Registering a company in Paraguay can be interesting for several reasons:
- It is a large emerging market, with a growth of 4-5% of GDP per year;
- Foreign investors, with more experience and expertise, can provide themselves with a competitive advantage;
- Foreigners have every right to open and 100% own local companies;
- Foreign companies receive additional incentives, including a reduction in corporate tax from 30% to 10%, a special regime for exports, a reduced tax rate in free trade zones;
- Taxation – on a territorial basis, that is, taxes are collected from profits received in Paraguay;
- The minimum share capital is not stipulated – at your choice;
- The company does not need a secretary;
- Investments in many areas are exempt from VAT;
- In the case of large investments (more than $ 5 million), entrepreneurs are exempt from all taxes on dividends and profits for 10 years (under certain conditions).
At the same time, you need to understand that Paraguay has its pitfalls, in particular:
- To open a company, at least 2 shareholders or shareholder is required, as well as at least 1 director, who must be a resident of Paraguay (by temporary or permanent residence permit, citizen);
- Expect that opening a company will require 4-6 months and certain costs for paperwork, translation into Spanish, etc .;
- It also follows from the previous paragraph that the main language is Spanish, as well as Guarani. Document circulation is carried out in these languages, many foreign documents will require translation into them;
- Even though the country is developing, the market is growing, and there are many restrictions here, especially in the financial sector. On the one hand, this is a risk, and on the other, it is an opportunity to occupy a niche.
- Company registration in Paraguay: the difference between LLC and PLC
- To register a company in Paraguay, two main forms are used: LLC (Limited liability company) and PLC (Public liability company).
The difference between the companies is as follows:
- an LLC requires a minimum of 2 shareholders and 1 director, and a PLC requires a minimum of 2 shareholders and 1 director;
- In LLC shares, and PLC – shares;
- The PLC requires more reporting.
In general, the forms are similar, but foreign investors are more likely to use PLCs for large projects in Paraguay.
Company registration takes up to 6 months. From this time, you will need to be present in Asuncion for only 1 week and then only if you want to get a local ID card (cedula) and become a director/manager of the company.
A company in Paraguay must have a real office. We will help you find the right one for a fee. It is also necessary to keep accounting records and submit them every month.
Another important point: if you do not have a Paraguay ID card and/or do not plan to move to Paraguay to form a company, you will need to issue a power of attorney in English or Spanish, affix an apostille and send it to Paraguay. Here she will be legalized and registered in the Public Register of the Supreme Court.
After that, specialists receive a tax number for the company from the Ministry of Finance, licenses and required permits from local authorities, and register with the Ministry of Industry and Commerce.
If the client does not have an ID and does not plan to receive one yet, then he cannot become a director or other part of the company’s management, since all responsible persons of the company must leave their biometric data with the Ministry of Finance. This requires a physical presence in the country.
In this case, you will need to hire a person who will become the director. It is required by law that he owns at least 1% of the shares/interests in the company. The moment you decide to become a resident of Paraguay, you can transfer this 1% back to yourself, having previously left your biometric data with the Ministry.
An interesting feature of Paraguayan companies is that they can be put to sleep. If you do not need an active company, it is “put to sleep”, that is, its tax number is temporarily suspended. However, at any time, the owner can receive the company’s tax returns, as well as “wake up” it and return to active business activities.
A few words about a bank account for a company in Paraguay. To open an account for a company in Paraguay, your presence is required. At the same time, some banks refuse to open an account for those companies that have been on the market for less than 2 years.
Banks pay attention to who takes responsibility for the bank. This is a local director or manager, not some owner, even if he is a foreigner.