Investment Incentives in Paraguay
Located in the center of South America, Paraguay is listed as the 8th most complex jurisdiction in which to do business. However, Paraguay has a good quality of life and a business-friendly environment. Despite the fact that Paraguay is listed as a rather complex jurisdiction, there are an array of business opportunities. Paraguay is characterised by a stable economy and controlled levels of inflation, offering macroeconomic stability which provides a secure environment for investment.
The country has a privileged location as it has two important rivers within its territory. In addition the country is also located along the inter-oceanic corridor which grands access to some important ports and markets in the region.
What are the main investment incentives in Paraguay?
For starters, the Free Trade Zone Regime, areas where all types of commercial, industrial and service activities may be carried out. The legal framework of these zones offers several advantages, for example, tax exemptions or a special tax regime with an income tax rate of 0.5%.
Secondly the Maquila Regime provides for another investment incentive. The Maquila regime is a reliable and efficient alternative for Paraguay to conduct business overseas. The specific Industry Law exempts payment of the MERCOSUR common customs tariff applicable to temporary imports of capital goods, inputs and components.
In addition to the two regimes mentioned, Paraguay also counts with an Export Incentives Regime which means all exports are VAT exempt. The legislation recognises a tax credit for pre-production stages. A Temporary or Provisional Admission Regime is also in place, which exempts imports from import tariffs and VAT.