Paraguay is not really known internationally, but the country has a really attractive policy to attract foreign investment. It is the 17th nation by GDP in this region (IMF estimates around USD 44.93 billions), since last decades comes from encouraging external and internal investment. Therefore, we can appreciate main taxes have low value. 

For instance, Income Tax vary according to the section of the natural person. Moreover, application is between 8% and 10%, so hiring local people seems really interesting for investors. VAT and Corporative Tax have also a 10%. Therefore, this percentage turns the country into the lowest values in LATAM, except for Panama and its VAT. In addition to no existence of Wealth Tax and a 1% rate for Property Tax.  

Paraguayan VAT is especially adapted to the shopping basket, as only applies a 5% to alienation and products importation. Rest of cases, except for some real estate stuff, apply 1%. 

Government take in account possible problems on selling products outside the country. On this way, promotes importation and exportation thanks to Maquila Law and, also, achieving agreements with other countries, like Spain, to avoid Doable Taxation. About maquila -production of raw material in another country in order to, after the process, export it-, manufacturer company can benefit from a 1% unique tax. 

In addition, Law 523/95 stablishes a free trade zones regime. Here, entities from determined sectors enjoy fiscal benefits and exemptions provided that compliance by companies follow a required timetable. It exists another unique tax (0.5%) to Gross Income derived from selling third countries. So its compliance is useful for next entities: 

• Maintenance services of machinery and electronic equipment 

• Industrial production of goods with the aim of export them 

• Goods importation without any type of intervention and modification 

Another way of getting benefits is due to Law 60/90 of fiscal incentives: exoneration to the national and foreign investment. The main measure is that during five years companies are freed from paying the 95% on Income Tax, based on gross sales under the shelter of the law. Finally, you can better know your options there by registering a Joint Venture with local corporations, recognised in article 14 on Law 117/1991 about Investment.  

If you manage operations in Paraguay or plan to expand to Paraguay or any of the more than 50 countries where Auxadi offers accounting, tax, and payroll services, contact us. With 45 years of experience and 1,500 satisfied clients, we can make your life easier. Contact us.

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