Paraguay Enacts Law No. 5542/15 'On Investment Guarantees And Promotion Of Employment, Economic And Social Development'

The Government of Paraguay sanctioned and enacted Law No. 5.542/15 (the "Law"), which guarantees the stability of Income Tax rate, equal treatment and legal security for those companies that apply to the regime established therein, through the execution of an investment contract with the government authorities. Likewise, when the investment involves high social impact, the Law foresees additional benefits such as, exemption from additional Income Tax rates on distribution of profits and up to 50% reduction of the withholding tax rate on dividend remittances abroad.

The Law is applicable to both new investment projects, as well as investments existing prior to its entry into force, provided such existing investments comply with the requirements set out in the Law, including approval of the investment project and the execution of the investment contract.

The Law shall be further regulated by means of a Presidential Decree within 120 days of enactment.

Scope of the Law

The protection of capital investment in industry and other productive activities in the country, when they contribute to:

Employment generation; and Economic and social development of the Nation, through the incorporation of added value to local or imported raw materials. Beneficiaries

Either natural or legal entities, whether local or foreign, who invest capital in companies that meet the above mentioned requirements, either by creating/incorporating them or adapting already existing companies to such requirements.

Main benefits

Combination with Law N. 60/90...