Registering a company in Paraguay allows you to start a business in one of the most promising countries in South America. Below we look at the business forms available, as well as a number of requirements that need to be fulfilled in order to register a company in Paraguay.
Starting a company in Paraguay: advantages of the jurisdiction
If you are considering this jurisdiction as a platform for doing business, it is important to consider the advantages of the Republic of Paraguay. These typically include items such as:
- actively developing economy;
- favourable location of the state;
- the opportunity to enter the markets of South America;
- you can set up a company in Paraguay in a short period of time;
- the government welcomes international infusion;
- the country's legislation guarantees equal treatment of both local and foreign entrepreneurs;
- Paraguay allows full repatriation of capital and profits;
- a number of tax incentives are available to foreign companies;
- investments in many areas, including exports, may be exempt from VAT;
Paraguay's economic expansion has been primarily propelled by markedly diminished fiscal encumbrance, the stimulation of overseas investment, investment in communal framework, and the exportation of commodities.
With this aim of enhancing Paraguay's repute as a commercial initiation platform, the Paraguayan administration has promulgated several statutes to stimulate foreign investments via particular fiscal enticements like the Maquila, 60/90 statutes, etc. Statute 60/90 grants an exemption on returns, imports, and offshore debt reimbursements for capital asset investment schemes exceeding $5 million (immunities are for a period of up to a decade). The Maquila regimen permits corporations to inward shipment basic materials (sans taxation) and acquire, fabricate, or refine them in Paraguay to subsequently export the finalized commodity at a fixed taxation rate of 1% over worth.
Furthermore, as mentioned heretofore, overseas backers are assured equal treatment akin to any indigenous baker, the entitlement to possess real estate, and the movement of assets across frontiers without constraints except for relevant levies.
Legal entity registration in Paraguay: Business structures
Foreign entrepreneurs can register one of the following types of business entities:
Sociedad Anónima (SA)
Just as in numerous Latin American nations, the SA or "corporation" is the most favored business archetype for substantial enterprises in Paraguay.
Key features:
- There must be a minimum of two shareholders, including one Paraguayan resident;
- Every firm is obligated to incorporate the initials SA in their designation.;
- Capital requisites are minimal (as little as 1 USD). However, a minimum of 10,000 USD is required if the company's activities involve exports;
- Registered authorisation of tribunals from civic archives;
- It takes about 12 weeks to register an SA in Paraguay.
Limited Liability Company (SRL)
SRL or Limited Liability Company (LLC) is also a common business form as this model provides more protection for the investor's contribution.
Some key features of SRL registration in Paraguay include:
- There must be a minimum of two shareholders, including one Paraguayan resident;
- The appointment of a minimum of 1 director is required;
- It is mandatory to include the designation of the limited liability company in the name of the limited liability company;
- Companies are not required to enroll with the civic ledger as mercantile organisations, but this may cause further complications;
- The corporate agreement must be registered in the public registry before the LLC starts its activities;
- There is no legal requirement for a minimum share capital;
- It will take approximately 10-12 weeks to register an LLC in Paraguay.
Branch
Overseas corporations have the option to inaugurate a subsidiary branch in Paraguay. For corporations seeking protracted investments and more intricate and extensive ventures in Paraguay, the establishment of a subsidiary branch can prove to be a highly judicious selection.
However, it is worth keeping in mind the following:
- Branches must be enrolled with the Registrar of Juridical Entities and Unions and the State Commercial Registry;
- A min of one director is required, who must reside in Paraguay;
Establishing a juridical entity in Paraguay is a moderately straightforward procedure. The phases to enroll a corporation in Paraguay are as follows:
- Designation verification to guarantee the singularity of the proffered corporation appellation;
- Composition of corporate diplomas (which must be authenticated by an advocate);
- Validation of the corporate records by a public notary;
- Submission of the establishment records with the SUAE;
- Submission of records, like articles of syndication or corporation formulation diploma, with the Treasury Prosecutor's Bureau;
- Acquisition of a taxpayer enrollment numeral subsequent to soliciting for fiscal enlistment at the Ministry of Finance.
It is also of value to acknowledge that certain activities mandating governmental enrollment, such as the establishment of a corporation (Sociedad anónima), may be susceptible to modifications and temporal postponements due to the obligatory enrollment of an array of deeds. Nevertheless, Paraguay in this current year initiated the implementation of a novel corporate configuration designated Empresa de Acciones Simplificadas (Simplified Share Corporation), characterized by a briefer enrollment duration, streamlined governance, and the provision for a sole shareholder.
Peculiarities of taxation
Paraguay possesses the 34th most modest corporate levy ratio globally. Corporate earnings are imposed on a territorial foundation - signifying that earnings amassed in international jurisdictions are not subjected to taxation within the nation.
In 2020, Paraguay entirely revamped its fiscal framework to streamline and contemporize it. The objective of the novel Tax Statute is to enhance the extant fiscal structure so that it is more uncomplicated, more proficient, more equitable, and more competitive. The Fiscal Decree mirrors specific tenets widespread in contemporary fiscal systems targeted at diminishing fiscal elusion.
If you have resolved to establish a corporation in Paraguay, it is worthwhile to investigate the prevailing taxation percentages. Corporate revenue assessment (10% tariff) is imposed on earnings procured from agrarian pursuits, commerce, manufacturing, and amenities (excluding individual services), whereas dividend assessment (10-15%) is imposed on dividends or earnings disbursed to stockholders or recipients of corporations.
Paraguay solely levies on revenue garnered from "Paraguayan origins." Earnings are regarded as originating from Paraguayan origins if such gains ensue from:
- endeavors conducted in Paraguay;
- possessions;
- entitlements monetarily utilized.
Value Added Tax (10% tariff) is imposed on the vendition of merchandise and amenities, and also on the importation of merchandise. The value augmented levies is rigorously geographical, signifying that exclusively sales of commodities and amenities within Paraguay are subject to taxation. Nonetheless, the fresh tax enactment establishes that electronic amenities, such as transmitting amenities, are regarded as having been rendered in Paraguay if the demesne is:
- User IP domicile;
- billing domicile;
- financial institution account;
- credit card grantor.
Conclusion
Integrating a venture in Paraguay is a procedure that requires an understanding of local legislation. If you still have questions on this topic, you can make an appointment for a personal consultation on regulation of activities in Paraguay by contacting our specialists.
