +595 21 608 011 of Paraguay (ADEFI) Avda. Brasilia N.° 840 casi Sgto. Gauto - Asunción Gral. Santos N.° 112 esq. Mcal. López - Asunción [email protected] Aca Carayá N.° 388 casi Leandro Prieto – Asunción +595 21 208 855, +595 21 213 971 +595 21 338 9289, +595 21 985 429 489 www.bcp.gov.py +595 21 210 894 (R.A.) [email protected] www.camacoes.org.py [email protected] www.capeco.org.py •National Development Bank (BNF) www.adefi.org.py •Paraguayan French Chamber of Commerce Independencia Nacional esq. Cerro Corá •Paraguayan Chamber of the Construction Yegros N.° 837 casi F.R. Moreno, 1.° Piso, Asunción •Paraguayan Association of Advertising Industry (CAPACO) Oficina 12 - Asunción +595 21 413 9000 Agencies (APAP) Cervantes esq. Víctor Hugo - Asunción + 595 21 497 852, + 595 21 448 149 [email protected] Cap. Brizuela N.° 475 esq. Pitiantuta y +595 21 295 424 [email protected] www.bnf.gov.py Ayala Velázquez [email protected] www.ccpf.com.py +595 21 207 757 www.capaco.org.py •Agricultural Enabling Credit (CAH) [email protected] •Japanese Chamber of Industry and Trade of Pa- Carios N.° 362 casi W. Richardson - Asunción •Paraguayan German Chamber of Commerce raguay +595 21 5690 100 / 150 •Rural Association of Paraguay (ARP) Mcal. López N.° 110 esq. Rca. Argentina Facundo Machain N.° 5577 casi Tte. Ángel [email protected] Ruta Troperos del Chaco km. 14,5 Edificio Torre de las Américas, Oficina 4D Espinoza – Asunción www.cah.gov.py Mariano Roque Alonso Asunción, 1887 - Asunción +595 21 613 533 +595 21 754 412 + 59521 615 846 www.shoukoukaipy.com •Cattle Fund (FONDO GANADERO) www.arp.org.py www.paraguay.ahk.de Mariscal López N.° 1699 - Asunción •Paraguayan Roadway Chamber (CAVIALPA) +595 227 288 (RA) •Chamber of Advertisers of Paraguay (CAP) •Paraguayan American Chamber of Commerce Avda. Aviadores del Chaco N.° 2050, [email protected] Quesada esq. Tte. Zotti, Edificio Atlas Center, 25 de Mayo esq. Mayor Bullo WTC Torre 1, Piso 14 www.fondogan.gov.py 5.° Piso - Asunción +59521 222 160 +595 21 603 005 +595 21 230 068 www.amcham.com.py www.cavialpa.org.py [email protected] 9.5. Binational Entities www.cap.org.py •Paraguayan Argentinean Chamber of Commerce •Paraguayan Importers’ Center (CIP) •Itaipú Binational Entity Edif. Banco de la Nación Argentina Avda. Brasilia N.° 1947 casi Avda. Artigas Avda. España N.° 850 - Asunción •Chamber of Maquiladora Companies of Alberdi esq. Palma – Asunción Asunción +595 21 248 1000 Paraguay (CEMAP) +59521 497 804 / 5 +595 21 299 800 (RA) www.itaipu.gov.py +595 972 267 548 www.campyar.org.py [email protected] [email protected] www.cip.org.py www.maquila.org.py

164 Paraguay Investment Guide Paraguay Investment Guide 165 Phonebook And Addresses

•Paraguayan Bar Association •Paraguayan Chamber of Developers (CAPADEI) 14 de Mayo N.° 988 eaq, Manduvirá – Asunción Eusebio Lillo y Gonzalo Bulnes, Galería Mangoré, +595 21 441 882 Piso 1, Oficina 4 [email protected] +595 21 606 903 www.colegiodeabogados.org.py [email protected] www.capadei.org.py •Association of Paraguayan Accountants Yegros N.° 860 casi Manuel Domínguez •Metalworking Industries Center (CIME) +595 21 445 454 Avda. Choferes del Chaco N.° 588 - Asunción [email protected] [email protected] www.ccpy.org.py +595 21 661 468

•Paraguayan Association of Economics Graduates •Federation of Credit Unions (FECOAC) Mcal. López N.° 887 eaq. EE. UU. y Tacuary 25 de Mayo N.° 3993 casi Choferes del Chaco Asunción Asunción +595 983 510 032 +595 21 200 239 [email protected] [email protected]

•Association of Notaries of Paraguay •Federation of Production, Industry and Trade Juan E. O’Leary N.° 1066 esq. Jejuí y Manduvirá (FEPRINCO) Asunción Palma N.° 751, Edificio Unión Club, Piso 3 +595 21 491 273, +595 21 441 190 Asunción [email protected] +595 21 446 638, +595 21 444 963 www.cep.org.py [email protected]

•Paraguayan Association of Human Resources •Union of Production Guilds (UGP) México N.° 1039 casi Tte. Fariña - Asunción Avda. Brasilia N.° 939 casi Ciancio - Asunción +595 21 448 599 +595 21 224 232 [email protected] [email protected] www.aparh.org.py [email protected] www.ugp.org.py •Paraguayan Association for Quality (APC) Eduardo Víctor Haedo N.° 680 caso Juan E. •Paraguayan Industrial Union (UIP) O´leary Asunción Avda. Santísimo Sacramento N.° 945 - Asunción +595 21 447 348 +595 21 606 988 [email protected] [email protected] www.apc.org.py www.uip.org.py

•Paraguayan Association of Insurance Companies (APCS) 15 de Agosto esq. Lugano - Asunción +595 21 446 447 [email protected] www.apcs.org.py

166 Paraguay Investment Guide