Archivos del autor: Fibase

Our partner Martin Carlevaro, specialist in charge of the infrastructure and APPs practice, is interviewed on 12/18/2020 by Horacio Ferraro of 5 Días TV about the infrastructure projects that are currently in the pipeline in Paraguay.

As part of the post-pandemic economic reactivation, the national government enacted Law No. 6534/20 which, on the one hand, ensures the full protection of personal and credit information and, on the other hand, expands and modernizes the regulatory framework in a timely manner for its treatment and use in the market.

In general, the law enters into force immediately, and Law 1682/01 and its two subsequent amendments, known in common language as the «Informconf Law», were derogated.

The new law provides that, within a maximum period of two years (until October 2022), companies involved in processing information must rearrange their statutes, organization and operation to be renamed «Credit Bureaus». These new companies will become companies supervised by the Central Bank of Paraguay (“BCP”), with minimum capital requirements. However, the regulation of said law by the two enforcement authorities is still pending: the Central Bank of Paraguay and the Office for Defense of Consumers (“SEDECO”), so it would be reasonable to count on some specific issues to be expanded or even become enforceable in the very short term.

The following new facts can be mentioned:

1. a) The «right to be forgotten» is created: credit data that may affect a person should not be kept on record for more than 5 years. After that period of time, it must be eliminated or disassociated from the person.
2. b) Breach of the «duty of secrecy» is expanded: previously as exclusive power of judges, now is extended to the Comptroller General of the Republic, the BCP, the Tax Administration, Customs, the Attorney General’s Office and the Financial Intelligence Unit (“Seprelad”).
3. c) «Information consent» is expanded: companies that collect information must report the destination and purpose of the same and obtain prior express authorization from individuals.
4. d) The use of credit information for decision-making related to human resources, as well as for the provision of medical services, is prohibited

With regard to overdue obligations and delinquency in general, the new law provides that:

• e) Delinquency for alimony becomes part of and affects a person’s credit information from the moment the claim begins;
• f) Cancellation of liabilities by debtors must be reported within a maximum period of 24 hours; and,
• g) Publication of overdue debts that have exceeded 3 years since their registration and not legally claimed is prohibited

Other important aspects to be considered:

• h) The law establishes the obligation to inform in advance to those individuals whose credit information will be consulted, about the company that will provide the data, the use that will be given to the accessed data, and deliver a copy of the provided report in the event that the owner of the data requires it.
• i) In case of rejection for entering into a contract, request for work, service, commercial or financial credit, based on a credit report, such circumstance must be reported, and the report must be shown, delivering a copy of it.
• j) The sale or assignment of credit portfolios must be reported to the credit bureaus

The main positive aspect worth to be mentioned is that adjustment to the new legal obligations will be minimal for those companies whose daily business involves granting commercial loans. However, it must be noted that sanctions are more serious than in the previous legislation, with higher fines that can even include the closure of operations and disqualification within the financial system. Therefore, it is BKM|Berkemeyer suggestion to review all processes and documents related to credits, including collections, and take advantage of the opportunity to detect other opportunities for savings and efficiency.

This newsletter comprises a fast reading summary, of general interest,  and in no case the same may be understood as a legal opinion or recommendation or a transcription of the text of the law. For further information, please contact juan.guerra@berke.com.py and mauro.mascareno@berke.com.py.

Frigorífico Concepción from Paraguay issued bonds in NY under Rule 144A / Regulation S for a value of USD 40 million. The Bolivian subsidiary of said issuer established guarantees on the debt, in addition to a number of properties in Paraguay and receivables from activities in Bolivia and Paraguay that were set as guarantees on behalf of the investors. To this end, a guarantee trust was created in Paraguay with Finexpar as trustee and Wilmington Trust acting as beneficiary. Wilmington Trust was also the Trustee in the Indenture under New York law.

The bonds expire in 2025 and accrue an interest rate of 11%. Oppenheimer acted as underwriter for the operation

Although issuances in international capital markets are not common for companies incorporated in Paraguay, this is the second debt offering from Frigorífico Concepción this year, being a “retap” of the USD 100 million issuance in January 2020.

With the proceeds from the last issuance, Frigorífico Concepción aims to increase production at its meat production facilities in Paraguay, as well as cancelling existing debts and funding the expansion of the meat production facilities in Bolivia.

Frigorífico Concepción ranks among the top five exporters of meat products in Latin America. Its facilities can accommodate up to 40,000 head of cattle. The Concepción Group exports meat products to more than 30 countries through eight subsidiaries that operate in the processing industry.

Wilmington Trust Advisor

BKM | Berkemeyer

ugo Berkemeyer and Martín Carlevaro, Partners, and Milena Sljivich, Associat, in Asunción

On Saturday, November 7th, the Tax Administration published General Resolution No. 70/2020 in order to set regulations for certain aspects of Taxes on Dividends and Profits (IDU), specifically the obligation to file Informative Statements (DJI).

The Tax Administration «construes» Law No. 6380/2019 and defines the scope according to their criteria, addressing issues such as: i) filing of DJI by the «EDGUR» within the sixth month following the closing of the fiscal year, ii) information required to be provided to SET (date of meeting or the like, reported fiscal year, total amount of profits, amount to be distributed, etc.).

We emphasize on the importance of clarity when drafting the minutes regarding meetings of shareholders or stakeholders, as these documents must be attached to the DJI, and ambiguous or unclear drafting could give rise to IDU’s claims.

For more information, please contact:

federico.valinotti@berke.com.py

carlos.vargas@berke.com.py

mauro.mascareno@berke.com.py

BKM | BERKEMEYER

Through Resolution No. 69/2020, published on Saturday, November 7th, the Tax Administration sets regulations for certain aspects of the Personal Income Tax, providing at the same time new forms (sworn statements) to submit tax settlements.

The Tax Administration «construes» Law No. 6380/2019 and defines the scope according to their criteria, divided into two general chapters of: i) Capital income and, ii) Incomes derived from personal services, addressing also matters regarding related documentation and records

Scope of capital income is specified in relation to matters such as: anticipated inheritance, real estate leasing, withholdings, dividends, registration/cancellation of duties, among others.

On the other hand, income from personal services refers to income in kind, dependents, income by minors, alimonies, subsidies, recreation, prepaid medicine, housing, construction/remodeling/fixing, documentation/valid receipts, withholdings.

The new development in this regulation is the fact that it clarifies that real estate sales by individuals should be documented only by withholding receipts and not by issuing exempt invoices. This is extremely important as implies that the sale and purchase prices are not required to be stated when declaring VAT amounts because they are not covered by said type of tax.

For more information, please contact

federico.valinotti@berke.com.py

carlos.vargas@berke.com.py

mauro@mascareno@berke.com.py

BKM | BERKEMEYER