Business travel, establishing companies, investments, HR, marketing
E-Book, Englisch, 120 Seiten
ISBN: 978-3-7583-8010-5
Verlag: Books on Demand
Format: EPUB
Kopierschutz: Wasserzeichen (»Systemvoraussetzungen)
In its 130 pages, the book offers information on all important aspects of doing business in Paraguay:
- Legal forms
- Tax system
- Setting up a company (freelance as well as corporate)
- Financial investments
- Investment incentives
- Success stories and success factors
- Personnel and marketing
- Dealing with Paraguayans
- Peculiarities in everyday business life
- Organizational information (flight, hotel, traffic, electricity, telecommunications, money/banks)
- Detailed index.
All information is newly researched (2023) and therefore includes all new developments such as the tax reform of 2020 and the consequences for companies and freelancers, the new legal form of the EAS and other legal changes, as well as numerous case studies of successful companies - based on exclusive interviews.
But even in Paraguay, success does not fall from the sky. Therefore this book also presents examples of a wide variety of companies and fields of activity and highlights the success factors systematically collected and evaluated in numerous interviews.
There are also valuable insider tips that can save you a lot of money! The book is not an immigration guide - but immigrants who want to become economically active can also benefit from the content.
Paraguay also has an excellent investment climate. It offers numerous investment incentives with high tax benefits, and profits can be freely transferred abroad. Of particular interest to manufacturing companies are the very competitive energy and labor costs. As over 99% of the energy is generated by hydropower, this is also an attractive location from an environmental point of view. Labor costs are up to 50% lower than in Brazil, which has a large labor force, and energy costs are about 60% lower. With a corporate tax rate of only 10%, Paraguay is an exiting opportunity.
Autoren/Hrsg.
Weitere Infos & Material
2. Basics of doing business in Paraguay Paraguay is a country of immigration and is very friendly and helpful to foreigners, both on the part of the people and the various authorities. This makes doing business in Paraguay quite easy for foreigners. You cannot expect to find forms in English, but at least many declarations and forms contain information about the particularities of a certain procedure if you are a foreigner or do not (yet) have a Paraguayan residence permit (and Cédula). The latter is recommended anyway, especially since it is cheap and easy to obtain (see Chapter 2.2). In recent years, many procedures have been simplified – and above all digitized and standardized. However, this does not mean that you can do everything online or that there is no bureaucracy – quite the opposite. You might be surprised how bureaucratic Paraguay is and how much paperwork is required. Compared to the past, however, the necessary formalities can be done on your own. You do not necessarily need a local who knows where and when to "grease the palms". Nevertheless, professional assistance is very helpful, as some procedures still seem somewhat illogical or confusing to an outsider. Furthermore, Paraguay is a country where you can do a lot with a relatively small investment or, if you want to work as a service provider or craftsman, you can quickly gain many customers with reliable quality and achieve significantly higher prices than the locals, because this is exactly what is lacking in the country. The vast majority of companies in Paraguay – like almost everywhere else in the world – are small and medium-sized enterprises (SME, called PYME in Spanish). The difference in Paraguay, however, is in the definition of size. In Paraguay, a company with 50 employees or a turnover of more than two billion PYG (about 354,000 US dollars) is considered a large company. And even of these, there are only about 7,000 in the whole of Paraguay. The majority of companies are not only small businesses with one to ten employees, but also microenterprises (MIPYME), which work in handicrafts, retail and the like, often with family members as support. It is also interesting to know that about 90 percent of the Paraguayan economy is controlled by family groups (e.g., Vierci, Cartes). Paraguay offers many attractive niches for foreigners to establish businesses. However, it is necessary to thoroughly analyze the market and target groups and to obtain a tax number (RUC) in order to officially register a company. These items are described below. When developing and elaborating the business idea, it should be considered that Paraguay is an emerging country with large differences between rich and poor, but whose middle class has been growing for years and also offers interesting prospects. The main consequence of this is that purchasing power is extremely uneven. While the upper class is rich enough to consume regardless of prices, the majority of the population, whose average income is just above the minimum wage, has a limited budget. However, Paraguayans like to spend their disposable income on consumption (gastronomy, telecommunications, etc.). In addition, in Paraguay, as in any country, it is important to consider the cultural characteristics. Therefore, it is very important to define exactly who is the target group for a product or service. There is no shortage of interesting areas for business or investment in the country, and with an average return on investment of 22 percent, it pays to take a closer look. Industry, for example, is not very developed. Agriculture still accounts for more than 70 percent of the country's GDP, so there are great opportunities for investors in the processing of agricultural products, including organic products, novel foods, and so on. In the construction sector, the road infrastructure, with only about 11,000 kilometers of paved roads (13% of all roads), and the estimated annual need for 100,000 new housing units should be mentioned. For financially strong investors, natural resource exploration and development projects, as well as large investments in the livestock and agricultural sectors, or in the area of PPP (public private partnership) are possible targets. Since the existence of natural resources in Paraguay has only recently become known, the country has a lot of catching up to do in the area of resource development. A nickel concession was acquired by Canadian investors in December 2014. Confirmed deposits of individual commodities range from barium to chromium, iron, natural gas/oil, gold, molybdenum, titanium, uranium, and tin. Of course, they do not reach the level of the big resource countries such as Chile or Peru, but the field for investments as well as for the corresponding machinery for processing is still quite open. Again, the government is very supportive of foreign involvement. In general, you should not rely solely on your own observations or analysis, which are probably based on developed countries. The differences between developing and developed countries can be so great that your business idea is doomed to fail from the start, but another idea closer to home will not catch your eye. Therefore, it is important to seek professional advice and, if possible, ask different people who are not looking for their own advantage – there are many of them in the country. It is also wise to use people who are familiar with both cultures, as a purely local consultant will not understand the direction of your ideas and the background to your questions. Disadvantages of a business engagement include the lack of transportation infrastructure and the low level of education of the workforce. It should also be noted that, despite existing legislation, there are still major problems with environmental protection, data protection and intellectual property protection (see Section 6.4 for details). 2.1. Legal status for non-Paraguayans The Paraguayan Constitution guarantees the right to private property; foreigners are formally equal to Paraguayans in almost all areas. The same applies to the investments they make in the country and the property (including real estate) they acquire (Article 109). Conversely, foreign investors have the same obligations as Paraguayans. The legal basis for this is Law 117/91. This is an advantage over many other countries in the world that should not be underestimated. The export of capital and profits from economic activities is also unlimited. Exports of foreign currency are subject only to current tax regulations. Free trade is also guaranteed, including production, marketing, and import and export. There are, of course, exceptions for prohibited products or services (e.g., drugs). All in all, as a foreigner, you can legally carry out almost all activities as a Paraguayan. Only near the border with neighboring countries (Argentina, Brazil, Bolivia) are there some restrictions; legally speaking, citizens of the respective neighboring country are not allowed to buy land or be majority owners of companies within 50 kilometers (31 miles) of the border (Law 2.532/05) – so for most foreigners this is not a relevant regulation. In practice, this can cause some formal challenges. For example, the so-called Cédula (Paraguayan proof of identity, C.I. for its abbreviation) is required for many transactions (e.g., when applying for a bank account). And although legally a foreign passport is just as valid in such cases, at best you will delay your transaction by trying to explain this fact to the clerk sitting across from you. In addition, there are now considerable financial or tax advantages (see sections 4.2 and 4.3) for persons or investors residing in Paraguay. This means that – although you have basically the same rights as a foreign investor, it is advisable to obtain a Paraguayan Cédula and residence permit. But this is not a big deal. 2.2. Residence permit and Cédula As stated at the beginning, this book is not an immigration guide. Nevertheless, for all those who travel frequently to Paraguay or do business there, there are several reasons to apply for a residence permit for Paraguay. This residence permit allows for the Cédula (Paraguayan ID card) that will make your daily life, taxes, and business much more comfortable. The Cédula is required for many procedures in Paraguay, although legally international identity cards would also have to be recognized (especially since the Paraguayan Cédula does not have a registration address, so the argument of making someone easier to find is not really convincing). This begins with the application for a Paraguayan telephone number and does not end with the opening of a bank account. You will regularly need the Cédula number of other people for a lot of activities, too. For example, for completing a bank transfer in Paraguay you will not only need to enter the name, bank account number etc., but also the Cédula number of the recipient. Apart from the fact that a residence permit is valid indefinitely and includes the right to work, you will automatically receive the Paraguayan identity card (Cédula – a plastic card in the size of a credit card) and you can also easily apply for a local driver's license. Once again: Legally, you can drive in Paraguay with an international driver's license but try to explain this to a traffic cop if you are in a hurry! Alternatively, you can get a tourist driving license, which is valid for one year. Fees and requirements vary slightly depending on the...
