Category: Uncategorized

Through Resolution No. 01, Minutes No. 01 dated January 3, 2024, the Central Bank of Paraguay ("BCP") ordered the intervention by the Superintendency of Banks ("SIB") of the Retirement and Pension Fund for Employees of Banks and Related Institutions ("CJPEBA"), due to the disintegration of the Board of Directors. The SIB will intervene until the new authorities of the Board assume their roles, a period that cannot be extended for more than 90 days.

The administration of CJPEBA will be assumed by the interveners designated by SIS before CJPEBA, with the authority to carry out the following acts of administration and conservation: (i) Collect mandatory contributions and dues; (ii) Pay retirements, pensions and other retirement benefits; (iii) Collect principal and interest installment payments, fees, and others, from loans granted by CJPEBA; (iv) Grant pensions, retirements, and other retirement benefits; (v) Physically preserve the assets and documents of the entity, taking appropriate security and conservation measures; (vi) Provide information to SIS and the Board of the BCP, upon their request or on its own initiative, to alert authorities about situations that require immediate action; and (vii) Perform other acts that may be necessary to enable the functioning and continuity of the administration and conservation of the intervened entity, which may be authorized by SIS.

Through Resolution SV. SG. No. 030 dated December 26, 2023, the Superintendency of Securities ("SIV") approved the Unique Chart of Accounts ("PUC") and the Manual of Accounting Records for mandatory use by brokerage firms and investment fund management companies. These are detailed in Annexes I and II, respectively.

The PUC will become effective on January 1, 2024. Consequently, the financial statements for the first quarter of the year 2024 are required to incorporate the detailed records of operations in accordance with the PUC.

Additionally, it is clarified that the mere listing of operations in the PUC does not authorize its validity. Therefore, in case of new transactions, brokerage firms and investment fund management companies must obtain prior approval from the SIV.

The Sectors specified in the PUC are: (i) Assets; (ii) Liabilities; (iii) Net Equity; (iv) Contingency; (v) Off-Balance Sheet Accounts; (vi) Income; and (vii) Expenses.

In Annex II of the Resolution, the Manual of Accounting Records defines each Sector and Chapter that constitutes the PUC.

In accordance with Resolution No. 202 dated November 21, 2023, the Secretariat for the Prevention of Money Laundering or Assets ("SEPRELAD") authorized the implementation of the Integrated Operations Reporting System ("SIRO") for the submission of compliance reports by the Obligated Subjects. The resolution will come into effect on January 1, 2024.

The annual reports on the evaluation of Internal Control procedures will be submitted through SIRO according to the following timetable:

Obligated Subject	Applicable regulations	Date	Entity
Real Estate	Art. 13 – Res. 201/20	Within 90 days following the close of the fiscal year	SEPRELAD
Automobiles	Art. 13 – Res. 196/20	Within 90 days following the close of the fiscal year	SEPRELAD
Jewelry	Art. 13 – Res. 222/20	Within 90 days following the close of the fiscal year	SEPRELAD
Gambling	Art. 13 – Res. 258/20	Within 90 days following the close of the fiscal year	SEPRELAD/CONAIZAR
Remittance Agency	Art. 13 – Res. 176/20	Within 90 days following the close of the fiscal year	SEPRELAD
Cooperatives	Art. 13 – Res. 156/20	Within 90 days following the close of the fiscal year	SEPRELAD/INCOOP
E-wallet	Art. 13 – Res. 77/20	Within 90 days following the close of the fiscal year	SEPRELAD/SIB
Insurance	Art. 13 – Res. 71/20	Within 90 days following the close of the fiscal year	SIS
Currency Exchange	Art. 13 – Res. 248/20	Within 90 days following the close of the fiscal year	SEPRELAD/SIB
Securities	Art. 13 – Res. 172/20	Within 90 days following the close of the fiscal year	SEPRELAD/SIV
Virtual Assets	Art. 13 – Res. 314/20	Within 90 days following the close of the fiscal year	SEPRELAD

The annual external audit reports will be submitted through SIRO according to the following timetable:

Obligated Subject	Applicable regulations	Date	Entity
Real Estate	Art. 14 – Res. 201/20	Within 180 days following the close of theaudited fiscal year	SEPRELAD
Automobiles	Art. 14 – Res. 196/20	Within 180 days following the close of theaudited fiscal year	SEPRELAD
Jewelry	Art. 14 – Res. 222/20	Within 180 days following the close of theaudited fiscal year	SEPRELAD
Gambling	Art. 20 – Res. 258/20	Within 180 days following the close of theaudited fiscal year	SEPRELAD/CONAIZAR
Remittance Agency	Art. 23 – Res. 176/20	Within 180 days following the close of theaudited fiscal year	SEPRELAD
Securities	Art. 23 – Res. 172/20	Within 180 days following the close of theaudited fiscal year	SEPRELAD/INCOOP
Cooperatives	Art. 22 – Res. 156/20	Within 180 days following the close of theaudited fiscal year	SEPRELAD/SIB
E-wallet	Art. 20 – Res. 77/20	Within 180 days following the close of theaudited fiscal year	SIS
Currency Exchange	Art. 23 – Res. 248/20	Within 180 days following the close of theaudited fiscal year	SEPRELAD/SIB
Virtual Assets	Art. 15 – Res. 314/21	Within 180 days following the close of theaudited fiscal year	SEPRELAD/SIV
Non-profit Organization (Level 3)	Art. 34 – Res. 490/22	Until June 30 of the following year for each audited fiscal year	SEPRELAD

Finally, the compliance officer's reports will be presented through SIRO according to the following timetable:

Obligated Subject	Applicable regulations	Date	Entity
Gambling	Art. 16 – Res. 258/20	Within 60 days following the close of the fiscal year	SEPRELAD/CONAIZAR
Remittance Agency	Art. 18 – Res. 176/20	Within 60 days following the close of the fiscal year	SEPRELAD
Securities	Art. 18 – Res. 172/20	Within 60 days following the close of the fiscal year	SEPRELAD/SIV
Cooperatives	Art. 17 – Res. 156/20	Within 60 days following the close of the fiscal year	SEPRELAD/INCOOP
E-wallet	Art. 15 – Res. 77/20	Within 60 days following the close of the fiscal year	SEPRELAD/SIB
Insurance	Art. 56 – Res. 71/19	Within 60 days following the close of the fiscal year	SEPRELAD/SIS

The Superintendency of Banks through Resolution No. 19/23 dated November 8, 2023 (the "Resolution") modified the categories of applicants for credits destined to housing loans provided in Resolution No. 12 dated October 29, 2020, which was rendered ineffective by the latest Resolution.

Identification of loans granted by financial institutions

The Resolution provides that loans disbursed by financial institutions for housing financing, regardless of their amount, shall be identified as "PERSONAL DEBTORS - HOUSING". However, the Resolution provides that loans for commercial purposes will not be included in this classification.

In addition, the Resolution provides that, the loan balances destined to housing financing will be classified as "Category II Assets with 0.10 rating". This is to determine solvency indicators.  

Categorization of debtors

Debtors will be categorized according to their payment behavior, based on the default observed depending on the number of days of delay. In this regard, the Resolution provides for categories that are divided on a scale from 1 to 6, with the higher scale corresponding to a longer duration of the debtor’s defaults. For example, loan balances up to 60 days past due will be part of category 1, and loan balances more than 330 days past due will be part of category 6. The Resolution also provides that the projections will be applied from risk category 2 onwards.

Minimum information requirements

Financial institutions must comply with certain minimum information requirements for debtors, for example, identification of the debtor (identity card or equivalent), information on the application, purpose and conditions of the loan, among others. If a co-debtor is involved, the minimum information requirements will also apply to the latter.

Interruption of the computation of days in default

The resolution stipulates that in cases of renegotiations, whether it be renewal, refinancing and/or restructuring of housing operations, the payment by the client with their own resources of 10% of the overdue debt (capital plus interests) and other due charges will interrupt the computation of the days in default. This will allow the upgrading of the category to the next lower risk category.  

Appraisal of the property and minimum projections

The Resolution also provides that 100% of the quick sale value of the appraised value of the real estate received as collateral for housing loans will be established as the computable value for the determination of the minimum projections.

The appraised value of the collateral must be updated within a period of no more than 5 years. However, when the debtor is more than 90 days in default, or any other indicator of deterioration, a new appraisal must be made, provided that the last appraisal is not less than 3 years old.  

El Poder Ejecutivo emitió el Decreto 933 de fecha 27 de diciembre de 2023 (el “Decreto”) por el cual reglamenta la Ley 5741/2016, encargada de regular la incorporación de propietarios y/o responsables de microempresas al seguro social del Instituto de Previsión Social (“IPS”) y establece un sistema especial de beneficios del sistema de seguridad social para estos.

En líneas generales, el Decreto establece:

1. Aplica a propietarios y/o responsables de las Microempresas clasificadas conforme a la Ley 4457/2012 en: dueño, titular o propietario de Microempresa; socio de una Microempresa, y; responsable de Microempresa. Estos sujetos podrán registrarse como asegurados titulares ante el IPS, y podrán registrar a sus familiares como beneficiarios del seguro social de acuerdo con la ley aplicable.
2. Las Microempresas están obligadas a inscribirse ante el IPS y registrar a los sujetos señalados en el punto anterior, conforme a las normativas aplicables.
3. Para la inscripción, que será gradual, el Decreto prevé un Programa de formalización y regularización. Para acreditar la calidad de Microempresa, se tomará la categorización de microempresa. La inscripción será conforme al siguiente cuadro, sin perjuicio de que los sujetos obligados se inscriban antes:

Años	Criterios para incorporación gradual
2023 2028	Los propietarios y/o responsables de las microempresas con cédula MIPYMES vigente que soliciten su inscripción.
2028	A partir de 1 de julio del año 2028, todos los sujetos obligados por ley deberán estar inscriptos ante el IPS, según la categorización del Ministerio de Industria y Comercio MIC.

4. La base imponible del aporte que deben hacer los propietarios y responsables de Microempresas es el mayor salario mensual declarado y abonado a sus trabajadores, que en ningún caso podrá ser menor al salario mínimo legal vigente para actividades diversas no especificadas, y la tasa de aporte es del 23% (veintitrés por ciento) sobre dicha base imponible. Sin embargo, en su calidad de empleadores, los propietarios y/o responsables de Microempresas, están obligados a cotizar de conformidad a las normativas generales del IPS (16,5% empleador – 9% trabajador).
5. Las prestaciones que otorga el IPS son por riesgos de accidente y enfermedad común; accidente y enfermedad profesional; maternidad; invalidez; vejez, y; muerte, conforme a las disposiciones legales del IPS.
6. Las prestaciones económicas de largo plazo se calcularán tomando como periodo de referencia el promedio de los últimos 120 (ciento veinte) salarios mensuales sobre los cuales se cotizó al IPS.
7. El MIC se encargará de proveer información actualizada sobre las microempresas.
8. La base imponible se deberá declarar mensualmente de manera a realizar la liquidación respectiva.
9. La mora de aportes por un periodo de sesenta (60) días en adelante imposibilitará al titular y grupo familiar el acceso a prestaciones otorgadas por el IPS. El IPS establecerá el plazo para el pago de los aportes mensuales.
10. Los aportes se distribuirán para el fondo de jubilaciones y pensiones, de enfermedad y maternidad, y administración general en el porcentaje fijado por ley.
11. Se pierde la calidad de sujeto obligado cuando: no se acredite la calidad de propietario y/o responsable o no sea categorizado como MIPYMES conforme a las leyes aplicables; ante la suspensión temporal, cierre, clausura o cancelación definitiva del RUC de la empresa (debe comunicarse la inactividad ante el IPS, y; ante la muerte del titular.
12. El propietario y/o responsable de una Microempresa que sea categorizada por el MIC, en el nivel superior de pequeña o mediana empresa, podrá: continuar aportando el 23% para acceder a las prestaciones aplicables a microempresas, o; podrá acogerse al régimen de continuidad en el beneficio o de trabajador independiente para continuar cotizando solamente para la jubilación, de acuerdo con las leyes aplicables. El cambio de categoría no implica pérdida de aportes que se acumularán para efectos jubilatorios.
13. La implementación de las disposiciones del Decreto será regulada por el MIC y el Ministerio de Trabajo, Empleo y Seguridad Social, y, el IPS.

Executive Summary

Standard	Content	Date
Law N° 7196	The consular fee and the contribution to the Paraguayan Institute of the Indigenous ("INDI") on trade documents and international transportation of goods are eliminated.	October 27, 2023
Law N° 7218	The withholding on account of Corporate Income Tax ("IRE") to public sector suppliers is increased until December 31, 2023.	November 16, 2023
Decree N° 777	The withholding of IRE as a single and definitive payment for small producers of earth minerals extracted from mills is reduced by half until December 31, 2023.	November 24, 2023
Binding Consultation	The previous Tax Authority (“SET”) ruled on the deductibility in the IRE of interest paid for late cancellation of taxes or penalties applied by any public body.	May 2023
Administrative Court Ruling No. 281/2023	The Administrative Court decided to confirm the response of the previous SET to a binding consultation on the deductibility of the provisions for premium debtors for the determination of the IRE.	November 2023

More information:

► Law No. 7196/2023 - Modifies several articles of Law No. 4033/2010, "On the Consular Tariff", eliminating it together with the contribution to INDI as costs associated with trade documents and international transportation of goods.

With the sanction and enactment of Law No. 7196/2023, published in Official Gazette No. 214 of November 2, 2023 and effective as of the following day, Paraguay eliminated the economic restriction to international trade and transportation that consisted in charging consular fees for the legalization or visa of commercial documents issued abroad that are necessary for the international transportation of goods destined to Paraguay, as well as their importation into the country.

Specifically, the decree eliminated the legalizations or visas corresponding to the trade chapter's navigation, air navigation, rail transport, land transport and import operations sections. It also eliminated the contribution to INDI, provided in Article 57, paragraph a) of Law No. 904/81, as 7% of the consular fee on specific international trade and transport documents. In this way, the cost of imports into the country is reduced, since the aforementioned economic costs are eliminated.

Law No. 7218/2023 - Establishes extraordinary management measures for public finances, among which is the increase in the withholding of IRE on account of public sector suppliers until December 31, 2023.

Law No. 4218/2023, published in Official Gazette No. 225 of November 16, 2023, provided several measures to bridge the financial gap faced by the new Government at the end of 2023. One of these measures consists in the increase, until December 31, 2023, of the withholdings on account of the IRE applied to public sector suppliers, excluding Municipalities and Governors' Offices. Thus, withholdings to public sector suppliers are as follows:

Withholding IRE	Until 11/16/2023	From 11/17/2023 to 12/31/2023	From 01/01/2024	Variation
Public sector suppliers	3%	4%	3%	+/-1%

The amount withheld will be credited as an advance payment of the IRE that public sector suppliers will pay in April of each year, which, in financial terms, implies a loan at zero interest rate ("0") for the State, for an indefinite term, since the end of this financing to the public sector will depend on the date on which the tax credit for advance payments of the IRE is offset, or its repetition is obtained.

IRE withholding will not be made when the amount of sale or service rendered, excluding VAT, is less than PYG 2,550,307 which is the minimum salary for unspecified miscellaneous activities for the Capital that was in force as of January 1, 2023, by Decree No. 7270/2022. For the taxpayer to be able to apply this exception to IRE withholding, the splitting of invoices on the same day will not be taken into account since all purchases made from the same supplier on the same date constitute a single transaction; the number of invoices used is irrelevant.

Decree No. 777/2023 - Reduces by half until December 31, 2023, the withholding of IRE as a single and definitive payment for small producers of earthy minerals extracted from mills.

By means Decree No. 777/2023, published in the Official Gazette No. 238 of December 1, 2023, the Executive Power provided that taxpayers of IRE that acquire earth minerals extracted through mills of small producers, who lack the size to determine the IRE on their account, must withhold this tax applying the general rate of 10% on a net income that drops from 30% to 15% of the price of the operation, until December 31, 2023.

This measure implies a transitory reduction by half of the IRE taxable base for the referred activity, which also means a reduction by half of the respective levy, which drops from 3% to 1.5% of the transaction price, as follows:

Withholding IRE	Until 01/12/2023	From 02/12/2023 to 31/12/2023	From 01/01/2024	Variation
Taxable base	30%	15%	30%	-/+15%
Rate 10%	3%	1,5%	3%	-/+1,5%

The purpose of this measure is to facilitate compliance with tax obligations, as well as to promote the growth and formalization of the sector benefited by it. It is worth mentioning that this measure is not new since reductions had already been provided for exceptional periods in 2020 and 2021 through Decree No. 3725/2020.

► Answer to Binding Consultation on the deductibility in the IRE of interest for late cancellation of taxes or penalties applied by any public body.

In response to a binding consultation in May 2023, the former SET established its position on the deductibility in the IRE of interest for late payment of taxes or penalties applied by any public body. In the consultation, the taxpayer referred explicitly to the interest charged by the tax authority when granting IRE payment facilities. The taxpayer stated that it should be deductible.

In this regard, the taxpayer pointed out that although Article 16 of Law No. 6380/2019 (the "Tax Law") establishes as non-deductible costs and expenses for the determination of the IRE the penalties for infringements applied by any competent public agency, the mentioned regulation does not include as non-deductible costs or expenses the interest paid for the fractioning of the IRE, since these, in its opinion: (1) are not the tax itself, (2) nor do they constitute an infraction penalty, but rather (3) are a financial cost similar to a loan from a banking entity, which is considered deductible for the determination of the IRE.

The Tax Authority approached the consultation recognizing that interest for late payment originates in the deferral of the payment of the principal obligation and that its purpose is to maintain in the future the original value of the amount owed, the payment of which is deferred. Thus, the Tax Administration qualified interest as an accessory of the principal obligation and used the legal principle that states that "the accessory follows the fate of the principal obligation" to affirm that interest shares the deductibility of its principal, which in this case was the IRE, which is not deductible in the liquidation of the tax itself, which also made the interest paid for it "non-deductible".

This reasoning would also apply to the interest paid for the deferral of any penalty applied by any public body, which would be a non-deductible expense since such penalties would also be deductible. However, this would not be sufficient to state that interest for any tax other than IRE would not be deductible in the liquidation of this tax because, to the extent that the tax is deductible as a cost or expense, the interest paid for it would also be deductible.

With this in mind, the Tax Administration also referred to numeral 10 of article 15 of the Tax Law as a second argument to deny the deductibility of late payment interest paid to public entities, stating that in such cases, the interest is not income taxed by an Income Tax. Therefore, it would not be a deductible expense in the IRE.

Regarding this last argument, it is worth mentioning that Article 56 of the IRE regulations annexed to Decree No. 3182/2019 provides for the interaction between the requirements for deductibility of interest in the IRE and establishes that the main requirement for this is that (a) they involve income taxed by an Income Tax, without reference to any rate limit; and, failing this, that (b) they do not exceed the average passive rates of the banking and financial market for similar operations. In other words, this second requirement allows the deductibility of interest that does not comply with the first one.

► Administrative Court Ruling No. 281/2023 - the Administrative Court resolved to confirm the response of the previous SET to a binding consultation on the deductibility of the provisions for insurance’ premium debtors for the determination of the IRE.

The Administrative Court confirmed through Ruling No. 281/2023, the response issued by the former SET to a binding consultation formulated by a guild of insurance companies regarding the deductibility in the IRE of the provisions on "debtors for premiums". The previous SET had issued the answer stating its position on the non-deductibility of such a concept, arguing that it does not fall within the concept of "reserves similar" to mathematical reserves but rather that they are provisions on bad debts, whose deductibility is only allowed to banks and finance companies under certain conditions.

The former SET added that to consider the reserves of insurance companies as "similar" to mathematical reserves, they must meet the following requirements (which would be missing in the reserves for prize debtors): (1) not increase the equity of the companies, (2) be integrated with premiums or portions of premiums economically unearned or unearned in the year, and (3) form a provision to cover the risk corresponding to subsequent periods, i.e., constitute company liability.

On this point, the taxpayers based their position on the following arguments related to the provisions discussed: (a) they are established by the control authority (the Superintendence of Insurance of the Central Bank of Paraguay), and therefore constitute mandatory reserves and, therefore, are necessarily deductible expenses; (b) they are comparable to mathematical reserves and, therefore, deductible; (c) it is inconsistent not to consider them as deductible since this would imply taxing them, contrary to the income concept.

The Administrative Court, by a majority vote (two judges voted in the same sense and one against), resolved as follows concerning the allowance for doubtful accounts for insurance premiums: (i) they are not similar or equivalent to mathematical reserves, but constitute technical credits; (ii) they are provisions for debtors and, as such, do not constitute deductible expenses as they do not meet the requirements of numeral 17 of Article 15 of the Tax Law, and (iii) only provisions on bad credits granted by entities regulated by Law No. 861/1996 (banks, finance companies and other credit entities) under the conditions established by the Central Bank of Paraguay are deductible, this deductibility not being extensible to insurance and similar entities.

It is important to note that Administrative Court Ruling No. 281/2023 can still be appealed before the Criminal Chamber of the Supreme Court of Justice, where this decision could be reversed.

Entró en vigor la ley N° 7.235/2023 que reglamenta el rol supervisor del estado a las entidades de jubilaciones y pensiones, en cumplimiento del artículo 95 de la Constitución Nacional (la “Ley”).

1. Objeto

• La Ley regula y supervisa la administración de los recursos financieros y no financieros, de las Entidades de Jubilaciones y Pensiones (“EJP”) de naturaleza pública y privadas del Paraguay.
• La Ley crea la Superintendencia de Jubilaciones y Pensiones para velar por una adecuada y prudente administración, por parte de los órganos de dirección de las EJP supervisadas.
• Los recursos de los fondos de jubilaciones y pensiones de las EJP se deben administrar con criterios de seguridad, liquidez y rentabilidad.
• La dirección y administración general de las EJP se regirá según sus respectivas cartas orgánicas, estatutos sociales y demás normativas aplicables.
• La Ley establece las definiciones pertinentes en su artículo 3°.

2. Aplicación de la Ley

Están sujetas a la Ley:

• Las EJP de naturaleza pública o entidades públicas, tales como:

1. El Instituto de Previsión Social.
2. La Caja de Jubilaciones y Pensiones del Personal de la Administración Nacional de Electricidad.
3. La Caja de Jubilaciones y Pensiones del Personal Municipal.
4. La Caja de Seguros Sociales de Empleados y Obreros Ferroviarios.
5. La Caja Paraguaya de Jubilaciones y Pensiones del Personal de la Itaipú Binacional.
6. La Caja de Jubilaciones y Pensiones de Empleados de Bancos y Afines.
7. El Fondo de Jubilaciones y Pensiones para los Miembros del Poder Legislativo de la Nación.
8. La Dirección General de Jubilaciones y Pensiones del Ministerio de Economía y Finanzas.

• Las EJP de naturaleza privada o entidades privadas: tales como mutuales y sociedades anónimas constituidas conforme las disposiciones de las leyes aplicables que cuentan con planes de cotización definida y cuyas prestaciones previsionales son resultado del ahorro acumulado en una cuenta individual.
• Las personas físicas o jurídicas que tengan algún tipo de vínculo o relación con las EJP, tales como, accionistas; miembros del consejo de administración o del órgano directivo, sus administradores, representantes y todos aquellos que ejerzan cargos de dirección, administración, fiscalización y auditoría; las sociedades en las que dichas personas controlen por lo menos el 10% de las acciones; quienes presten servicios inherentes al giro y con impacto en el riesgo operativo de las EJP, así como determinar las condiciones de registro, permanencia, suspensión temporal, sanción y exclusión de estas del sistema regulado.
• Las personas que provean prestaciones similares o análogas a las mencionadas precedentemente, cuando su naturaleza o alcance lo justifique.
• En todos los casos, las EJP deberán ceñir sus operaciones al cumplimiento de los fines específicos señalados precedentemente, bajo un régimen de separación funcional, patrimonial y contable de los demás fondos que administran.
• No serán reguladas ni supervisadas las operaciones financieras, contables, administrativas y actuariales correspondientes a los fondos de prestaciones de servicios de salud, maternidad y riesgos laborales que se encuentren administrados por las EJP.

3. Superintendencia de Jubilaciones y Pensiones

• Se crea la Superintendencia de Jubilaciones y Pensiones (la “Superintendencia”) dependiente del Consejo de Seguridad Social como órgano técnico, regulador y supervisor del Sistema Nacional de Jubilaciones y Pensiones, con autonomía funcional y administrativa.
• La Superintendencia tendrá atribuciones normativas; de supervisión y exigencia, técnicas, y; operativas, las cuales están detalladas en la Ley.
• La Superintendencia podrá requerir órdenes judiciales de allanamiento, de auxilio de la fuerza pública y de secuestro de documentos para el cumplimiento de funciones.

4. Préstamos al afiliado, jubilado, pensionado y funcionario

Las EJP podrán otorgar préstamos a sus afiliados, jubilados, pensionados y funcionarios, conforme con sus respectivas cartas orgánicas y estatutos sociales, y de acuerdo con la regulación emitida por la Superintendencia.

5. Inversiones, inmuebles, auditorías y estados contables

• Las EJP solo podrán comprar, vender, arrendar, negociar e invertir sus activos en:

1. Instrumentos emitidos o garantizados por bancos y por instituciones financieras regidas por la ley aplicable.
2. Bonos o títulos de deuda de oferta pública emitidos en el Paraguay, registrados en la Superintendencia de Valores.
3. Acciones de Sociedades Anónimas de Capital Abierto.
4. Cuotas de participación en fondos de inversión y fondos mutuos regidos por la correspondiente.
5. Créditos y préstamos con y sin garantía hipotecaria, según la naturaleza de estos, otorgados a los afiliados activos, jubilados y pensionados de la respectiva EJP y a los afiliados empleados de la misma, cuando estuvieran previstas en sus respectivas cartas orgánicas y estatutos sociales.
6. Inversiones inmobiliarias.
7. Otros activos, nacionales o extranjeros, que autorice la Superintendencia, siguiendo criterios prudenciales.

• La Superintendencia establecerá los límites por tipo de activos y por tipo de emisor, como porcentaje del fondo a aplicarse a la inversión, y las condiciones de elegibilidad para todos los tipos de activos. Los fondos de las EJP no estarán sujetos a montos o porcentajes mínimos de inversión en ningún activo o emisor.
• Las EJP podrán aceptar inmuebles como parte del recupero de inversiones siempre que reúnan los requisitos fijados por la Superintendencia. Los inmuebles podrán ser enajenados mediante subasta pública reglamentada por la Superintendencia. Las enajenaciones e inversiones inmobiliarias serán autorizadas por la máxima autoridad de la EJP, que tendrá responsabilidad personal, ilimitada y solidaria, conforme a las leyes civiles y penales, ante perjuicios patrimoniales.
• Las EJP someterán anualmente sus balances y estados financieros a auditores internos y, por lo menos cada 3 años, a auditores externos independientes. Adicionalmente, se llevarán a cabo estudios actuariales cada 3 años o en la periodicidad que determine la Superintendencia. La Superintendencia determinará los registros, requisitos de auditores externos, ámbito, estándares e informes pertinentes, y las normas y criterios de contabilidad de las EJP.
• No serán oponibles a la Superintendencia las normas de secreto profesional de la actividad de los auditores. Los auditores externos deberán comunicar a la Superintendencia los datos y documentos que necesite.

6. Consejo de Segundad Social

• Se crea el Consejo de Segundad Social (el “Consejo”) como un órgano colegiado y deliberativo, integrado por el presidente del Banco Central del Paraguay, las máximas autoridades de los Ministerios de Economía y Finanzas; de Trabajo, Empleo y Seguridad Social; y, por un representante de los trabajadores, un representante de los jubilados y un representante de los empleadores.
• La Presidencia del Consejo y la designación de sus miembros será en la forma y cantidad fijada en la Ley. Los miembros del Consejo durarán 5 años en el cargo, pudiendo ser nominados sólo por otro período más, sucesivo o alternado, mediante el mismo procedimiento.
• En líneas generales, el Consejo: sugiere candidatos para el cargo de Superintendente, convoca los concursos para terna; recibe y evalúa los informes técnicos, planes, rendiciones de la Superintendencia; establecer canales de comunicación, de quejas; conformar mesas de dialogo tripartitas sobre reformas legales de seguridad social; convoca al Superintendente; solicita asesoramiento nacional e internacional; conforma comisiones especiales junto a otros órganos fijados en la Ley, y; puede modificar o revocar las resoluciones del Superintendente mediante resolución fundada.

7. Superintendente

• El Superintendente dirige la Superintendencia. Es designado por el Poder Ejecutivo de una terna de candidatos elaborada por el Consejo. Dura 5 años en sus funciones, pudiendo ser reelecto. No puede desarrollar actividades de índole político-partidaria ni ocupar cargos directivos en entidades gremiales, sindicales o políticas mientras esté en ejercicio de su cargo.
• Puede ejercer parcialmente la docencia.
• Los requisitos, cesantía, incompatibilidades e inhabilidades están fijadas en la Ley.

8. Infracciones, Plan de Adecuación e Intervención

• La Ley establece que son infracciones:

1. Incumplir las obligaciones previstas en las cartas orgánicas, estatutos sociales y demás normativas legales y reglamentarias que rigen las EJP.
2. Realizar actos que pongan en peligro la provisión de las prestaciones previsionales, así como la seguridad del fondo de jubilaciones y la situación de liquidez y solvencia.
3. Iniciar las operaciones de una entidad privada, sin hallarse habilitada previamente por la Superintendencia.
4. La realización de actos sin la previa autorización de la Superintendencia en los casos en que sea expresamente requerida o con inobservancia de las condiciones exigidas en la legislación y reglamentación vigente.
5. Incumplir, total o parcialmente, las disposiciones y los requerimientos que sean dictados por la Superintendencia.
6. Registrar un deterioro patrimonial de los fondos, que ponga en riesgo la solvencia, liquidez y sostenibilidad de las EJP para hacer frente a sus obligaciones.
7. Formular y suministrar balances y estados financieros y/o balances e informes actuariales que no representen la real situación de las EJP.
8. Realizar actos administrativos y operaciones fraudulentas o ilegales.
9. Suspender o cesar en forma parcial o total las prestaciones previsionales a los beneficiarios de las EJP, en los plazos previstos en las reglamentaciones.
10. Suministrar información incorrecta, incompleta o total o parcialmente falsa a la Superintendencia, a los Organismos y Entidades del Estado y a los afiliados y beneficiarios de las EJP.
11. Cobrar comisiones fuera de los límites establecidos por la Superintendencia.
12. Realizar actividades o actos administrativos que hayan sido objetados en supervisiones anteriores por la Superintendencia.
13. Incumplir los requerimientos de capital mínimo, en los casos en que éstos sean exigidos a las entidades privadas, por un plazo superior al que se establezca en las reglamentaciones de esta ley.

• Las EJP deberán presentar a la Superintendencia un plan de adecuación, en el plazo y forma fijados en la Ley, si incurren en una de las causales previstas en los incisos c), e), f) g) y k) del punto anterior. Si la EJP presenta su plan de antes del requerimiento de la Superintendencia, será un atenuante a los efectos de la infracción. El plan tiene una duración de 12 meses, prorrogable fundadamente por 12 meses más.
• Cuando no se haya cumplido con el plan de adecuación, la Superintendencia con la aprobación previa del Consejo resolverá la intervención de la entidad supervisada. Esta medida será de carácter excepcional y tendrá una duración máxima de 12 meses. Durante la intervención se sustituye la administración y los administradores serán sumariados en la forma establecida en la Ley. Culminada la intervención, la Superintendencia elevará su informe detallado al Consejo y será comunicado también al Poder Ejecutivo y al Congreso Nacional, así como a la Contraloría General de la República, cuando la EJP supervisada sea de naturaleza pública.

9. Deber de reserva

• Las informaciones, datos y documentos de afiliados, beneficiarios y aquellas relativas a las personas ajenas a las EJP supervisadas por la Ley que obren en poder de éstas y de la Superintendencia, en virtud de sus funciones, son de carácter reservado, salvo que la ley disponga lo contrario.
• Toda información o dato particular o privado que deba transmitirse, proporcionarse entre otras entidades públicas, por imperio de las normas legales deberán mantenerse en estricta confidencialidad.
• Ningún funcionario estará exento de responsabilidad, por su acción u omisión en el desempeño de sus funciones.

10. Régimen sancionador. Responsabilidad, procedimiento, reducciones, sanciones, gradación, medidas provisorias y prescripción

• Las EJP, sus administradores y representantes serán pasibles de sanciones cuando infrinjan las disposiciones de la Ley, o las reglamentaciones de la Superintendencia. La delegación de funciones no implica delegación de responsabilidades.
• Es responsable la persona jurídica que cometió la falta, así como todos sus órganos de dirección, administración y fiscalización. Las personas físicas que ocupen dichos cargos podrán ser exonerados de responsabilidad en caso de que: demuestre que no han tenido conocimiento del hecho u omisión que se les impute, ni directa ni indirectamente; así como que no pudieron llegar a tener indicios o información del acto u omisión que suponga el incumplimiento de las normas de obligada observancia, o bien, se demuestre que, habiendo tenido conocimiento de la supuesta falta, se han opuesto oportunamente, por cualquier medio escrito fehaciente a tal actuación u omisión.
• Las infracciones deberán comprobarse en un sumario administrativo realizado de conformidad con la ley de procedimientos administrativos y la reglamentación que emita la Superintendencia. Las decisiones de las Superintendencia son apelables ante el Consejo. La Superintendencia podrá recurrir al auxilio de la fuerza pública y al Poder Judicial para el cumplimiento de sus decisiones. La Superintendencia podrá aplicar el criterio de oportunidad para reducción y descuentos en multas.
• Las sanciones previstas en la Ley para las EJP infractoras son:

1. Apercibimiento.
2. Multas hasta 1000 salarios mínimos mensuales, las que no podrán ser cubiertas con recursos del fondo de jubilaciones y pensiones.
3. Dichas sanciones podrán ser aplicadas también a otras personas cuya actividad tenga incidencia en el ámbito previsto en esta ley y los reglamentos sobre conflictos de interés, según lo determine la Superintendencia.

• Sin perjuicio de las responsabilidades civiles y penales que pudieran corresponder, las personas físicas que conforman el consejo de administración o el órgano directivo, y todos aquellos que ejerzan cargos de directivos, gerentes, asesores jurídicos, actuarios, auditores, contadores, administradores, síndicos y todos aquellos que ejerzan cargos similares en las entidades supervisadas, son pasibles de las siguientes sanciones:

1. Apercibimiento.
2. Multas hasta 500 salarios mínimos.
3. Cancelación de la autorización o equivalente en el registro correspondiente de la Superintendencia.
4. Remoción del cargo con inhabilitación para el ejercicio de cargos de dirección, administración o fiscalización, por un período de 3 a 10 años.
5. Inhabilitación para el ejercicio de cargos en el sector público, entidades autónomas o descentralizadas, por un período de 3 a 10 años.
6. Las sanciones señaladas precedentemente podrán ser aplicadas también a otras personas físicas cuya actividad tenga incidencia en el ámbito previsto en esta ley y los reglamentos sobre conflictos de interés, según lo determine la Superintendencia.

• Para determinar la sanción se tienen en cuenta los siguientes criterios de graduación: La existencia de un daño y su dimensión; la naturaleza de la infracción, en función de su materialidad o gravedad; el reconocimiento oportuno de los hechos que hayan configurado la infracción; la subsanación de la infracción por iniciativa propia, sin previo requerimiento de la administración; la reincidencia o conducta anterior, atendiendo a las sanciones que le hubieren sido impuestas durante los últimos 5 años; la capacidad económica del infractor.
• La Superintendencia, a través de resolución fundada, podrá disponer, como medida de urgencia, la suspensión provisional de determinadas operaciones de las EJP, o de las personas que cumplan cargos de dirección, administración o fiscalización para mitigar los efectos de situaciones que puedan comprometer la integridad o estabilidad de las EJP. Cuando la suspensión afecte a entidades públicas se debe comunicar al Poder Ejecutivo.
• Las faltas prescriben en el término de 5 años. Si la irregularidad es una actividad continuada se computa el plazo desde la última actuación. La prescripción se interrumpe con la notificación de la resolución de apertura del sumario administrativo.
• La implementación del plan de adecuación, el proceso de intervención y las medidas de urgencia, serán independientes de las sanciones y medidas provisorias indicadas en la Ley.

11. Disposiciones transitorias

• Hasta 24 meses posteriores a la publicación de la Ley, la Superintendencia debe diseñar e implementar su estructura orgánica funcional, establecer su plan estratégico institucional, capacitar a sus recursos humanos. Posteriormente la Superintendencia implementará el plan de capacitación e inducción a las EJP durante un periodo máximo de 12 (doce) meses, durante dicho plazo, las EJP presentarán un informe de sus activos y patrimonio según reglamentación de la Superintendencia. Posteriormente, la Superintendencia podrá autorizar la supervisión a las EJP para que presenten su primer plan de adecuación que no podrá ser superior a 5 años.
• La Ley, en su artículo 42° dispone los porcentajes relacionados a las limitaciones de inversión, que permanecerán vigentes hasta la culminación del período de transición. El Consejo podrá ajustar las condiciones y los límites citados en la Ley, así como autorizar otros tipos de activos siguiendo criterios prudenciales para la inversión de los recursos de las EJP.

12. Inversiones y préstamos – Instituto de Previsión Social

• La Ley modifica el artículo 27 de la normativa del Instituto de Previsión Social, estableciendo que el Consejo de Administración del ente dispondrá la elaboración de un programa de inversiones y colocaciones financieras de las reservas del ente a fin de preservar el valor de estas. Las rentas generadas serán destinadas a reforzar el Fondo Común de Jubilaciones y Pensiones y a otras que el Consejo de Administración determine.
• Asimismo, aclara que el Instituto de Previsión Social no concederá préstamos al Estado paraguayo, ni a los entes descentralizados, ni a las municipalidades, tampoco podrá instrumentar operaciones con bonos o cualquier otro tipo de títulos de deuda emitidos por el Estado paraguayo.

13. Por último, la Ley dispone los artículos de las normativas de jubilaciones y pensiones que quedan derogadas.

According to data published by The Global Findex Database 2021 survey, Paraguay had a bank account ownership rate of 54%. Furthermore, according to the latest data published by the Central Bank of Paraguay ("BCP") in August 2023, the population's bank account ownership rose to approximately three-quarters of the country's population, at 76%.

This substantial surge in account ownership in recent years can be attributed not only to the growth of traditional financial institutions in the country but also to the emergence of Fintech companies in the Paraguayan financial market.

Fintech companies have become key tools for financial inclusion. The Fintech industry has generated disruptive alternatives for financial inclusion all around the world, which governments have been regulating and adopting in their inclusion efforts.

We will provide a brief summary of the latest advances in the regulation of the current main Fintech tools in Paraguay, including aspects closely related to these tools, such as personal data and its treatment.

1. e-wallets

Entities that provide e-wallet services in Paraguay are known as EMPE or EMPEs. EMPEs are companies authorized and supervised by the Central Bank of Paraguay to process, manage, and, in general, provide services related to mobile money and e-wallets. Through e-wallets, users can make payments to businesses and transfer electronic money, whether to users of the same e-wallet, different e-wallets, or even to individuals who do not have accounts with any of the e-wallets operating in the country.

With approximately 2.7 million active accounts and monthly transactions of approximately $160 million, e-wallets play a significant role in the country's digital transformation and serve as a tool for financial inclusion.[3]

1. 1. Applicable Law

Regulation of e-wallets in Paraguay consists of a set of resolutions issued by BCP and the Secretariat for the Prevention of Money Asset Laundering ("SEPRELAD").

Among the BCP's resolutions are Resolution No. 6/14 and its amendment, No. 6/20, which establish the general conditions for the operation and registration of EMPEs in Paraguay. Additionally, Resolution No. 10/2019 contains provisions related to the information that EMPEs must provide annually to BCP as the regulatory authority.

In addition, SEPRELAD Resolution No. 77/20 outlines the operational framework of measures to combat money laundering and the financing of terrorism that EMPEs must implement, as well as the authorities responsible for supervising these procedures within their structure.

1. 1.1. BCP Resolutions

BCP issued Resolution No. 6 in 2014 which -along with its amendment, Resolution No. 6, issued in 2020- currently serves as the national regulatory framework for EMPEs and e-wallets. Through this resolution, BCP declares that e-wallets should be considered as financial inclusion tools that aim to integrate the unbanked population into the national financial system. In this scenario, e-wallets seek to address market needs related to small-scale commercial financing.

In that sense, the documentation requirements for user registration with e-wallets are straightforward, and the registration process is entirely digital.

The Resolution mandates that EMPEs may provide e-money provisioning services and non-bank electronic transfers ("remittances") among their users and the general population through their e-wallets. It also establishes that electronic money will be accepted as a means of payment and will be convertible into cash.

It's worth noting that EMPEs are not authorized to engage in financial intermediation activities or to grant loans from their own funds to users. Also, the funds deposited by users in their accounts do not constitute bank deposits.

Instead, e-wallets function more as a platform for storing electronic money, allowing users to convert their cash into electronic money that can later be converted back into cash, usually for a commission fee charged by the EMPE.

In line with BCP's focus on small-scale activities, the limit on the amount of electronic money that users can store in their accounts is quite limited. Funds exceeding this limit are deposited in a financial institution.

A monthly limit for sending and receiving money transfers is also set for users. If this limit is exceeded, these transactions are made through accounts opened with financial institutions.

As mentioned above, e-wallet users can send money to individuals who do not have an e-wallet account. In that case, the funds can be withdrawn, or the individuals can register with the e-wallet through which the transfer was sent and use the funds from their new e-money account.

Regarding the security of e-money stored in e-wallets, the BCP's regulatory policy stipulates that all funds held by each account holder, agent and point of sale must be held in trust or deposited with the BCP. In fact, EMPEs may secure these funds using both methods, provided that the trust and BCP deposits cover all funds held by account holders, agents, and points of sale. In practice, most EMPEs in the country have chosen to establish trusts as their method of securing funds.

1. 1.2. SEPRELAD Resolutions

EMPEs have their own Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) Rules and Regulations, issued by SEPRELAD through Resolution No. 77/20. This resolution includes, among other measures, the requirement to conduct due diligence on e-wallet users.

In addition, the resolution mandates the existence of an AML and CTF Committee, which must include at least two members of the EMPE Board of Directors. This committee will be chaired by the EMPE's Compliance Officer, who must have a direct, full-time and exclusive employment relationship with the EMPE or its economic group and hold a top management position.

2. Crowdfunding

In crowdfunding, a group of investors finances a project or venture in exchange for bonds, obligations, shares, participation, dividends, or project-related income, among other benefits.

Law No. 5810/17 on the Securities Market explicitly excludes crowdfunding or collective financing from its application, stating in article 8 that "[...] credit contracts under the collective financing modality, either through platforms or other means," are not covered by its scope.

While Paraguay does not have specific regulations for crowdfunding, these activities are legal in the country, and some sectors consider necessary to regulate these activities, taking into account the financing opportunities they provide for small and medium-sized enterprises (SMEs) and startups. In this regard, the Superintendency of Securities (the "SV") is working with key industry players on the drafting of a bill to regulate crowdfunding activities.

2. 1. Projected Bill and Potential Implications

The National Securities Commission, now the Superintendency of Securities, has drafted a bill to regulate crowdfunding platforms. The bill has not yet been presented to the Legislative Branch, as we understand they are finalizing details for its submission.

According to its current wording, the bill aims to establish the SV as the enforcing authority of the law and requires platforms to submit information to the Information Center of the Superintendency of Banks, a subsidiary of the BCP.

The bill defines 'crowdfunding' as the public solicitation of funds from a large number of individuals to finance a business, project, or cause.

Additionally, crowdfunding platforms are defined as "[...] companies that, through a website, electronic systems, digital means, or other mass communication methods, regularly connect a plurality of natural or legal persons offering financing with others seeking some form of financing."

The bill regulates not only crowdfunding platforms but also lending or collective lending platforms. In this sense, it seeks to formalize crowdfunding and lending as forms of collective financing in the national legal framework. The bill also includes provisions applicable to factoring crowdfunding through platforms.

If the bill is passed in its current form, investment, lending, and factoring crowdfunding activities would fall under its scope. This means that crowdfunding platforms would include platforms that provide collective financing in any of these modalities.

It is worth noting that these crowdfunding platforms would not be permitted to engage in activities other than those expressly authorized, unless expressly authorized by the SV and provided they have sufficient mechanisms and procedures in place to minimize conflicts of interest that may arise in the exercise of their activities.

In addition, these platforms would not be allowed to provide recommendations or personalized advice on the investments they facilitate, nor participate as investors or promoters (defined as individuals who request funds through these platforms) in collective financing operations they facilitate. They would only be allowed to charge fees and commissions for providing their services.

The bill provides for the creation of a Registry of Crowdfunding Platforms, which will be managed by the SV. Registration requirements for platforms include the incorporation of a company, minimum capital requirements set forth by the SV, and having operational and technological risk mitigation procedures in place.

Additionally, the bill imposes obligations on the platform to ensure that investors and promoters are protected when participating in this form of financing. For this purpose, platforms must collect and monitor information about promoters, investors, and the transactions conducted through their means, in particular the agreed interest rates.

Finally, the bill outlines the types of offenses, their gradation, and the sanctions that may be imposed by the SV, ranging from warnings and disqualification from engaging in this activity to fines of up to three hundred times the minimum monthly wage (approximately USD 115,000).

3. Lending

Lending, along with crowdfunding, is a widely used form of collective financing around the world. In lending, unlike crowdfunding, a group of individuals lends funds to individuals or legal entities in exchange for the repayment of the capital provided, together with interest thereon.

The granting of monetary loans, whether by individuals or legal entities who do so on a regular basis (the "Lenders"), is regulated by the BCP, as detailed in the following section. However, lending as a form of collective financing typically requires the intervention of a platform to facilitate it. Therefore, the draft of the proposed bill for the regulation of crowdfunding platforms includes the regulation of this activity within its scope.

Currently, there are crowdfunding platforms in Paraguay focused on lending that have connected thousands of investors with users in need of credits.

3. 1. Applicable Regulation

The BCP, through Resolution No. 7/19 (the "Lending Resolution"), included individuals and legal entities that regularly provide monetary loans as subjects of Law No. 861/96 of "General Law of Banks, Financial Institutions, and Other Credit Entities" and its amending Law No. 5.787/16 of "Modernization and Strengthening of the Regulations Governing the Operation of the Paraguayan Financial System."

As a result, the BCP created the Registry of Monetary Lenders, where any individual or legal entity regularly engaged in granting credits (the “Lenders” as defined above) must be registered.

Subsequently, the BCP issued Resolution No. 30/22, establishing the Regulatory Framework for Information Transparency and Integrity Management for the Lenders.

This new resolution introduced specific obligations for the Lenders. The Lending Resolution explicitly states that the Lenders must comply with the BCP's regulations on corporate governance, complaints and inquiries Management, and interest rates.

Additionally, it requires Lenders to sign contracts, either in physical or digital form, for loan transactions. These contracts must include details such as the loan amount, maturity date, interest rate, fees, expenses, and penalties.

The Lending Resolution also establishes obligations for the transfer of credit portfolios, in particular related to notifying the borrower of the transfer, including a 5-day period for such notification after the purchase is formalized, and ensuring that the notification has been made correctly.

The provisions related to the Lenders are effective in regulating the activities of individuals who regularly grant credits with their own funds. However, lending through crowdfunding is a more dynamic activity that requires its own regulation.

Therefore, it is appropriate that the scope of the bill includes this activity and the platforms that facilitate it. Thus, if the current bill is passed, the granting of money loans through lending platforms would be supervised by the SV rather than the Superintendency of Banks.

4. Cryptocurrencies and Crypto Assets

In Paraguay, the market for crypto assets and cryptocurrencies is still in its beginning stages. In previous years, attempts were made to formalize this market through the presentation of a bill aimed at regulating it.

However, although activities related to crypto assets and cryptocurrencies are not yet fully regulated, certain aspects have already been subject to regulation by the SEPRELAD, following recommendations from the Financial Action Task Force (the “FATF”). Additionally, the BCP has publicly stated its position on cryptocurrencies.

4. 1. Communications issued by the BCP

On May 31, 2019, the BCP issued a statement to investors and the general public, warning about the use of cryptocurrencies. It emphasized that, as they are not issued by a Central Bank, cryptocurrencies have no legal tender or canceling force.

In this statement, the BCP also stated that "[…] their value is mainly based on the trust that people place in them, deciding to use and accept these currencies at their own risk, and their price fluctuates according to supply and demand, usually with significant variability. The future price of these cryptocurrencies can both rise and tend to zero."

The statement further reminded that the Organic Law of the Central Bank of Paraguay, in its articles 38 and 39, designates the guaraní as the monetary unit of the Republic of Paraguay. This law designates the Central Bank of Paraguay as the sole issuer of banknotes and coins in circulation, establishing the legal tender and unlimited canceling force of the guaraní. Consequently, the BCP affirmed, "Bitcoin and other similar cryptocurrencies are not considered as banknotes or coins, have no mandatory canceling force in Paraguay, and therefore, are not guaranteed by the State."

The BCP also warned that individuals buying or investing in these currencies "assume significant risks, such as the possible total loss of the value of their investment (due to high volatility in their price, possibilities of fraud or hacking, and difficulties in selling or exchanging them)." It further asserted that "[…] cryptocurrencies are also often used as instruments of payment in illicit transactions."

Finally, the BCP indicated in this statement that it would continue studying cryptocurrency operations, both regionally and globally, and their potential impact on the financial system, "following the recommendations of best practices according to specialized international organizations."

A little over a year after the issuance of the statement, the BCP issued a new statement on virtual currencies or cryptocurrencies, simply reaffirming its position from the previous year.

When questioned by the local press on subsequent occasions, the BCP simply announced that it "has [already] communicated its institutional position."

4. 2. Resolutions issued by SEPRELAD

On the other hand, SEPRELAD has issued specific regulations related to activities involving crypto assets or virtual assets.

Following recommendations issued by FATF regarding "new technologies," SEPRELAD issued Resolution No. 8/20. This resolution designated individuals or entities engaging in mining or its equivalent, exchange, transfer, storage, or administration of virtual assets, or participating and providing financial services related to these, as Obligated Subjects.

Obligated Subjects before SEPRELAD are individuals or legal entities engaged in sectors considered susceptible to being used as a vehicle for money laundering or terrorist financing. Thus, Obligated Subjects have certain obligations to fulfill before SEPRELAD, such as registration with this institution, reporting of operations, conducting due diligence on clients and suppliers, and having structures in place to mitigate the risks of money laundering and financing mentioned.

Subsequently, SEPRELAD issued Resolution No. 9/20, through which it resolved that Obligated Subjects with clients designated as "Providers of Virtual Asset Services" must analyze their profiles, including specific due diligence, to manage exposure to money laundering and terrorist financing and mitigate associated risks.

This analysis and due diligence thus became necessary procedures to carry out operations, whether initiating or continuing a business relationship with Providers of Virtual Asset Services.

Finally, SEPRELAD issued Resolution No. 314/21, which establishes the Regulation for the Prevention of Money Laundering and Terrorism Financing for individuals or legal entities established or domiciled in the country engaging in activities associated with virtual assets.

This regulation is mandatory for individuals and legal entities engaged in activities associated with virtual assets, namely those mentioned in Resolution No. 8/20. It establishes that Obligated Subjects must implement a comprehensive system for the Prevention of Money Laundering and Terrorism Financing, whose scope covers the entity’s entire operation.

Obligated Subjects must conduct a self-assessment of the risks of money laundering and terrorist financing to which they are exposed at least every two years and review the methodology associated with them at least every four years. This self-assessment must be made available to SEPRELAD.

Likewise, Obligated Subjects must have a Compliance structure, led by a Compliance Officer, appointed by the Board or equivalent of the company, or by the owner, in the case of a sole proprietorship. This appointment must be communicated to SEPRELAD within the established period.

The Compliance Officer reports directly to the highest authority of the company or sole proprietorship and is responsible for implementing the prevention policies of money laundering and terrorist financing of the venture or entity, as well as reporting suspicious operations to SEPRELAD.

Finally, the Subject Obligor must have an Anti-Money Laundering and Terrorism Financing Manual and a Code of Ethics and Conduct.

4. 3. Proposed bill

In December 2022, the Paraguayan House of Representatives finally archived the Bill that had been presented in 2021, with the aim of regulating the activities of mining, marketing, intermediation, exchange, transfer, custody, and administration of crypto assets.

This Bill had been presented and approved by the Senate in December 2021. The Bill was then modified by the House of Representatives, and in August 2022, the modified Bill was sanctioned by the Senate.

However, through Decree No. 7.692/22 of December 2022, the Executive Branch vetoed the Bill in its entirety. This veto was rejected by the Senate, but the House of Representatives did not support the rejection and, as a result, the Bill was finally archived.

The rejection by the Executive Branch was based on a recommendation from the National Electricity Administration (the “ANDE”). In this regard, the Bill aimed to apply a preferential tariff to the electricity consumption required for mining activities, based on the tariff for industrial activities.

Regarding this, ANDE stated, through Note No. P.3179/2022, that "the activity of crypto-asset mining [...] is characterized by high electricity consumption, intensive use of capital, and scarce use of labor, [so] it is appropriate to characterize it as electro-intensive consumption and not as industrial consumption." Thus, ANDE asserted that the tariff approved by Congress could not cover the costs of providing electricity in which it would incur.

On the other hand, the Undersecretary of State for the Economy also recommended the veto by the Executive Branch, categorizing the activity as short-term and responsible for environmental damages. This position, as well as the aforementioned position of the BCP, was mentioned in the explanatory memorandum of Decree No. 7.692/22, which vetoed the approval of the Bill.

Arguing the need to regulate this activity to address the current reigning informality of this market, the Paraguayan Fintech Chamber is currently drafting a new Bill, which aims to reach a consensus with the various government stakeholders.

5. Data Protection

Credit information and its processing are regulated through Law No. 6,534/20. However, the treatment and use of personal data is not covered by the scope of this law, prompting current efforts to regulate them.

5. 1. Applicable Laws

Law No. 6,534/20, of "Protection of Personal Credit Data," establishes the regime for the protection of data and personal information. It regulates the collection and access to credit information data, establishing provisions for companies engaged in obtaining and providing credit information.

This law defines personal data as any information of any kind, referring to specific or determinable legal or natural persons. It also defines credit information as positive and negative information related to the credit history of individuals and legal entities, regarding credit and commercial activities that serve, among other things, to determine their level of indebtedness, fulfillment of obligations, and, in general, credit risks at a given moment.

This law seeks to preserve fundamental rights, such as privacy, informational self-determination, freedom, security, and fair treatment of individuals. It prohibits the dissemination of intimate data of the owner, or any misuse that may lead to discrimination or pose a serious risk to them.

The authorities designated by the law for data protection matters are the BCP and the SEDECO. These authorities act as supervisors of the data protection system established by the law and can impose sanctions on those who violate its provisions.

Furthermore, this law guarantees access to personal data for all individuals and those under their legal authority, guardianship, or curatorship, existing in records maintained by individuals or legal entities, public or private.

According to this law, individuals must expressly and unequivocally consent to the collection and use of their personal data. This consent can be in written, electronic, or digital form and can be expressly revoked under the same conditions, free of charge and without retroactive effect. The processing and transfer of this data without the consent of the owner constitute an unlawful act.

Individuals also have the right to know the general and specific conditions of the processing of their personal data, and the purpose for which they will be used must be explicitly and clearly informed. In this context, they can request the updating, rectification, deletion, opposition, and portability of this data from the entity responsible for its management. Unless otherwise provided by law, credit information in a registry can be retained for up to five years from the date of the recorded events.

The law establishes a duty of secrecy for individuals responsible for and in charge of processing third-party credit information, as well as those involved in any phase of its collection, processing, storage, use, or circulation. This duty of secrecy only gives way when the information is required by the BCP, its supervisory bodies, the National Directorate of Tax Revenues ("DNIT"), the SEPRELAD, the General Comptroller of the Republic, and, naturally, the Public Prosecutor's Office and competent judicial authorities.

Credit information services can only be provided by Credit Information Bureaus previously authorized by the BCP. These bureaus can only provide credit reference services to certain users, including banks and financial institutions, cooperatives, credit houses, individuals or companies providing credit, mutual funds, and pawn shops, as well as individuals or companies dedicated to selling products on credit or installment plans and those functioning as a channel or means to facilitate financial intermediation or credit granting.

These bureaus can only process credit information related to the economic solvency and credit of the owner, obtained from public sources or provided by the owner with their consent. They cannot disclose credit information about (i) overdue debts not judicially claimed that have exceeded three years of registration, (ii) canceled debts, and (iii) creditor meeting lawsuits after five years from their admission.

Users of credit information services must provide Credit Information Bureaus with positive and negative credit information about their clients. Additionally, they can only use credit information obtained through bureaus confidentially and for the assessment of credit risks.

A key obligation established for users of these services is to inform the owner of credit information about the denial of a contract, job application, service, commercial or financial credit based on a credit report, providing a copy of this report.

Regarding violations of the law, both individuals and legal entities that commit offenses may be held responsible, as well as all members of the administrative bodies of the entity in question and those who perform functions similar to those positions, with the exceptions and according to the circumstances established in the law.

Sanctions that may be imposed on violators by the BCP and SEDECO range from warnings, temporary and permanent closure of operations, disqualification from holding positions within the financial, credit, and Credit Information Bureaus systems, to fines that could amount to nearly one million dollars.

5. 2. Proposed bill

Upon the enactment of Law No. 6,534/20, sectors of the population expressed concerns about its scope, claiming this law primarily regulates the treatment of credit information of individuals, without focusing much on protecting personal data in general.

Therefore, there is currently a bill that aims to rectify this situation and include personal data. This bill is currently under discussion in the committees of the House of Representatives.

In its current wording, the bill does not seek to repeal Law No. 6,534/20 but aims to regulate, in a supplementary manner, those issues of credit information not covered by Law No. 6,534/20. Therefore, the bill does not address the treatment and use of already regulated credit information but aims for the comprehensive protection of personal data of individuals to ensure the full exercise of their rights and regulate the free circulation of this data.

To this end, the bill seeks to regulate issues related to biometric, genetic, sensitive, and personal data. It also aims to regulate the processing of this data and its automated use, as well as the profiling based on them.

6. Trust Services

The Paraguayan State, through the Ministry of Information and Communication Technologies, has developed strategies for the digitization of services, transactions, and interactions in the country, both in the public and private spheres. This project, known as the Digital Agenda, among other things, seeks to promote access to secure and fast digital interactions and, in this context, has regulated the provision of so-called "trust services."

Trust services, defined as those involving the creation, verification, validation, or preservation of electronic signatures, electronic seals, electronic time stamps, electronic delivery, website authentication, and means of identification through electronic identification systems, are regulated as such in Paraguay by Law No. 6,822/21, "On Trust Services for Electronic Transactions, Electronic Documents, and Electronic Transmissible Documents," (the “Trust Services Law”) and its regulatory decree, No. 7,576/22.

These services aim to generate trust and security in electronic transactions and interactions between public bodies, citizens, and businesses, and their regulation is necessary to foster a secure electronic money ecosystem for the population. Among those frequently used are electronic signatures for validating legal acts such as contracts, electronic billing processes, electronic transmission of data or documents, and an increasingly wide range of government procedures.

6. 1. Applicable Laws

Law No. 6,822/21 is primarily influenced by European Regulation No. 910/2014, which regulates electronic identification and trust services for electronic transactions in the member states of the European Union.

The state entity responsible for supervising and issuing the necessary resolutions for the implementation of the provisions of the Trust Services Law is the Ministry of Industry and Commerce, as stipulated by its regulatory decree.

To precisely determine what trust services are, the Trust Services Law establishes four pillars to define them, namely:

1. The creation, verification, and validation of electronic signatures, electronic seals, electronic time stamps, certified electronic delivery services, and certificates related to these services;
2. The creation, verification, and validation of certificates for website authentication;
3. The preservation of electronic signatures, seals, or certificates related to these services;
4. The issuance service of means of identification through electronic identification systems.

The main services within these pillars are electronic signatures, electronic seals, electronic time stamps, certified electronic delivery services, and certificates for website authentication.

The law establishes that, as long as identification is carried out through an electronic identification system in compliance with the requirements outlined in the Trust Services Law, legal effects or admissibility in private, judicial, and administrative proceedings will not be denied to the electronic identification of an individual or legal entity (through its representative).

Likewise, the law establishes a distinction between the provision of these services and their qualified provision, which constitutes a more reliable version of these services and can only be provided by qualified providers according to the parameters established in the law, with implications explained later. The Ministry of Industry and Commerce maintains the list of qualified providers.

To become a qualified provider of these services, providers must be established in the country, either (i) by establishing domicile in Paraguayan territory; (ii) having facilities or workplaces in Paraguayan territory, where they carry out all or part of their activity; or (iii) by registering their company or branch with the General Directorate of Public Records. In addition, the provision of the service must be included in the social statutes of the providing entity.

These qualified providers must be audited at least every two years by independent auditors. In addition, they can be audited at any time by the Ministry of Industry and Commerce, and they must adjust their operations to the observations made by it. Additionally, trust services provided by service providers established outside the country will be recognized as equivalent to those provided by service providers established in Paraguay, as long as there are mutual recognition agreements between national authorities or corresponding international organizations.

The Trust Services Law reiterates what was established by its predecessor, Law No. 4,017/10, by stating that a qualified electronic signature has the same legal effect as a handwritten signature. However, it eliminates the distinction between digital and electronic signatures that Law No. 4,017/10 had stipulated, causing confusion in the everyday use of these services.

The electronic reproduction of documents in paper format, through scans and similar processes, receives explicit legal recognition through the Trust Services Law. This recognition will be valid as long as there is some reliable guarantee that the integrity of the information contained in the document has been preserved.

Finally, the Trust Services Law also recognizes the legal value of acknowledgments of receipt of electronic documents through any act by the recipient that is sufficient to indicate to the sender the receipt of the document. This is especially important for everyday interactions through emails or messaging applications.

La incursión disruptiva de las Fintech en el mercado financiero y su naturaleza sumamente dinámica significa que su regulación por parte de los Estados se encuentra en constante evolución.

Para mayor información y en caso de consultas sobre el ecosistema Fintech en Paraguay, puede contactar con nuestro equipo: Carlos Vouga (cvouga@vouga.com.py), Manuel Acevedo, ( Cecilia Vera (cvera@vouga.com.py) y Lucas Rolón (lrolon@vouga.com.py).

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[1] This includes accounts owned at any regulated institution, such as banks, credit unions, microfinance institutions and e-wallets.

[2] Financial Inclusion Indicators and Data. August 2023. Central Bank of Paraguay.

[3] Statistical and Financial Bulletin of EMPEs. July 31, 2023. Central Bank of Paraguay.

Por medio de la Resolución CA N° 78/2023 de fecha 23 de noviembre de 2023 (la “Resolución”), el IPS estableció:

1. La revocación de la Resolución CA N° 048/2022 que trataba las solicitudes de subsidio por maternidad de empresas que se encontraban en mora con las obligaciones establecidas en el régimen de seguridad social del IPS.
2. La fijación de nuevos criterios para el pago del subsidio por maternidad conforme a los siguientes delineamientos establecidos en la Resolución:
   1. La «Mora Patronal» se genera al día siguiente al vencimiento de la planilla del aporte obrero patronal, conforme al calendario establecido por la Resolución C.A. N° 066/2022 (“Calendario de Pago”); y se extingue automáticamente con el pago del aporte o la cuota inicial del fraccionamiento; así como las multas y recargos si los hubiere, de conformidad a lo establecido en la Resolución.
   2. Serán denegados los subsidios por maternidad cuyo inicio del reposo coincida con el periodo comprendido entre: (i) el día siguiente a la fecha de vencimiento de la obligación con el seguro social, según el Calendario de Pago; y, (ii) la fecha de pago efectivo de dicha obligación.
   3. La Gerencia de Prestaciones Económicas del IPS denegará las solicitudes de subsidios por maternidad cuando el inicio del reposo por maternidad coincida con el periodo en que la empresa se encuentre en mora con su aporte al seguro social, de conformidad a lo dispuesto en el punto anterior.
   4. En adelante, las solicitudes de reconsideración de subsidios por maternidad que sean denegadas por el IPS serán atendidas en la medida que se presenten dentro del plazo de 10 días hábiles contados desde el día siguiente a la notificación de la denegación, conforme a las leyes aplicables.

Este contenido tiene únicamente fines informativos generales y no debe ser considerado como asesoría legal puntual. Si precisa asesoramiento específico no dude en contactarnos.

Por medio de la Resolución CA N° 78-025/2023 de fecha 23 de noviembre de 2023 (la “Resolución”), el IPS estableció:

1. La exoneración del monto en concepto de recargo por mora para los empleadores aportantes del Régimen especial y general sobre planillas normales, planillas complementarias y/o cuotas de fraccionamientos de pagos vencidos e impagos, con vigencia desde el 1 de diciembre de 2023 al 26 de diciembre de 2023.
2. La Resolución establece la exoneración como sigue:
   1. Del 100% del monto en concepto de recargo por mora en la modalidad de pagos al contado de la totalidad de lo adeudado.
   2. Del 50% del monto en concepto de recargo por mora en la modalidad de pagos parciales.
3. Durante la vigencia de la Resolución queda suspendida la Resolución CA N° 020/2021 respecto a los recargos por mora para el pago de aportes vencidos e impagos.
4. Los empleadores que gestionen fraccionamientos a través del Sistema REI en cualquier modalidad de financiación serán liquidados con los cálculos de los recargos legales conforme a las reglamentaciones vigentes.
5. Respecto de los empleadores que cuenten con certificados de deudas sin procesos judiciales o con trámites judiciales ya iniciados por el IPS y soliciten acogerse a los beneficios de esta Resolución, se procederá de la siguiente manera: (i) desbloqueo de cuenta; (ii) cobro de aportes vencidos, y (iii) posterior comunicación a la dirección jurídica del IPS.
6. El IPS adecuará los sistemas informáticos para la implementación de lo dispuesto en la Resolución.

Este contenido tiene únicamente fines informativos generales y no debe ser considerado como asesoría legal puntual. Si precisa asesoramiento específico no dude en contactarnos.