National and foreign companies involved in the production, development or assembly of high tech goods will have important tax benefits. Between these tax advantages exemption from payment of any customs duty in addition to important tax reductions.
Recent Law Nº 4427/2012 provides incentives for the production, development, or assembly of high tech goods and its scope apply to in the areas of electronics, telecommunications and information technology, applying to both individuals and national or foreign companies that invest in capital goods, raw materials, components, kits, parts and accessories, whose goal is the production, development and/or assemblies of high-tech goods.
For those seeking to rely on this regulation, will be required to have fulfilled the following requirements: 1) To produce high-tech goods; 2) To create permanent sources of work integrated with at least 50% (fifty percent) of Paraguayan citizens; 3) To incorporate as Value-Added, at least 20% (twenty percent) to the basic production processes related to the program submitted to the enforcement authority; 4) To incorporate technologies that facilitate the production efficiency and enable the more and better use of raw materials, labor and domestic energy resources; 5) To develop plans for technology transfer, training of manpower; 6) To establish plans for cooperation with educational institutions oriented towards training, employment, research, internship programs and academic outreach activities for students; 7) To develop programs to support social sectors; 8) To submit an investment project approved by the regulatory body, that to be considered as such should include an assembly line infrastructure testing or quality control and ability to end product packaging.
The tax advantages are really interesting. For example, the import of raw materials, components, kits, parts and accessories, which is required by the subjects covered by this Act for the production of high-technology goods, is exempt from payment of any customs duty. The subjects covered by this Act, before the withdrawal of raw materials, components, kits, and parts of the customs area, have to pay VAT at the rate of 10% (ten percent) of the 15% (fifteen percent) of the Customs value expressed in foreign currency.
Furthermore, the tax base for determining the Selective Consumption Tax (ISC) levied on the first sale of goods covered by this Act, shall be 10% (ten percent) of the selling price in the factory, excluding the tax itself and VAT. Consequently, the applicable rate will be 1% (one percent).
The implementation of VAT to the beneficiaries on high-tech goods produced, developed or assembled in the country will have a tax base of 20% (twenty percent) of the value purchase thereof. While in the case of sales of goods that have significant value for cultural dissemination and education, covered by the Act, that are produced in the country, and recognized by the Ministry of Education and Culture, via Ministerial Resolution, will be exempt from payment of Value Added Tax (VAT) and excise tax (ISC) in cases of this applies.
Finally, in all tendering and procurement of goods by organizations and entities of the State, the incorporation of the goods produced, developed or assemblies covered by this Act, shall have a margin of preference of up to 40 % (forty percent) in the offered prices.