LAND OF OPPORTUNITIES 2021 - Rediex
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E X
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PARAGUAY
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LAND OF OPPORTUNITIES
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PARAGUAY Land of Opportunities
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PARAGUAY IS IN THE CENTER OF SOUTH AMERICA
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E D
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PARAGUAY Land of Opportunities
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COUNTRY PROFILE
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OFFICIAL NAME
Republic of Paraguay
CAPITAL
Asuncion
SURFACE
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406,752 km2
GOVERNMENT SYSTEM
PRESIDENT Presidential Republic
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Mario Abdo Benitez
(2018-2023) POPULATION (2020)
7.353.038
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OFFICIAL LANGUAGES
Spanish and Guarani
LITERACY RATE
94.3%
URBANIZATION RATE
60%
CURRENCY
Guarani (PYG)
SOURCES: BCP, DGEEC, Banco Mundial
PARAGUAY Land of Opportunities
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MAIN ECONOMIC INDICATORS
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GROSS DOMESTIC PRODUCT - GROSS DOMESTIC PRODUCT PER
GDP (2020) CAPITA (2020)
USD 36.049 mill. USD 4.970
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GDP GROWTH for 2021
GDP GROWTH (2020)
(BCP projection, may 2021)
-0,6%
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3,5%
FOREIGN CURRENCY RESERVES
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INFLATION (2020)
(Abril 2021)
2,2%
USD 10.170 mill.
PUBLIC EXTERNAL DEBT
EXCHANGE RATE (June 2021)
(march 2021)
6.650 (Gs./USD)
USD 9.961 mill. (27,6% of
GDP)
SOURCES: BCP, DGEEC, FMI
PARAGUAY Land of Opportunities
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VARIATION OF PARAGUAYAN GDP
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12%
11,1%
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Average Growth
10%
2006 - 2020: 3,8%
8,3%
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8%
6,5%
6% 5,4% 5,3%
4,8% 4,8%
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4,3% 4,3%
4% 3,2% 3,5%
3,0%
2%
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0%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
-2% -0,3% -0,7% -0,4% -0,6%
In recent years, Paraguay maintained positive average growth, despite the volatility of its main trading partners. In 2020, remained as the
least affected country in the region by the COVID-19 Pandemic.
SOURCE: BCP – 2021 “BCP projection”
PARAGUAY Land of Opportunities
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GDP COMPOSITION
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Taxes on products Agriculture
Livestock
7% 9%
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2%
Forestry, Fishing, Mining
Government Services 10% 1%
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Home Services
Manufacturing
4% 19%
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Restaurants and Hotels
2%
Company Services
2%
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Real Estate Construction
6% 7%
Finance
6% Electricity and Water
Telecommunications 7%
Transportation Commerce
4%
4% 10%
SOURCE: BCP- año de base: 2020
PARAGUAY Land of Opportunities
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EXPORT COMPOSITION
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VALUE ANDCOMPOSITION
COMPOSITION OF
EXPORTS WITH ADDED VALUE
VALUE AND OFEXPORTS
EXPORTS
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(Millions USD)
USD
USD2,500
2,500 millions
millions //2003
2003 1.200
960
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1.000
Primary
Energy
Energy MAO
MAO MIO
MIO
Manufactures of
Products
50%
50% 29%
29% 17%
17% 4%
4%
800
Idustrial Origin
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600
674
USD 7,962
USD 8,529 millions / 2019
millions / 2020
400 Maquila Regimen
295 Exports
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Primary Products Primary
MAO Energy MIO
MAO Energy MIO
Products 200
35%
33% 33%
31% 21%
24% 11%
13%
53
0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
MAO: Manufactures of Agrarian Origin
MIO: Manufactures of Industrial Origin
SOURCE: BCP
PARAGUAY Land of Opportunities
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FOREIGN DIRECT INVESTMENT (FDI) EVOLUTION
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FDI STOCK IN MILLIONS USD
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8.000
7.000
6.881
6.4146.313
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6.222
6.000
5.000
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4.000
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3.000
2.000
1.000
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
SOURCE: BCP
PARAGUAY Land of Opportunities
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FOREIGN DIRECT INVESTMENT (FDI) COMPOSITION
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BALANCE OF FDI IN MILLIONS USD AT THE END OF 2019
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MAIN COUNTRIES OF ORIGIN MAIN INVESTMENT SECTORS
1.600 1.400
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1.400 1.351 1.200
1.182
1.200
1.000 911
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1.000 807 778
800
774
800 726
633
600
600
455 395
R
398 400 358
400 293 260 300 286 273
253 245 232 246 227 222
202 167
164 162 200
200 125 110 94
0 0
SOURCE: BCP
PARAGUAY Land of Opportunities
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DIVERSIFICATION OF FOREIGN DIRECT INVESTMENT
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E D
SOURCE: BCP - Cierre 2019
RPARAGUAY Land of Opportunities
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TRUSTWORTHY FOR FOREIGN INVESTMENTS
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Ireland Netherlands
Russia
Sweden
Canada
United Kingdom Germany
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United States Belgium
France South Korea
Luxembourg Mainland China
Mexico Portugal Japan
Switzerland
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Guatemala Republic of China -
Cayman Islands Spain Taiwan
Costa Rica Austria Hong Kong
British Virgin Islands
India
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Philippines
Panama
Venezuela
Ecuador Colombia
Peru Brazil
Australia
42 countries
Bolivia Uruguay
in 2019
Chile
ArgentinaPARAGUAY Land of Opportunities
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COUNTRY RISK RATING
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EVOLUTION OF THE RATING OF PARAGUAY
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SOURCES: Standard and Poor’s, Moody’s, Fitch RatingsPARAGUAY Land of Opportunities
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LEADER IN FAVORABLE BUSINESS CLIMATE
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BUSINESS CLIMATE INDEX INDEX OF EASE TO DOING BUSINESS/
RANKING
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200 188
COUNTRY RANKING 180
Paraguay 1 160 150
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Colombia 2 140
125 126 129
124
Chile 3 120
101
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Peru 4 100
76
Uruguay 5 80
67
60
Brazil 6 60
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Bolivia 7 40
Argentina 8 20
Mexico 9 0
Ecuador 10
Venezuela 11
SOURCE: Foundation Getulio Vargas – First SOURCE: World Bank
trimester 2021PARAGUAY Land of Opportunities
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THE MOST SIMPLE AND COMPETITIVE TAX SCHEME
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TAXES
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Maximum rate for corporate
income tax 10%* 30% 25% 34% 25%
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Maximum rate for personal
income tax 10% 35% 36% 28% 13%
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Common indirect tax rate (e.g.
VAT) 10% 21% 22% 17% 13%
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Total referential of taxes and
social contributions 35% 106% 42% 65% 84%
(according to the World Bank)
* In case of sharing dividends, an additional 15% tax applies on the net profit.
Together, these three taxes reach a top of 23.5%.
SOURCES: FDI Intelligence, Ministry of FinancePARAGUAY Land of Opportunities
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TAX REFORM
TAX EFFECTIVE CHARGE IMPACT ON FOREIGN COMPANIES
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VALID UNTIL 2019 EFFECTIVE SINCE 2020
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10% 10%
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TAX ON 5% TAX ON 15%
PROFITS PROFITS
TAX ON THE 15% TAX ON DIVIDENDS 0%
DISITRIBUTION TAX ON PROFIT
TAX ON PROFIT
OF PROFITS REMITTANCES
REMITTANCES
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IRE IDU
10% 13,5% 0%
IRACIS REMITTANCES
14,5% 12,8% OR TAX ON
NON-RESIDENTS
INR
Overall Taxes = 27,3% 13,5%
Overall Taxes = 23,5%
SOURCE: Ministry of FinancePARAGUAY Land of Opportunities
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LABOR REGIME
In accordance to the current paraguayan Labor legislation
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(Law 213/93 and ammendments)
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PAID HOLIDAYS OTHER IMPORTANT DATA
• WORKING HOURS: 48 per week
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SENIORITY PAID HOLIDAY
• 13TH SALARY: paid at the end of the year
(equal to 1/12 of the yearly earned
0 to 5 years 12 working days
salary)qual to 1/12ry)
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More than 5 to 10 years 18 working days
• LEGAL MINIMUM WAGE (05/2021): Gs.
2,192,839 (USD 324)
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More than 10 years 30 working days • Maternity Leave and nursing time
Social Security (IPS)
Employer: 16.5% Employee: 9%
* For further information about the labor legislation, see the Law 213/93
(Labor Code), and their amendments and implementation rules.PARAGUAY Land of Opportunities
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LEADER IN THE GENERATION OF RENEWABLE ENERGY
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GENERATION OF ELECTRICITY FROM RENEWABLE SOURCES
(% OF TOTAL)
100%
100%
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89%
90%
80%
74%
68%
70%
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64%
60%
53% 53%
50%
44%
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40%
31%
28%
30%
20%
10%
0%
Paraguay Uruguay Brazil Colombia Venezuela Ecuador Peru Chile Bolivia Argentina
SOURCE: World Bank / FDI IntelligencePARAGUAY Land of Opportunities
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ENERGY
COST IN CENTS OF USD PER KWH (2020)
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MEDIUM INDUSTRIAL TENSION
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Bolivia 0,175
Peru 0,171
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Uruguay 0,169
Brazil 0,163
Argentina 0,155
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Colombia 0,132
Ecuador 0,119
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Chile 0,097
The surplus of electricity produced by the Itaipú and Yacyretá Paraguay 0,066
hydroelectric plants, corresponding to Paraguay, is exported to Brazil
0,00 0,02 0,04 0,06 0,08 0,10 0,12 0,14 0,16 0,18 0,20
(78%) and Argentina (22%).
With this, Paraguay is one of the largest producers and exporters of
renewable energy in the world. In July 2019, National Congress approved a new program to strengthen the transmission
Electric power is currently the second export product in the country. of electric energy, including two new 500 kV lines, in addition to the expansion and
improvement of the distribution system; this will allow full supply of energy for large
parts of the national territory.
SOURCES: ANDE, World Bank, FDI IntelligenceE X
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INCENTIVES FOR NATIONAL AND
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INTERNATIONAL INVESTMENTS
REPARAGUAY Land of Opportunities
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KEY FACTS FOR INVESTMENT IN PARAGUAY
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Greater
projected
Economic
economic growth Lowest indirect Lowest corporate Lowest energy resilience to
in Latin America
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tax rate in the tax rate in the costs in the external factors
between 2020 region region region (crisis in Argentina
and 2024 and Brazil)
(according to IMF)
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The National
Growing Government’s Youngest
Macroeconomic
economic Low public debit structural population in the
discipline
diversification reforms are region
underway.
SOURCE: MIC/REDIEXPARAGUAY Land of Opportunities
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MAQUILA REGIME
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Regime for the production of goods and services for export
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• TAX OF 1% on the final value
of the produced goods/
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services.
• Suspension of import taxes for
materials, machinery and
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other necessary supplies.
• VAT returns on the purchase of
goods and services, as a tax
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credit.
• Tax Exemption on income and
dividends remittances.
MERCOSUR Investment´s regimes are periodically reviewed. Next revisión
will be in 2023.
SOURCE: MIC/REDIEXPARAGUAY Land of Opportunities
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60/90 Investment Incentive Law
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Import tax on Capital Goods
(Machinery and Equipment)
0%
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Value Added Tax (VAT) on Capital Goods
(Local or foreign acquisition)
0%
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DEBT: Tax applied on remittances and payments of Interests (for investments
0%
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equal or higher than USD 5 million)
PROFITS: Tax applied on remittances dividends and utilities
(for 10 years for investments equal or higher than USD 5 million)
0%
SOURCE: MIC/REDIEXPARAGUAY Land of Opportunities
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OTHER INCENTIVES
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RAW MATERIAL REGIME PRODUCT AND NATIONAL
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EMPLOYMENT REGIME
Benefits on the imports of raw material and
implements with a 0% customs tax, provided Law 4558/11 grants a margin of
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proof it is used in their own production preference for Paraguayan products
process, and there is no national production and services in public purchases.
for them
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* Regime in place until 2023, subject to negotiation.
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BENEFICIARIES:
“Each industry of the country, registered at the Ministry of Industry and Commerce.”
MERCOSUR Investment´s regimes are periodically reviewed. Next revisión will be in 2023.
SOURCE: MIC/REDIEXPARAGUAY Land of Opportunities
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OTHER INCENTIVES AND THE AUTOMOTIVE REGIME
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DEVELOPMENT OF THE
MOTORCYCLE PARTS SECTOR
FISCAL ADVANTAGES Currently, there are 25
companies
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registered in this sector.
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• Exemption of customs • Plastic parts
tax
• Suspension parts
• VAT on import is
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calculated on 20% on
• Metal parts
the actual customs • Rubber parts
value
SOURCE: MIC/REDIEXPARAGUAY Land of Opportunities
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OTHER INCENTIVES / LAW 5542 INVESTMENT GUARANTEE
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MAIN BENEFITS
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• Invariability of the tax rate of the corporate tax for
companies for a period of up to 10 years, counted from
its start, with the possibility of extending the deadline
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for exceptional projects *
• Favorable exchange rate, for capital and profits
transfers.
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• Special regime for exports of part or all of the goods
produced. Companies may maintain a percentage of
foreign currency abroad, when these are necessary for
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the payment of obligations; or compliance with the
remittance of the profits that the investments generate.
* Up to 15 years for investments between USD 50 MILLION and less than USD 100
MILLION; up to 20 years for investments in industrial projects of an amount equal to or
greater than USD 100 MILLION.
SOURCE: MIC/REDIEXPARAGUAY Land of Opportunities
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OTHER INCENTIVES / PPP LAW
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By this law, rules and mechanisms to promote the public sector-related investments by the public-
private partnership are established.
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Elegible projects are:
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Waterway projects,
Road, railway, port riverway dredge and Electrical
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Social infrastructure
and airport projects navigability maintain infrastructure
projects
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Other infrastructure
Urban improvement,
Drinking water supply investment and public
equipment and
and sewage disposal services interest
development projects
projects
SOURCE: STPPARAGUAY Land of Opportunities
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OTHER INCENTIVES / INDUSTRIAL PARKS
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The industrial parks approved by the Ministry of Industry and Commerce does offer the
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following fiscal advantages:
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Reduction on the
Reduction on 50% of VAT exemption for
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Reduction on the municipal construction,
the industry real estate or factory
real estate tax building subdivision and
allowance fee renting costs
real estate transfer taxes
SOURCE: MIC/REDIEX
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Note: The Ministry of Industry and Commerce is working to improve the infrastructure and services of
the industrial parks with high quality standards.PARAGUAY Land of Opportunities
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FREE TRADE ZONES
Goods and Services departmental and
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Exemption of all types of
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Single tax of 0.5% on the
invoice of sales to third
Real estate infrastructure
for different types of
D
municipal fees countries activities
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Maintenance of the
origin of the products Specific protection
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introduced in the Free measures for their
Trade Zone, if there is no products, such as a
Environmental license Agile customs processing
change in the tariff line differentiated import
(Law 523/95, Art. 20; fee, prior import
Decree 7068/2006 and licenses, among others
Decree 1933/2019)
SOURCE: Ministry of FinancePARAGUAY Land of Opportunities
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EXPANDED MARKET AND NETWORK OF COMMERCIAL AGREEMENTS
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• Paraguay as a Mercosur State Party to Mercosur
has access to a market of more than 260 million
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inhabitants.
• Paraguay receives special and differentiated
D
treatment in the following areas:
o Preferential rules of origin: 40% regional
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content and 60% extrazone for a majority of
the products.
o Positive concessions for Paraguay in
external negotiations
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o National List of Exceptions to the Common
External Tariff of Mercosur of 649 tariff
items.
o Special regimes for the import of raw
materials, agricultural inputs and capital
goods and computer and
telecommunications.
SOURCE: MIC/REDIEXPARAGUAY Land of Opportunities
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THE NEW AUTOMOTIVE SECTOR AGREEMENTS AND THEIR
GREAT POTENTIAL
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• Vehicles and auto parts with a • The incorporation of opportunities for the
regional content index (ICR) of 50% development of vehicles with new
will enter the signatory countries engines (electric, hybrid, gas, hydrogen,
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cleared of customs duties etc.), starting with a Regional Content
• Auto parts manufactured in one Index (ICR) of 30%.
country that have 40% of ICR will • Preferential access for maquila products
R
have access in the other country with with ICR less than 50%, starting with USD
zero tariff up to an amount of US $ 35 350 million and an ICR of 40% to reach
million (gradual increase of amounts USD 750 million and ICR 50% in 2027
and ICR until 2026) • Preferential access for both countries for
1,000 vehicle units of people with a
reduced ICR (30% ICR for Paraguay and
35% for Brazil)
SOURCE : MRE/MICPARAGUAY Land of Opportunities
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PARAGUAY WILL BE THE COUNTRY MOST BENEFITED WITH THESE
NEW AGREEMENTS
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• Agreement reached in June, 2019 after 20 years of • Negotiations concluded in
negotiation. August, 2019
• One of the most important trade agreements, at global • Preferential access for
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level. almost 97% of Mercosur’s
• The agreement eliminates tariffs for 93% of Mercosur export offer
exports and grant preferential treatment for almost all • For first time, Switzerland
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the remaining 7%. and Norway established
• The EU liberalizes 99% of Mercosur's agricultural exports. preferential quotas for
For 81.7% it will eliminate import tariffs and for the Mercosur countries
remaining 17.3% it will offer preferential import quotas. • Main beneficiary export
• Commercial opportunities in the sectors of organic sugar, products for Mercosur are
bovine meat, poultry meat, rice, corn, honey and ethanol bovine meat, poultry meat,
from Paraguay corn, vegetal oils, among
others.
SOURCE : MRE/MICPARAGUAY Land of Opportunities
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NETWORK OF COMMERCIAL BILATERAL AGREEMENTS
AGREEMENTS IN NEGOTIATION OF MERCOSUR WITH:
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As a member of Mercosur, Paraguay is part of a network of
commercial agreements.
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AGREEMENTS OF PARTIAL SCOPE OF ECONOMIC
COMPLEMENTATION OF MERCOSUR WITH:
Canadá Corea del Sur Singapur
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MERCOSUR MAINTAINS DIALOGUES FOR
NEGOTIATIONS WITH:
Bolivia Chile Colombia Cuba
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• Association of • Gulf • Eurasian
Southeast Asian Cooperation Economic Peru Andean Nations
México
Nations (ASEAN) Council (GCC) Union (EEU) Community
R
Other Commercial Agreements of Mercosur with:
Australia Japan Lebanon Morocco
India Israel Palestina South Africa
Pakistan Tunisia Turkey Customs Union
SOURCES: MRE / MICPARAGUAY Land of Opportunities
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BILATERAL COMMERCIAL AGREEMENT NETWORK
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Paraguay has Investment Agreements with the following countries:
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Germany El Salvador Peru
Austria United Arab Emirates Portugal
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Belgium-Luxemburgo Spain Czech Republic
Chile France Romania
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South Korea Great Britain South Africa
Costa Rica Hungary Switzerland
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Cuba Italy Taiwan
Ecuador Netherlands Venezuela
In addition, Paraguay has agreements to avoid double taxation with Chile, the United Arab
Emirates, Taiwan and Uruguay.PARAGUAY Land of Opportunities
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HIGH LEVELS OF PRODUCTION AND EXPORT CAPACITY
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1° 2°
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Net Exporter of Stevia
Clean Energy in Producer in
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the World the World
3°
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Mate tea
4°
Exporter in the Corn Exporter
in the World
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World
6° 8°
Meat Exporter in
Soybean oil
the World
Exporter in the
WorldPARAGUAY Land of Opportunities
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POST-PANDEMIC ECONOMIC MOTORS
PRIORITIZED SECTORS
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High quality of life at a Young labor force and
reasonable cost demographic bonus
Creative Industries
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Light Manufacturing
Personal Services
and BPO
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Robust macro-economic IT Service Abundant and
Forestry Tourism
stability Management competitive energy
Value-Added
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Mining with Added
Agriculture Based
Value
Industry
Regional Logistics
Central location in Abundant and diverse
Mercosur natural resources
SOURCE: Paraguay Post Covid-19, Roberto Artavia, 2020PARAGUAY Land of Opportunities
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COUNTRY BRAND
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1 2 3 4
ASSOCIATED WITH PROMOTES HIGHLIGHTS
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STRATEGIC
COMPETION TOOL QUALITY TOURISM AND PARAGUAY’S BEST
PRODUCTION CULTURE QUALITIES
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PRIORITY SECTORS CONCEPTS THAT SELL
• Exports • Paraguay as an energy producer
• Foreign Direct Investment • Water, as an element of connection with the
• Tourism world, culture, commerce, business and tourism
• Culture • Young and growing country, with natural resources
• Creative Industries and abundant opportunities.PARAGUAY Land of Opportunities
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SUSTAINABLE BUSINESS OPPORTUNITIES IN PARAGUAY
I E
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FOOD AND DRINKS INFRASTRUCTURE FINANCING
HEALTH CARE
RE EDUCATION RENEWABLE RESOURCES
AND ALTERNATIVE ENERGIES
TECHNOLOGY AND
COMMUNICATIONS
SOURCE: SDG INVESTOR PLATAFORM https://sdginvestorplatform.undp.org/E X
THANK YOU
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Asunción – Paraguay
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Mcal. López 3333 c/ Dr. Weiss CP: 1892 (+595) 021 616 3028 info@rediex.gov.py www.rediex.gov.pyYou can also read
