Competitive Platform

#Advantages #Competitiveness # Differentiation

AVAILABILITY AND PRICES OF ELECTRICITY FOR INDUSTRIES

The price of electric Paraguayan industrial energy is the most economical in the region with US $ 41.53 per megawatt hour (MWh).

With the new transmission lines of 500 kV a significant improvement in the safe and continuous supply of the industry and the citizenship with electric power was achieved. As there are areas of the country with greater availability of electricity, the government can advise energy-intensive companies on the most appropriate locations.

100% of Paraguay’s electricity comes from hydroelectric sources that are environmentally sustainable.

For more information:

Construction Project of the 500 kV Transmission Line Yacyretá – Ayolas – Villa Hayes

http://www.ande.gov.py/noticias/documentos/2477/lt_500_web.pdf

Source: FDI Intelligence

Source: ANDE (año 2014)

PREFERENTIAL ACCESS TO THE MARKET OF THE EUROPEAN UNION. SGP+

Starting in 2014, Paraguay remains the only Mercosur member country with preferential access to the European Union for more than 6,300 products under the “General System of Preferences Plus” (GSP+).

Among the sectors with preferential access, items such as clothing, footwear, plastics, insecticides, leather, balance, and wood, among others stand out.

With this, international companies have the possibility of carrying out production processes in Paraguay, for subsequent export to the European Union, with a reduced tariff.

Source: MIC/REDIEX

TAX REGIME

TRIPLE TEN CONSOLIDATED TAX REGIME

Paraguay has the most competitive tax package in the region. In 2004, a simplified and advantageous tax system was implemented for national and international companies, called “triple 10”. The taxes applied are:

– 10% corporate income tax

– 10% personal income tax (only applied to people who receive more than 60 minimum wages in a year, regulation in force for the year 2017)
– 10% value added tax on goods and services (with reductions or exemptions for basic goods and educational services).

LAW 60/90

It establishes the regime of fiscal incentives for capital investment, both of national and foreign origin. Its objectives are: to increase the production of goods and services, to create permanent sources of labor, to promote exports, to substitute imports, to promote investment and reinvestment of profits in capital goods, and to incorporate technologies that increase productive efficiency and enable greater and better use of raw materials, labor and national energy resources.. More info…

MAQUILA REGIME

Law 1064/97 created the National Council of Maquiladora Industries for Export (NCMIE), whose purpose is to promote the establishment of maquiladora companies and regulate their operations. These companies incorporate labor and other national resources and are engaged in the transformation, processing, repair or assembly of goods of foreign origin temporarily imported for that purpose for subsequent re-export, in execution of a contract signed with a company domiciled abroad.. More info…

IMPORTATION REGIME OF RAW MATERIALS AND INPUTS

The objective of this regime is to encourage the importation of raw materials and inputs that are not produced in the country. Its legal framework is composed of Decree No. 11.771/00, Decree No. 6.957/05 and Resolution No. 1/01.

REGIME OF ORIGIN OF MERCOSUR

It is the set of requirements that ensure that a product has been produced in one of the States Parties of MERCOSUR. These rules or requirements may be general or specific.

Goods that meet these conditions are called “originating in MERCOSUR” and can be traded between countries of the bloc without payment of the import tariff.

LAW OF FREE ZONES

The Law of Free Zones No. 523, promulgated in 1995, creates and authorizes the operation in Paraguay of areas subject to state control, where commercial, industrial and service activities are carried out and receive special benefits that promote activities with a view to the development of international trade.

DECREE No. 11. 701 "IMPORT REGIME OF RAW MATERIALS AND INPUTS"

The objective of this regime is to encourage the importation of raw materials and inputs that are not produced in the country. In order to obtain certification, certain requirements must be fulfilled: the raw material must not be obtained in the interior of the country, the amount of the import must not be less than USD 1,500. The benefit of this regime is the application of a customs tariff of 0% to the importation of raw materials, provided that it is demonstrated that they are used in the productive processes.

LAW 4838/12 "NATIONAL AUTOMOTIVE POLICY"

It is a law of taxes incentives to the investment of capital of national and foreign origin with the purpose of promoting and stimulating the manufacture and / or assembly of motorized and non-motorized vehicles and auto parts in general. It also aims to contribute to improving competitiveness, creating a source of work, facilitating and transferring technology, among others.

LAW 5102/13 "PRIVATE PUBLIC ALLIANCE"

Its purpose is to establish norms and mechanisms to promote, through public private participation, investments in public infrastructure and in the provision of the services to which they are destined or complementary to them, as well as in the production of goods and services that are specific to the object of agencies, entities, public companies and companies in which the State is a party.

LAW 5074/13 "ESTABLISHES THE REGIME OF PUBLIC WORKS"

It establishes modalities and special and complementary conditions to the Law No. 1045/83 “That establishes the Regime of Public Works”

MAIN COMPETITIVE ADVANTAGES OF PARAGUAY FOR COMPANIES

LABOR COST

According to international comparative studies, Paraguay is among the South American countries with the lowest labor cost for the entrepreneur.

Although the country has a minimum wage to guarantee coverage of basic employee requirements, Paraguay’s personnel costs are the most competitive in the region, due to the cost of social security and cost of living.

Among the sectors with preferential access, items such as clothing, footwear, plastics, insecticides, leather, balance, wood, among others stand out.

With this, international companies have the possibility of carrying out production processes in Paraguay, for subsequent export to the European Union, with a reduced tariff.

Estimated labor cost for an industry of 100 employees, including 10 engineers, 1 manager, 1 manager, 17 highly qualified technicians, 50 qualified operators, 13 unqualified operators, 1 quality control manager, 5 quality control specialists and 2 Secretaries

PRICE OF ENERGY – INDUSTRIAL SECTOR

Paraguay’s significant surplus of electricity production allows the offering of energy at the lowest price in South America. As a result, Paraguay is particularly competitive for power intensive industries. It should be noted that 100% of the electricity produced in Paraguay comes from renewable sources.

Source: FDI, Data from Paraguay: ANDE; Data from Argentina: EDESUR (2016)

THE MOST COMPETITIVE TAXES FROM MERCOSUR

According to the World Bank, the sum of taxes and average labor contributions of a Paraguayan company is the lowest in Mercosur, and the lowest in South America.

Source: World Bank (Doing Business 2017)