What incentives introduced to Paraguay investor?

Exports are exempt from paying IVA (stands for value-added tax) because the government recognizes a tax credit for phases prior to production. There is also a Temporary Admission Scheme import permits exemption from import taxes and IVA on imports.

The investment laws provide equal treatment to foreign investment as well as local investments. The new tax laws encourage reinvestment with tax advantages. Paraguay has signed investment guarantee agreements with several countries. There are many incentives, such as the maquila program, free trade zones or free trade, among others.

Source: Ministry of Industry and Commerce of Paraguay.

LAW 60/90

Regime tax incentives for capital investment of domestic and foreign origin

Approve, with modifications, Decree Law No. 27, dated 31 March 1990, "por el cual se modifica and expand the Legislative Decree No. 19 dated 28 April 1989" which lay down rules on fiscal incentives For capital investment of national origin and foreigners.

The National Congress Paraguay sanctions with the force of law:

Article 1 .- Apruébese and modified Decree-Law No. 27 dated March 31, 1990, "which amends and extends the Decree Law No. 19, dated April 28, 1989", which The scheme provides tax incentives for capital investment of domestic and foreign origin, which reads as follows:

Chapter I

Of the object

"Article 1 .- The purpose of this Act is to promote and increase capital investment of national origin and / or abroad. To that end, will be granted tax benefits to individuals and legal entities established within the country, whose investments are carried out in line with economic and social policy of the National Government and aimed at:

a) increasing the production of goods and services;

b) The creation of permanent jobs;

c) The promotion of exports and import substitution;

d) The incorporation of technologies to increase production efficiency and enable greater and better use of raw materials, labor and energy resources; and

e) The investment and reinvestment of profits in capital goods. "
Regulation by Article 8 of Decree No. seventh 22.031/03

Chapter II

Of the subject and form of investment

"Article 2 .- They will be beneficiaries of this Law natural and legal persons, domestic or foreign, that invest in the following ways:

a) money, loans, supplier credit or other financial instruments, under conditions established by the executive branch;

b) In capital goods, raw materials and inputs for local industry, for the manufacture of capital goods, established in the investment project, approved pursuant to Art. 23 th of this Act;

c) trade marks, industrial processes and models and other forms of technology transfers capable of licensing;

d) In specialized technical assistance services;

e) In leasing of capital goods, and

f) Other forms that the executive branch determined in the regulation. "
Regulation by Article 8 of Decree No. seventh 22.031/03

"Article 3 .- The capital goods, imported or domestically produced, referred to this Law shall be of appropriate technology and usable in terms of productive efficiency."
Regulation by Article 8 of Decree No. seventh 22.031/03

"Article 4 .- The subjects of this Law shall not enjoy the benefits granted when the goods and products are destinaren to use or personal consumption."

Chapter III

The benefits

"Article 5 .- The investments covered by this Act shall enjoy the following benefits tax and municipal:

a) total exemption of taxes and municipal tax levied on the creation, registration and records of companies and enterprises;

Suspended in full force by Art. 34 of Law No. 2.421/04 force according to Decree No. 2939/04 Art. 1 inc. d) from 26/07/04
b) Exemption total taxes of any kind levied: the issuance, subscription and transfer of shares or shares of which tax the capital increases of companies or enterprises and the transfer of any property or right susceptible to valuation pecuniary the partners or shareholders contribute to society as integration of capital, and those levied on the issue, buying and selling of bonds, debentures and other securities obligations of corporations and companies, which are provided for in the proposed investment;

c) total exemption of customs and other charges of equivalent effect, including the application of internal taxes specified on the import of capital goods, raw materials and inputs for local industry, under the investment project;

d) Liberation requiring any special lace banking or deposit for imports of capital goods;

Suspended in full force by Art. 34 of Law No. 2.421/04 this force under the Decree No. 2939/04 Art. 1 inc. d) from 26/07/04
e) Exemption total taxes and other charges of any kind, that borrowers are legally obliged to pay. Excepted those charges that take over the contracts on loans, advances, advances, credit providers and funding domestic or foreign, that were used to finance investments in whole or in part under the investment project, on garments, mortgages Guarantees and depreciation of the same, by the end of five (5) years from the date of the resolution on the approval of the proposed investment;

Modified by Art. 36 inc. 1) of Law No. 2.421/04 force according to Decree No. 2939/04 Art. 1 inc. d) from 26/07/04
f) When the amount of funding from abroad and benefit from investment activity so warrants will be granted the benefits provided in the preceding paragraph and exemption from taxes levied on remittances and payments to the outside in interest , Commissions and capital of the same, until the launching of the project, according to the timetable approved investment;

Suspended in full force by Art. 34 of Law No. 2.421/04 force according to Decree No. 2939/04 Art. 1 inc. d) from 26/07/04
g) Exemption 95% (ninety-five percent) of the Income Tax in proportion to the gross sales generated by the investment made under this Act for a period of 5 (five) years beginning in the making ongoing project, according to the timetable approved investment;

Modified by Art. 36 inc. 1) of Law No. 2.421/04 force according to Decree No. 2939/04 Art. 1 inc. d) from 26/07/04, Consultation with regard to article 5 inc. h) of Act 60/90
h) Exemption total taxes that affect the dividends and profits from investment projects approved by the end of 5 (five) years from the launch of the project, according to the timetable approved investment;

Suspended in full force by Art. 34 of Law No. 2.421/04 pursuant to Decree No. 2939/04 Art. 1 inc. d) from 26/07/04
i) total exemption from taxes of any kind which affect the payment of rent, lease, utilities, royalty for use of trademarks, patents, industrial designs and other forms of technology transfer licensing likely carried out by the recipient companies whether residents or not, for a period of 5 (five) years from the year following the date of the resolution which approves the investment project.

j) Exemption from taxation in accordance with Law No. 70/68, in proportion to the amount of capital built for a period of 5 (five) years from the year following the resolution by which it approved the investment project;

k) Exemption total tax stamps and stamped paper in Law No. 1003/64 and tax services Law No. 1035/83 for the beneficiary on the acts, contracts, payment receipts and promissory notes documenting the planned investments in this Law ;

l) Exemption of tax on stamped paper and stamps provided for in Article 27 th, paragraph 2, Note 2 of Law No. 1003/64. "

"Article 6 .- was extended for a period of ten (10) years the benefits granted in art. 5 of this Act when investments come from resources of capital repatriations, or when they lie in areas of preferential determined by the development plans and programmes developed by the Technical Secretariat of Planning. "

"Article 7 .- was extended by the end of 7 (seven) years, the benefits referred to in Art. 5 of this Act where investments come from incorporation of capital goods of national origin."

Suspended in full force by Art. 34 of Law No. 2.421/04 force according to Decree No. 2939/04 Art. 1 inc. d) from 26/07/04
"Article 8 .- The individuals or corporations to invest the net profits of their business subject to taxation on income, are entitled to a reduction of 50% (fifty percent) of income tax, for net income to reversing the previous year of investment.

To be eligible for this incentive, investment should be reflected in an increase of 30% (thirty percent) of its capital comprising at least, according to investment project approved.

Do not enjoy the reduction mentioned above, whose investment projects were submitted after the deadlines laid down in Art. 73 th of Decree Law No. 9.240/49 for the submission of tax balance. "

Suspended in full force by Art. 34 of Law No. 2.421/04 force according to Decree No. 2939/04 Art. 1 inc. d) from 26/07/04
"Article 9 .- The reinvestments that are promoted under this Act must necessarily consider the introduction or expansion of productive units of goods and services that enhance the national heritage as well as the growth and creation of new sources of jobs and its multiplier effects on employment and national economy. "

Chapter IV

Lease of capital goods

See Law No. 1295/98 of Location, leased or Leasing and Trade Finance

"Article 10 ° .- The capital goods entered the country by leases under the modality" Leasing "are entitled to the benefits provided for in art. 5 of this Act, in accordance with the regulations, by the end of 5 (five) years, beginning one year after the date of the resolution which approves the investment project. "

"Article 11 .- The capital goods produced domestically under leases of the modality" Leasing "are entitled to the benefits provided in Art. 5 of this Act under the same conditions and deadlines set out in the previous article."

"Article 12 .- The companies involved in the leasing of capital goods under the modality" Leasing "are entitled to the benefits provided for in art. 5 of this Act, in accordance with the respective regulations."

Suspended in full force by Art. 34 of Law No. 2.421/04 force according to Decree No. 2939/04 Art. 1 inc. d) from 26/07/04
"Article 13 .- create the register rental mode" Leasing "attached to the Directorate General of Public Records, where they will be registered all assets under lease, the respective contracts, benefits, taxes and other relevant documents . The Executive Branch shall regulate the rights, obligations and formalities of such registration. "

"Article 14 ° .- For the affections of this Law, the Ministry of Industry and Commerce will entitle a Register of leases in the form of" Leasing "where they will be registered all assets under lease, the relevant contracts, benefits, respective charges and other documents. "
Regulation by Article 18 of Decree No. seventh 22.031/03
Regulation by article 19 of Decree No. seventh 22.031/03
Regulation by Article 20 of Decree No. seventh 22.031/03

Chapter V

Of the General Provisions

"Article 15 .- The beneficiaries of Decree-Law No. 19/89 of Decree-Law No. 27/90 and this law, keep a detailed record of assets embodied in a book authorized by the tax authorities, enabling make the same control over their use and destination. "

"Article 16 ° .- The failure of the timetable established in the investment project approved, except accidental cause or force majeure proven, will produce full or partial withdrawal of benefits agreed in the following cases:

a) The investment made outside the time limit set in the resolution of approval, will result in the loss of benefits agreed in the share of investment unrealized;

b) When imported goods had not been installed within the period specified in the resolution of approval, the beneficiary must pay taxes for imported goods that were released;

c) Where the delay in implementing the investment referred to in paragraph a) results in the impossibility of implementing the investment project within 6 (six) months following the date of the last planned investment in the project, corresponds to the total withdrawal of Resolution agrees that the benefits provided in this Act, and accordingly, payment of taxes released, except that part done already meets the objectives of the investment project approved, in which case the withdrawal will affect only that portion of the project is not done, and

d) When the recipient to give the capital a destination other than the intended purposes in the approved project, must enter charges released from those assets, plus a surcharge of 100% (one hundred per cent) in respect of the fine. "

"Article 17 ° .- Investment created the Council as an advisory body under the Ministry of Industry and Commerce and Ministry of Finance which will comprise:

a) A representative of the Ministry of Industry and Commerce;

b) A representative of the Ministry of Finance;

c) A representative of the Ministry of Agriculture and Livestock;

d) A representative of the Technical Planning Secretariat for Economic and Social Development;

e) A representative of the Central Bank of Paraguay;

f) A representative of the primary sector of production and,

g) A representative of the industrial sector or secondary production.

Members of the Investment Council will be appointed by the Executive on a proposal from the respective institutions or entities.

The Board of Investment will be chaired by a representative of the Ministry of Industry and Commerce and its members will enjoy a diet to be determined by the executive branch.

The Secretary of the Council shall be appointed on the proposal of the Ministry of Finance.

Also, each institution will have an alternate representative. "

"Article 18 ° .- Council members shall be persons with Investment suitability to exercise that office."

"Article 19 ° .- The Board of Investment will have the following functions:

a) To analyze and rule on investment projects corresponding to the purposes of this Act, in addition to the evaluations;

b) To advise public and private institutions in terms of capital investment;

c) Enable a record of requests for background of approvals granted and to report quarterly to Congress on projects approved, and

d) ruled on matters that relate to capital investments that have not been covered by the foregoing paragraphs. "

"Article 20 .- To qualify for the benefits conferred by this Act, investment projects must contain basically the data and information:

a) The name, address and legal status of the applicant;

b) The subject of investment activity;

c) Market studies, engineering project, location and environmental impact;

d) manpower to be employed;

e) raw materials and inputs of origin required by domestic and foreign investment, and

f) Amount of investment and its form of financing. "
Regulation by article 1 of Decree No. 22.031/03
Regulation by Article 2 of Decree No. 22.031/03
Regulation on article 3 of Decree No. 22.031/03
Regulation by Article 9 th Decree No. 22.031/03

"Article 21 ° .- Following reasons for the ecological impact, an investment project to receive the benefits of this Act, shall have effluent treatment plant industrial location also should not affect the living conditions of surrounding areas.

For installation of industrial plants should be given the environmental impact and the framework provided in urban planning in each locality. "

Modified by Art. 36 inc. 2 of Law No. 2.421/04 force according to Decree No. 2939/04 Art. 1 inc. d) from 26/07/04
"Article 22 ° .- When the investment project referred to the Act exceeds the equivalent Guarani U S $ 100,000 (one hundred thousand U.S. dollars) shall be prepared by technical and / or national consulting firms registered in the respective records and which operate legally authorized in the country. "
Regulation by article 7 of Decree No. 22.031/03

"Article 23 ° .- The recognition of the benefits they agreed this Law shall be awarded to each company by resolution to be signed by the Ministers of Industry and Commerce and Finance. The body of implementation and enforcement will be the Ministry of Industry and Commerce Except as regards the tax aspects that will be in charge of the Ministry of Finance. "

"Article 24 ° .- The Board of Investment must be issued within a maximum of sixty (60) days from the date of filing. The relevant ministerial resolution shall be given in the affirmative or negative within 15 ( fifteen) days from the date of opinion ".
Regulation by Article 10 th of Decree No. 22.031/03

"Article 25 ° .- The benefits granted by the investment laws are irrevocable, except where provided for in art. º 16, paragraphs a), b), c) and d).

The benefits granted under Decree-Laws. 19/89 and 27/90 are irrevocably acquired by the beneficiaries and may be extended by the provisions of this Law ".

Article 2 .- To be communicated to the Executive.

Approved by the Chamber of Deputies on December thirteen of the year one thousand nine hundred and ninety and the Chamber of Senators, Punishment Act, under Art. 157-fifth of the national Constitution, this twentieth day of December of the year one thousand nine hundred and ninety.

Jose A. Moreno Ruffinelli
President
H. Senate

Carlos Caballero Roig
Parliamentary Secretary

Waldino Ramon Lovera
President
H. Chamber of Deputies

Julio Rolando Elizeche
Parliamentary Secretary

Asuncion, March 26, 1991

Note by Republic Act, and insert published in the Official Gazette.

Andrés Rodríguez
President of the Republic

Antonio Zuccolillo Moscardó
Minister of Industry and Commerce

Juan Jose Diaz Perez
Minister of Finance