Paraguay has been recognized as an excellent opportunity for foreign goods, products or services – actually for the foreign companies that own those products, goods or services. These are introduced –temporarily– into the country in order to be assembled, repaired, improved, worked on, or processed, and finally exported to the foreign country again, in which the industrial headquarters are established.
This business modality is called Maquila and its impact can be appreciate, for example, in the U.S. – Mexico trade relationship. In fact, the maquiladora industry has been a major economic engine in that region. Having say that, let’s focuss on Paraguay.
Why?
From the business perspective, we could summarize the whole idea of Paraguay being an attractive location for Maquila’s into two points: (i) taxation; and (ii) the youth of the Paraguayan workforce.
Taxation is definitly the main attraction of Maquilas. By statute (Law 1064/97 “De la Industria Maquiladora de Exportación”) a unique tax of 1% is applied on the added value provided by the “Paraguayan element” to the raw materials imported or on the amount of the invoice issued by the foreing Company – the one that results larger.
There are not other taxes that apply to Maquilas with one exception: taxes for certain sales in the domestic (Paraguayan) market. These sales have a limit: 10% of the volume exported during the last year of exports to the industrial headquarter’s country. In this case, and until that 10% limit here referred to, all the domestic taxes on the sales apply.
The other factor: the youth of the Paraguayan workforce. Approximately, 65% of the Paraguayan population is under 35-years-old. This represents an important element when it comes to first employments. For this reason, Paraguay has proven that once the opportunity is given (an employment), the workers identify themselves with the Company.
THN (http://www.thn.com.py/), Yazaki (https://www.yazaki-group.com/global/), LEONI Group (https://www.leoni.com/en/), Daisa (http://www.daisa.com.br/), are just a few examples of foreign companies that have established Maquiladoras in the Paraguayan territory — all of them can certify the discipline and proactivness of their workers.
How?
Paraguayan legislation does not impose restrictions regarding the types of products or services encompassed by the Maquila industry.
Companies that want to establish a Maquila in Paraguay can do it throug the following types of business organizations: Corporations, Limited Liability Company, Branches, Partnerships, Limited Partnerships, Company Limited by Shares; Personal Service Companies and Individual Limited Liability Business.
Once the Company is created in Paraguay, the autorization shall be issued by the National Council for the Maquila Industry for Export – Consejo Nacional de la Industria Maquiladora de la Exportación (CNIME). The benefits granted by the Maquila regime can be enjoyed by any Company that fulfills the formal requirements, regardless the nationality of its members.
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