Country Report Paraguay

Economic overview

The COVID-19 pandemic hit Paraguay as the country was setting out on a solid recuperation way after development had slowed down in 2019. The worldwide downturn is probably going to prompt a GDP decrease of 1.2 percent in 2020. From that point, development is required to re-visitation of 4 percent, as the world economy recuperates. This is dependent upon the disadvantage danger of a more slow than anticipated standardization of worldwide business sectors. Thus, destitution is required to increment in 2020, and pay imbalance to stay high. 

The COVID-19 episode hits the Paraguay economy in a snapshot of financial recuperation after development had slowed down in 2019. The economy was in a downturn in the primary portion of 2019 (- 3 percent year-on-year) because of frail execution of the principle exchanging accomplices, particularly Argentina, and unfavorable climatic conditions, however began to recuperate in the second 50% of the year (+3 percent year-on-year) as farming yield bounced back alongside good climate. 

Paraguay has the lowest unemployment rate in the Mercosur area, which was 7.2% in 2019 and is expected to remain stable in 2020, despite the negative economic impact of the COVID-19 pandemic. 

Main sectors of industry

Industry, particularly the assembling area, truly was connected to rural preparing until the 1970s, when the development of hydroelectric plants and new mechanical impetuses started to expand the modern base. Industry was made primarily out of assembling and development. 

Paraguay had no genuine mining area, yet the production of development materials included restricted mining movement. Assembling and development in the economy in the last part of the 1980s stayed reliant on improvements in different areas, for example, horticulture and energy, for their development. 

Despite the fact that industry was getting more noticeable in Paraguay during the 1980s, a lot of GDP really declined during the 1970s and 1980s due to more fast development in horticulture. 

Manufacturing represented 16.3 percent of GDP in 1986 and utilized around 13 percent of the workforce, making Paraguay one of the most un-industrialized countries in Latin America. Fabricated fares, by most definitions, represented under 5 percent of absolute fares; when semiprocessed farming items were incorporated, notwithstanding, that figure arrived at 77 percent. 

The food, drinks, and tobacco subsector has been the center assembling movement since Paraguay’s commencement. 

Textiles, clothing, leather, and shoes contained the third biggest assembling subsector. These businesses were customary, grounded in the country’s bounty of sources of info like cotton filaments, steers covers up, and tannin remove.

Taxes for businesses

Corporate income tax is exacted on a regional premise in Paraguay. Duty is expected, with certain special cases, on business pay got from exercises performed, property arranged, or financial rights utilized in Paraguay, paying little mind to the identity, home, or home of those partaking in the activities or where agreements are agreed upon. Branches are burdened similarly as auxiliaries. 

Capital increases got from the offer of fixed resources, unfaltering property, and protections are burdened as normal pay at the 10% general corporate duty rate. 

Assessment misfortunes created as from financial year 2020 might be conveyed forward for up to five monetary years to balance up to 20% of available pay. The carryback of misfortunes isn’t allowed. 

People are occupant in Paraguay in the event that they are in the nation for over 120 days in a schedule year or in the past year time frame. 

Capital gains are are subject to individual income tax at 8% in the event that they are incidental; else, they are dependent upon corporate expense.

Investing in Paraguay

Paraguayan law grants financial specialists tax cuts, permits full bringing home of capital and benefits, bolsters gathering plant activities and ensures public treatment for unfamiliar speculators. Unfamiliar speculation isn’t liable to screening, and unfamiliar elements are allowed to claim property. 

The political atmosphere, the helpless state of framework and the absence of straightforwardness in guidelines are significant impediments for speculators. Also, work guidelines are outdated and prohibitive. Be that as it may, Paraguay can offer minimal effort power and looks to become, in the long haul, a focal point of mix between the Pacific and the Atlantic. Paraguay likewise allows speculators various tax reductions under Law 60/90.

  • Value Added Tax (VAT) 10% (standard rate)
  • Reduced rate: 5% (real estate selling and leasing, basic groceries, farming products, and pharmaceutical products)
  • Company Tax 10%
  • Dividends: 8% (residents)/15% (non-residents); Interests: 6% (financial institutions)/15% (non-resident commercial entity)/30% (parent company or shareholder); Royalties: 15%/30% (when paid to a head office abroad)