The National Congress has approved the bill on Tax Incentives for National and Foreign Investment, which will replace Law No. 60/90 when enacted. The regime modernizes investment promotion, with clear and competitive rules to attract national and foreign capital.
The law seeks to:
- Increase the production of goods and services.
- Generate permanent, quality jobs.
- Incorporate technologies that optimize resources and improve efficiency.
- Develop local suppliers and integrate national added value.
- Promote the growth of MSMEs.
Tax benefits will apply to strategic sectors, in line with the country’s sustainable development goals.
Specific benefits
The law establishes a set of advantages that significantly reduce the cost of capital and increase the return on investments:
- Exemption from customs duties on the import of capital goods, raw materials, and supplies intended for the investment project, applied directly to the industrial, agricultural, or service production cycle, except for fees for services actually rendered.
- Exemption from VAT on the import and local purchase of goods intended for the industrial or agricultural production cycle.
- Exemption from VAT on the first sale of capital goods that have been imported or acquired from national manufacturers under this tax incentive regime. This exemption will apply exclusively when the transfer of ownership of said goods is made between the beneficiaries of this law.
- Exemption from NRI on interest, commissions, and surcharges remitted abroad for loans used to finance the investment project, granted by banks, financial institutions, or other credit institutions with international experience. It will apply when the investment is at least USD 13,000,000.
- Exemption from IDU on dividends, profits, and returns from projects under the regime, for 10 years from their first generation, provided that the investment is at least USD 13,000,000. For non-residents, it only applies if the investment does not come from territories with low or no taxation, or if the IDU is not recognized as a tax credit in the country of origin. The exemption only covers profits derived from the project and, in the case of pre-existing production chains, will be applied proportionally to the new investment.
- Exemption from customs duties and VAT on the import of capital goods for investment projects aimed at large-scale tourism and entertainment services, provided that the investment is at least USD 20,000,000.
- The legal deadlines are: opinion from the Investment Council in 60 days and bi-ministerial resolution (MIC–MEF) in 15 days.
Innovations compared to the previous regime
While Law 60/90 offered general benefits, the new regulations introduce substantial improvements:
- Conditions benefits on the Environmental Impact Statement, which ensures sustainability.
- Incorporates the possibility of renewing benefits within the initial 20 years and complementing them with new stages of investment.
- Expressly regulates the transfer of pre-operational benefits and capital goods between beneficiaries.
- Establishes permanent monitoring and inspection mechanisms, with periodic reports in the form of a sworn statement.
Expected impact
The new framework reinforces Paraguay as a regional investment hub, offering greater legal certainty and a reduction in the cost of capital. A multiplier effect is projected in formal employment, attraction of technology, and strengthening of local value chains. For international investors, the exemption from taxes on dividends and financing interest represents a clear comparative advantage over neighboring regimes.
Conclusion and call to action
The approval of this law marks a milestone in Paraguayan economic policy. A window of opportunity opens for industrial, logistics, technological, and tourism projects.
From BKM, as specialized advisors in tax planning and structuring of investment projects, we are ready to accompany you in the eligibility diagnosis, financial modeling, and regulatory compliance.
For more information, please contact Luciano Antonelli: luciano.antonelli@berke.com.py
