Tax incentives in Paraguay for capital investment of domestic and foreign origin are one of the best within the region.

Twenty four years ago, Act 60/1990, established a system of tax incentives in Paraguay for capital investment of domestic and foreign origin. This Act was confirmed with the recent passed Act 5061/2013, reaching a level of fulfillment, which is consistent with what we might call springtime for business in Paraguay.

The purpose of this law is to promote and increase capital investment of national origin and/or abroad. Natural and legal persons are expected to get these fiscal benefits if they have local commercial domicile and the investments are made in accordance with the social & economic policies of national government.

To achieve the benefits, investments must be in one of the following ways: a) in cash, financing, supplier credit or other financial instruments under the conditions established by the Government; b) capital goods, raw materials and inputs for local industry, the manufacturing of capital goods established in the investment project approved by Law; c) trademarks, models and industrial processes and other forms of technology transfer susceptible of licensing; d) in services of specialized technical assistance ; e) leases of capital goods; and, f ) other ways to be determined by the Government.

What benefits are we talking about?

Some of the benefits conferred by the Law, include total exemption of the following taxes: government and municipal taxes over the creation, registration and recordal of companies; the taxes of any kind on the issuance, subscription and transfer of shares or quotas; tax on capital increases of companies or enterprises and the transfer of any property or right capable of pecuniary valuation provided by partners or shareholders for the benefit of the corporation to subscribe the capital; and those taxes on the issuance, purchase and sale of bonds, debentures and other securities obligations of corporations and enterprises, which are provided for in the investment project; the total exemption from customs duties and other similar effects, including internal taxes applicable specifically on the import of capital goods, raw materials and inputs for local industry under the investment project, among several other benefits.

These benefits have different durations but are highly profitable and can reach even up to 50% reduction of Income Tax in case of investment of net utilities subject to Income Tax.

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