Category: Uncategorized

Executive Summary

The Executive Branch issued Decrees No. 2063/2024 and 2167/2024 (both, collectively, the "PTR Decree"), whereby it established the Purchasing Tourism Regime ("PTR" or “Regime”) for the settlement of the Value Added Tax ("VAT") on the importation and commercialization of certain goods intended for tourists ("PTR Goods"), and abrogated the previous tourism regime set forth in Decree No. 1931/2019, which it updates and replaces.

More information:

The PTR applies to the importation and commercialization of PTR Goods that are classified under one of the 485 tariff codes identified in the Annex to the PTR Decree, prepared based on the Mercosur Common Nomenclature ("MCN") and which have the following structure:

• Subjects of the PTR

The PTR Decree distinguishes between the following parties involved in the Regime:

1. Tourists: Final recipients of the PTR Goods who meet the following requirements: (i) natural person, (ii) foreigner (not having Paraguayan nationality), (iii) not having domicile in the country (iv) nor residence in Paraguay.

2. PTR Taxpayers: Individual Limited Liability Companies, Simplified Joint Stock Companies, any type of commercial company created or admitted by law, and branches, agencies or permanent establishments of persons domiciled, or entities incorporated abroad, engaged in the commercialization of PTR Goods. According to their intervention in the Regime, they are subdivided into the following categories, without prejudice of meeting both qualities:
   • PTR Importers: Those who import and sell PTR Goods to other PTR Taxpayers.
   • PTR Traders: Those who sell PTR Goods to Tourists or to third parties who are neither Tourists nor PTR Taxpayers ("Third Parties").

3. Foreign Trade Intermediary Companies: Trading companies and other companies engaged in the industry that are (i) taxpayers of the Corporate Income Tax ("IRE") registered with the DNIT, (ii) trade in goods and products supplied mostly by third parties, and (iii) use international networks or infrastructure to supply themselves or their customers ("EICE").

PTR Taxpayers may only sell PTR Goods to Tourists in the following border cities of Paraguay: Asunción, Ciudad del Este, Encarnación, Pedro Juan Caballero, Pilar and Salto del Guairá; for which purpose they must have premises located there. This shall not limit the operations of the PTR Importers, who may operate as such in any city of the country.

• VAT regime

Under the Regime, if the PTR Goods are not sold to Third Parties, the VAT is settled and paid only at the time of their importation at the expense of the PTR Importer, after their introduction into the country by such party, a third party, or an EICE that sold them to the PTR Importer before the formalization of the customs clearance. To remove the PTR Goods from the customs area, the PTR Importer must have complied with the following tax obligations:

The VAT and the prepayment of the IRE must be paid before the General Customs Management ("GGA") of the DNIT, while the IRE withholding must be made by the PTR Importer to the EICE on the price that the latter fills in the VAT exempt box in the invoice issued to the PTR Importer. The taxation of the acquisition of the EICE will not be applicable if the EICE and the PTR Importer are related parties under transfer pricing rules, being applicable, instead, the normal taxation of transfer in customs area (VAT exempt) and of direct purchase by the PTR Importer.

The PTR Taxpayer who sells the PTR Goods to Tourists or other PTR Taxpayers will do so exempt from VAT and will support these operations with the invoices in which the identification of the purchaser must be stated (they cannot be unnamed) and, in the case of Tourists, their country of residence. In these cases, the VAT paid by the PTR Importer to the GGA will constitute a single and definitive payment, as well as a deductible expense of the IRE, since it is related to a VAT-exempt sale. Sales to Tourists will not give the right to VAT refunds.

If the PTR Taxpayer sells the PTR Goods to Third Parties or documents the operation with an unnamed invoice, the PTR Taxpayer must invoice the corresponding VAT under the general settlement system of this tax. In these cases, if the PTR Importer is the one who has made the sale, the VAT paid by him to the GGA will constitute a VAT credit, in accordance with the settlement rules of this tax.

If the DNIT detects that a PTR Taxpayer invoiced the sale of PTR Goods to Third Parties as VAT exempt or in an unnamed form, it will revalue the amount of the tax according to the general regime and apply penalties.

• Other incentives

In addition to the reduced VAT, the PTR Decree also establishes other incentives for the Regime in terms of costs for copyrights and related rights, as well as for the importation of hazardous cargo by air transport.

With respect to copyright and related rights costs, the amount of the Compensatory Remuneration Right for Private Copying is halved. This is the economic compensation granted to authors, composers, artists, performers and producers of phonograms or videograms, for the unauthorized copying of their works. Thus, in the PTR, this compensation goes from 0.5% to 0.25%, since it is calculated only on 50% of the value of the entry into the national territory of the products and devices subject to its payment.

With regards to the importation of hazardous cargo by air, a reduction of one point seven percentage points (1.7 pp) in the handling service fees of the National Directorate of Civil Aeronautics ("DINAC") is foreseen, according to the following:

For the DINAC’s rates reduction, the PTR Importer must present the Certificate of Insurance of the respective cargo, which must contain the following information: (i) date of issue, (ii) certificate number, (iii) QR code for verification of validity, (iv) name of the consignee, (v) Policy number, (vi) Air Waybill number, (vii) weight in kilograms, (viii) origin and destination, (ix) coverage and (x) total amount insured. Upon presentation of such insurance certificate, it shall become part of the importer's declaration in detail.

Customs authorization for the transit of hazardous cargo will be granted once the PTR Importer has the Certificate of Insurance, the invoices of origin and the verification report of such certificate issued by the Customs Administration. Once the transit is authorized, DINAC will charge a 2% fee on the total FOB value of the cargo, according to the documentation presented. In all other cases, the rules outline in the regulations in force shall apply.

• Registration in the PTR

To benefit from the PTR, both the EICE and the PTR Taxpayers must enroll in the registry set up by the DNIT, specifically with the General Internal Revenue Service, without prejudice to the importers, in such capacity, to do so concomitantly with the GGA.

The documentary requirements established to obtain authorization in the PTR must be maintained during the entire term of its validity. In the case of the registration of the EICE, they will be established by resolution of the DNIT, while those for the registration of the PTR Taxpayers are as follows:

If the PTR Taxpayer or whoever wishes to register as such is the holder of more than one domestic or foreign bank account, he/she must identify each one of them in the registry, attach the respective bank statements and indicate those accounts through which the payment transactions shall be made. Any variation or modification to the information of the registry must be communicated to the DNIT within 10 working days.

The qualification as a PTR Taxpayer will have a duration of two (2) calendar years, provided that the DNIT does not revoke it. Renewal will be made at the request of the interested party, for the same term, provided that the requirements for registration are met and the PTR Taxpayer has demonstrated cooperative behavior with the authorities e.

The DNIT will revoke the PTR Taxpayer's qualification when it: (i) fails to comply with any of the requirements established for its qualification or other obligations; (ii) commits smuggling or fraud according to Law No. 2422/2004, "Customs Code"; or (iii) sells the PTR Goods in with unnamed invoice. This revocation will cause the disqualification to operate in the PTR for 2 years from its notification.

• Obligations and limitations

The PTR Taxpayers will be obliged to have an External Tax Audit as from the fiscal year in which they have registered to the Regime, regardless of the amount of their annual turnover. They must also individualize in their inventory the PTR Goods and cooperate with the controls and inspections carried out by the DNIT.

In addition, the PTR Taxpayer cannot incorporate the PTR Goods as capital goods. In case of violating this prohibition, in addition to the penalties that the DNIT may apply, the DNIT will revalue and determine the VAT according to the general regime.

The PTR Goods identified in the following chapters of the MCN can only be sold to Tourists directly by PTR Importers, not by PTR Traders, which means that they may only be sold once under the PTR Regime, and not several times, as would be the case if they could be sold between PTR Taxpayers:

In these cases, PTR Importers must comply with the following special obligations: (i) submit an inventory of the initial stock of goods included in those chapters of the MCN at the time of requesting their qualification before the DNIT; and (ii) submit a detail of the sales made every quarter. Failure to comply with the latter will lead to suspension in the PTR until regularization.

• Validity of the PTR

 El Decreto RTC fue publicado en la Gaceta Oficial N° 134 del 9 de julio de 2024, por lo que entró a regir desde el día siguiente, a pesar de la corrección publicada en la Gaceta Oficial N° 146 del 24 de julio de 2024. Las habilitaciones otorgadas para operar bajo el anterior régimen de turismo del Decreto N° 1931/2019, por lo tanto, estuvieron vigentes hasta el mes de agosto de 2024. No obstante, los bienes ingresados al inventario de los Contribuyentes RTC bajo el anterior régimen de turismo deberán ser enajenados conforme con las reglas vigentes al momento de su adquisición.
 
Finally, if you wish to consult the list of goods included in the PTR established in the annex to the PTR Decree, you may do so by entering here.

La implementación de un Reglamento Interno de Trabajo (RIT) es fundamental para las empresas en Paraguay, no solo porque es un requisito legal en ciertos casos—dependiendo del número de trabajadores y la actividad económica—sino también porque actúa como una herramienta clave para regular las relaciones laborales. Es importante señalar que, en caso de no contar con un RIT, el Ministerio del Trabajo, Empleo y Seguridad Social (“MTESS”) puede imponer multas que oscilan entre 10 y 30 jornales mínimos, lo que representa un impacto en la economía de la empresa. Un RIT bien diseñado facilita la aplicación de sanciones de manera justa al establecer claramente los deberes y derechos tanto del empleador como de los trabajadores. Además, protege los derechos laborales, permitiendo que estos sean exigidos si se vulneran los procedimientos establecidos.

Este reglamento está regulado en el Código de Trabajo (CT) paraguayo, específicamente en el Libro III, Título III, artículos 350 al 357. En particular, el artículo 356 del CT se encuentra reglamentado por la Resolución MTESS 1342/2020 que aprueba las medidas administrativas de requisitos y guía de elaboración del anteproyecto para solicitudes de homologación de un RIT. El CT define el RIT como un conjunto de disposiciones obligatorias, acordadas por igual número de representantes del empleador y de los trabajadores, destinadas a regular el orden, la disciplina y la seguridad. Estas normas son esenciales para asegurar la productividad de la empresa y el buen desempeño de las labores en los establecimientos de trabajo.

Finalidad y contenido esencial de un Reglamento Interno de Trabajo

El objetivo principal del RIT es asegurar una relación laboral armoniosa, estructurada y disciplinada entre trabajadores y empleadores, lo que favorece la productividad. Para lograr este fin, el reglamento debe incluir ciertos elementos clave, como:

• Nombre de la empresa: Identificación oficial de la empresa a la que aplica el reglamento.
• Contrato de trabajo: Descripción de la relación laboral, incluyendo derechos y obligaciones de ambas partes.
• Período de prueba: Duración y condiciones del período de prueba antes de la contratación definitiva.
• Organización interna: Estructura organizacional de la empresa y funciones de cada área.
• Jornadas y horarios de trabajo: Especificación de la duración de la jornada laboral y horarios de entrada y salida.
• Asistencia, inasistencia y puntualidad: Reglas sobre asistencia, manejo de ausencias y puntualidad.
• Remuneración: Detalle de la política de pagos, salarios y bonificaciones.
• Vacaciones: Regulación de los días de vacaciones conforme a la normativa vigente.
• Permisos y licencias: Tipos de permisos y procedimientos para solicitarlos.
• Permiso de maternidad/paternidad: Condiciones para el disfrute de permisos por nacimiento o adopción.
• Higiene y apariencia personal: Normas sobre higiene y presentación que deben cumplir los trabajadores.
• Elementos de trabajo y seguridad: Provisión de equipos y medidas de seguridad para prevenir accidentes.
• Derechos, prohibiciones y obligaciones: Definición clara de derechos y responsabilidades de ambas partes.
• Prevención de violencia laboral, mobbing y/o acoso en el lugar de trabajo: Políticas de prevención y procedimientos de denuncia, mecanismos de protección y posibles sanciones.
• Faltas y sanciones: Especificación de faltas laborales y sanciones aplicables, según la gravedad de cada falta.

Es importante señalar que el RIT no es una herramienta estática. Debe adaptarse a nuevas normativas que surjan en respuesta a cambios en el ámbito laboral, garantizando así la protección de los derechos de los trabajadores y el cumplimiento de las responsabilidades del empleador.

Un ejemplo relevante es el teletrabajo, regulado por el artículo 6° de la Ley 6.738 de 2021. Debido a que esta forma de empleo genera condiciones laborales diferentes a las tradicionales mediante el uso de tecnologías de la información y telecomunicaciones, es de suma utilidad que el Reglamento Interno de Trabajo detalle claramente las condiciones específicas, objetivos, mecanismos de control y evaluación, y los derechos y obligaciones de los teletrabajadores.

Beneficios de un Reglamento Interno de Trabajo

Contar con un RIT bien estructurado permite a la empresa gestionar eficientemente a sus colaboradores, lo que se traduce en un mejor desempeño organizacional. Facilita la implementación de normas adaptadas a las necesidades específicas de cada sector. Por ejemplo, en una empresa de servicios financieros, es crucial incluir normas sobre confidencialidad para proteger la información sensible de clientes y transacciones.

Además, se deben incorporar políticas sobre el manejo de datos y la protección de la información financiera, alineándose con las normativas de privacidad y seguridad digital, para mitigar riesgos y garantizar la integridad de los datos.

Un RIT bien diseñado no solo reduce riesgos al estar en cumplimiento con las normativas establecidas por el MTESS, sino que también fomenta un entorno laboral seguro, previniendo accidentes y minimizando posibles conflictos legales dentro de la empresa.

Si tiene dudas sobre qué es un Reglamento Interno de Trabajo, cómo implementarlo o ajustarlo a las particularidades de su negocio, no dude en contactarnos. Nuestro equipo de expertos está disponible para brindarle el asesoramiento adecuado y acompañarle en cada paso del proceso, garantizando que su empresa cumpla con todas las normativas legales y optimice su gestión.

Through Resolution No. 383 dated June 12, 2024 (the “Resolution”), the Secretariat for the Prevention of Money Laundering or Assets (“SEPRELAD“) authorizes the creation and implementation of the citizen inquiry module named "E-Porandu" on its institutional website.

• Purpose: To facilitate citizen access to information and services through the "E-Porandu" module, promoting efficiency and transparency in administrative processes.
• Benefits:
  • Improved service to citizens through the use of Information and Communication Technologies (ICTs).
  • Optimization of public management and enhancement of administrative procedures.
  • Greater transparency and accessibility to information through an electronic ticketing system.
• Implementation: The module will be the sole channel for receiving citizen inquiries and suggestions starting August 1, 2024, replacing Resolution No. 316.

“SEPRELAD“ is committed to providing a more efficient and accessible service through this new module, available at www.seprelad.gov.py.

Through Resolution No. 312 dated June 24, 2024 (the “Resolution”), the Secretariat for the Prevention of Money Laundering or Assets (“SEPRELAD”) approved the submission of reports on national or international physical remittance operations of money or securities via the Integrated Operation Reporting System (“SIRO”) by obligated entities authorized by the Central Bank of Paraguay (“BCP”).

Annex A of the Resolution contains detailed instructions for reporting physical currency remittances abroad. To this end, the SIRO platform requires the following data, among others: (i) Shipment date; (ii) Carrier; (iii) Currency; (iv) Remitted amount; (v) Destination country; (vi) Destination bank; (vii) Beneficiary bank; (viii) Account number; (ix) Account holder. Once the declaration is registered, it will remain in "Pending" status by default, awaiting confirmation of the data entered by the cash-in-transit company.

The system will send an email notification to the cash-in-transit company, requesting validation of the declaration data. To do this, the company must log into SIRO and validate the corresponding declaration. Once the data is confirmed by the cash-in-transit company, the option to print the available declaration shipping receipt will be enabled.

Through Resolution No. 9, Act No. 41, dated September 5, 2024 (the "Resolution"), the Central Bank of Paraguay (“BCP”) approved modifications to the Regulation on Electronic Payment Methods. These changes aim to improve financial inclusion and optimize the regulation of non-bank electronic transfers and electronic money.

The Resolution introduces new provisions affecting both Electronic Payment Service Providers (EMPEs) and users. Below are the main modifications introduced:

1. Limits on Electronic Transfers: Non-bank electronic transfers made by senders through agents or points of sale may not exceed, per month, the equivalent of 40 minimum daily wages. In the case of transfers made from bank, financial, or cooperative accounts using the SIPAP system, this limit will not apply. Additionally, transactions between electronic money accounts will have a monthly maximum cap of three minimum wages.
2. Real-time Processing: Non-bank electronic transfers must be processed and recorded in real-time. The beneficiary may make partial withdrawals as long as they have an electronic money or bank account linked to the transaction.
3. Inactive Accounts: Balances in inactive accounts, those that show no activity for a period of 180 days, will be transferred to a bank account specified by the account holder. If the account holder does not have a bank account, the EMPE must open one on behalf of the holder.
4. Safeguarding Users’ Funds: Account holders’ funds will be guaranteed through the creation of a separate fund or through deposits with the BCP. These funds must cover 100% of the balance in electronic money and will be subject to daily reconciliation mechanisms.
5. Control and Supervision Measures: The BCP may request additional information from EMPEs and will be responsible for supervising compliance with the regulation. Additionally, EMPEs must implement control systems to track transactions and verify compliance with established limits.

Through Resolution No. 3, Act No. 44 dated September 16, 2024 (the “Resolution”), the Central Bank of Paraguay (“BCP“) has approved the "MIPYMES Basic Account Regulation," with the aim of promoting financial inclusion for micro, small, and medium-sized enterprises (MIPYMES).

Purpose: To facilitate MIPYMES' access to certain finance services.

Key Aspects:

• MSMEs’ Basic Account (the “Basic Account”): This is a savings account in local currency that does not require a minimum opening amount or a minimum average maintenance balance.
• Requirements for opening the Basic Account: (i) Holding a valid MSME Identification Card; and (ii) not having other deposit accounts (savings or checking), except for basic personal savings accounts.
• Permitted Transactions: Includes deposits, debit card purchases, and service payments with no additional costs. Customers can make unlimited transactions through SIPAP, subject to applicable legal limits.
• Limits: Monthly credits are capped at a maximum of 20 minimum wages, and the account has a validity of up to one year. Withdrawals are limited to six per month at no charge.
• Deposit Protection: Funds in these accounts will be guaranteed by the Deposit Guarantee Fund.
• Security and Transparency: Financial institutions must apply anti-money laundering/combating the financing of terrorism (AML/CFT) protocols, ensuring compliance with SEPRELAD regulations.

The regulation will come into effect after its publication, and financial institutions must ensure its proper implementation and dissemination.

Con orgullo, nos complace compartir que nuestra firma ha sido reconocida por ITR Americas Tax Awards as “Paraguay Tax Law Firm of the Year 2024”.

Este prestigioso galardón es un testimonio del compromiso y la dedicación de nuestro equipo, siempre enfocados en ofrecer servicios legales de la más alta calidad. La confianza de nuestros clientes y colaboradores nos motiva a continuar elevando nuestros estándares de excelencia.

¡Gracias a nuestros clientes y colaboradores por su apoyo constante!

Executive Summary

Standard	Date	Content
General Resolution No. 14/2024	July 01, 2024	The National Directorate of Tax Revenues ("DNIT") established the procedures applicable to the on-board provisioning and supplies regime.
General Resolution No. 15/2024	July 04, 2024	The DNIT extended the mandatory rotation and rest period of the External Tax Auditors ("AEI").
General Resolution No. 16/2024	July 30, 2024	La DNIT estableció un mecanismo excepcional para la presentación del Estudio Técnico de Precios de Trasferencia (“ETPT”), para los contribuyentes con cierre fiscal al 31-Dic-2023.
Binding Consultation	January 2024	The DNIT ruled on how to document the write-off of inventory for purposes of deductibility of Corporate Income Tax ("IRE") and the reversal of the associated Value Added Tax ("VAT") credit.
Binding Consultation	January 2024	The DNIT set forth its position on the impact of Personal Income Tax ("IRP") on the early withdrawal of retirement contributions.

► General Resolution No. 14/2024 - The procedures applicable to the on-board provisioning and supplies regime are established.

Por medio de la Resolución General N° 14/2024 (“RG-14”), la DNIT estableció los procedimientos aplicables al régimen de aprovisionamiento a bordo y suministros a vehículos de transporte en viaje internacional, siempre que las embarcaciones aprovisionadas cuenten con matrícula o bandera de países que admitan un tratamiento similar para el abastecimiento de los trasportes paraguayos.

RG-14 regulates Decree No. 1952/2024, about which more information can be found here. Among its most relevant provisions, there are those about the treatment of supplies, deposits and tanks dedicated to the regime, as well as the requirements to be met by river transport companies and those who wish to operate under the regime, whom must comply with the following:

Prior to the arrival of the goods to be subject to the on-board supply regime, an import license must be obtained from the Ministry of Industry and Commerce ("MIC") if restrictions or prohibitions apply to them.

The corresponding Customs Administration will authorize, return and/or reject the request for the entry of goods to the on-board provisioning and supplies regime, within a term no longer than 2 working days from the filing of the request. Upon arrival of the transport vehicles, the General Customs Management ("GGA") must be requested to unload the goods with the corresponding accompaniment and supervision.

The depositary must finish the entry to deposit of the quantities unloaded. The warehouses and tanks for the storage of supplies must be authorized by the MIC and the DNIT.

The customs broker shall proceed to formalize the clearance of the goods, assigning them the customs destination of supply on board ("DAAB") while they are in the warehouse, and then destine them for consumption of the vehicles on an international trip ("AB01") or import them for consumption ("ICAB").

In the event that the goods are destined for AB01, the customs broker must formalize their clearance and present it to the GGA to assign it the status of presented, after which the customs broker will generate the complementary fractioned clearance ("AFC1") based on the declared AB01 clearance. The circulation of goods among the different customs destinations foreseen in RG-14 corresponds to the following scheme:

Goods in free circulation in the national territory —imported or of local production— that are destined for on-board provisioning will be treated as exports for consumption when they correspond to cancelled balances of AFC1 for the supply of goods to vehicles on an international trip.

Failure to comply with the provisions set forth in RG-14 shall be subject to the penalties foreseen for customs offenses and fraud, as well as for smuggling, according to the nature and seriousness of the offense; notwithstanding other sanctions established in the legislation in force.

► General Resolution No. 15/2024 - The mandatory rotation and rest period for AEIs is extended.

By means of General Resolution No. 15/2024, the DNIT extended from 5 to 7 consecutive fiscal years the mandatory rotation term of the AEI, which is the term for which taxpayers may hire the same AEI. However, it also increased from 2 to 3 the number of fiscal years of rest that must elapse to be able to hire the same AEI again.

Also, it is established that the number of years or fiscal years remaining to complete the maximum of 7 consecutive fiscal years may be added to contracts executed before the entry into force of General Resolution No. 15/2024, which means 2 things: (i) an AEI that is within the 5 consecutive fiscal years, may continue until 7 years are completed; and (ii) an AEI that is in the rest period, may ignore it and continue with the same taxpayer for the amount of fiscal years missing until completing the 7 years, ignoring the elapsed rest.

► General Resolution No. 16/2024 - An exceptional mechanism is established for the filing of the ETPT, for taxpayers with fiscal year-end as of 31-Dec-2023.

By means of General Resolution No. 16/2024 ("RG-16"), the DNIT established exceptionally that the ETPT of taxpayers with fiscal year-end as of December 31, 2023, must be filed in digital format (PDF) through the DNIT's entry desk, and must be contained in an external storage medium, which may be a USB memory stick, CD or DVD.

The working papers must be submitted in electronic spreadsheet format (with .xls, xlsx or .ods extension) with the formulas applied to allow verification of the calculations or ratios used.

The ETPT must be duly validated with the signature of the Authorized Transfer Pricing Professional ("PAPT"), because the DNIT has not yet enabled the ETPT ratification option in the Marangatu system.

The deadline for filing the ETPT was not modified, so they should have been filed in July of this year, according to the perpetual due date calendar, even though the respective means for filing were not enabled. It is noteworthy that the DNIT has corrected this with the issuance of RG-16 only on July 30 of this year, after all the due dates have passed.

In this regard, it is reminded that the filing of the ETPT after the expiration date is subject to a maximum fine established by the Executive Branch for infringements, which is Gs.1.530.000, as established in Decree No. 5046/2021.

► Answer to binding consultation on the documentation for the write-off of inventories to be deductible from the IRE and comply with the reversal of its VAT credit.

In a binding consultation answered in January of this year, the DNIT expressed its criteria on the correct way to document the inventory write-off due to decomposition or obsolescence, for both its recognition as a deductible expense for IRE and the reversal of the VAT credit from its acquisition.

In the case of the IRE, the DNIT indicated that the appropriate way to document the loss is through (1) the inclusion of the detail of the write-offs in the opinion of the external tax auditor or, if not required to hire one, (2) by means of a report from the accountant containing the same detail of the write-offs with their cost values.

In the case of VAT, the DNIT indicated that neither the auditor's nor the accountant's report is sufficient to proceed with the reversal of the tax credit, since for this purpose the corresponding VAT debit must be generated, which is done through the issuance of an invoice with the detail of the goods written off at cost price including the VAT that was used as a credit at the time of purchase.

It follows that it will not be necessary to issue an invoice to reverse the VAT credit associated with the goods of the inventory written off when their acquisition has been exempt from this tax; or, if, instead of using the VAT their acquisition as a credit, it has been integrated as a cost of the inventory written off, which raises the question of whether the reversed VAT should be integrated to the deductible expense for the inventory written-off, considering that this cancels the VAT’s credit status.

► Answer to a binding consultation on the IRP taxation of the early withdrawal of retirement contributions.

In a binding consultation issued in January of this year, the DNIT answered the doubt of an employee as to whether the amounts corresponding to the withdrawal of his retirement contributions due to the termination of his employment relationship are taxed by the IRP. On this issue, the DNIT reasoned that the amount of these contributions is nothing more than the reversal of the employee's remuneration destined to the retirement and pension system, or the social security system created or admitted by law.

That portion of the employee's remuneration is excluded from the calculation of the gross income of the IRP in the category of personal services, provided it is used as a retirement contribution. Therefore, it is natural that this portion of the employee's remuneration constitutes gross income for such tax when its destination as retirement contribution is reverted and it becomes part of the employee's assets, because in the fiscal year this happens those contributions recover their status of employee's remuneration.

That is the logic behind Decree No. 7047/2022 which, among others, amended Article 54 of the IRP regulations annexed to Decree No. 3184/2019, to expressly include in its numeral 3 the early withdrawal of the retirement contribution as other types of income taxed by IRP in the category of personal services.

A través del Decreto Nº 2553/24, el 19 de setiembre de 2024 el Gobierno aprobó la nueva Política Energética Nacional, con visión al 2050.

La política tiene como objetivo consolidar una matriz energética adecuada a las necesidades del país, con el aprovechamiento y uso sostenible de sus recursos naturales nacionales y de su energía, promoviendo la integración regional, a fin de lograr el desarrollo de la población y de los sectores productivos. La política establece objetivos para los siguientes subsectores: eléctrico, entes binacionales hidroeléctricos, bioenergía, fuentes alternativas renovables, e hidrocarburos.

Puede descargar una copia del decreto aquí.

Executive Summary

Event	Date	Content
Call for Bids	July 19, 2024	The National Directorate of Public Procurement (DNCP) published on its portal the call for the International Public Bidding (IPB) for the Design and Construction of Sustainable Infrastructure Works and Urban Services in the Bañado Tacumbú neighborhood, convened by the Ministry of Public Works and Communications ("Contracting Authority" or "MOPC")
Call for Bids	September 12, 2024	The National Directorate of Public Procurement (DNCP) published on its portal the call for the International Public Bidding (IPB) for the Rehabilitation of Highway PY 05 (section Pozo Colorado - Concepción), convened by the Ministry of Public Works and Communications ("Contracting Authority" or "MOPC")
Call for Bids	September 11, 2024	The National Directorate of Public Procurement (DNCP) published on its portal the call for the International Public Bidding (IPB) for the Construction of Reinforced Concrete Bridges in the San Pedro Department, convened by the Ministry of Public Works and Communications ("Contracting Authority" or "MOPC")
Call for Bids	August 26, 2024	The National Directorate of Public Procurement (DNCP) published on its portal the call for the International Public Bidding (IPB) for the Improvement and Duplication of Highway PY 01 for the section Cuatro Mojones – Quiindy, convened by the Ministry of Public Works and Communications ("Contracting Authority" or "MOPC")

More Information:

I. Design and Construction of Sustainable Infrastructure Works and Urban Services in the Bañado Tacumbú Neighborhood

General Aspects

On July 19, 2024, the DNCP published on its portal the call for Bid 449366 convened by the MOPC under the modality of IPB for the design and construction of sustainable infrastructure works and urban services in the Bañado Tacumbú Neighborhood (the “Project").

Project Characteristics

The Project aims to improve the quality of life of the riverside population and the urban development of the Bañado Tacumbú neighborhood. The Project includes the following infrastructure works: (i) roads, (ii) electrical energy, (iii) drinking water, (iv) stormwater drainage, and (v) sanitary sewerage.

The Project will bring to life the new Bañado Tacumbú neighborhood, which will be located in an area of approximately 65 hectares, at an elevation of 64 meters above sea level, not subject to flooding by the Paraguay River, free of any occupation, and situated in the city of Asunción, capital of Paraguay.

Investment amount and financing

Gs. 157.500.000.000 (approximately USD 20,000,000). The Project will be fully financed by a loan from the Inter-American Development Bank (IDB), approved by Law No. 6424/2019.

Offer Maintenance Guarantee

5% - policy or bank guarantee.

Adjudication System

It will be awarded to the bidder whose proposal meets the qualification criteria, i.e., financial capacity, general and specific technical experience, key personnel, etc.

Number of Lots

Single lot for the entirety of the works.

Term for execution of works

The execution term of the Project is 21 months.

Subcontracting

Subcontracting for the execution of some scheduled works is permitted, but the amount of the subcontracted works shall not exceed 30% of the total contract amount. However, the awarded party must obtain prior authorization from the inviting authority.

Contracting Authority

MOPC

Relevant dates in relation to the Project

• Deadline for inquiries: October 3, 2024 (09:00).
• Bid submission date: October 24, 2024 (09:00).
• Bid opening date: October 24, 2024 (09:30).  

II. Rehabilitation of Highway PY 05 (Section Pozo Colorado - Concepción)

General Aspects

On September 12, 2024, the DNCP published on its portal the call for Bid 449368 convened by the MOPC under the modality of IPB for the hiring of construction companies for the rehabilitation of Highway PY 05, specifically in the section between Pozo Colorado and Concepción (northern zone and western region of the country) (the “Project").

Project Characteristics

The Project aims to rehabilitate the section between Pozo Colorado and Concepción, which is currently in very poor condition. The Project is one of the most innovative of its kind in Paraguay, as it is the first highway in the country to be constructed entirely of concrete. The MOPC has emphasized that the use of concrete will make Highway PY 05 safer, more durable, and more efficient; furthermore, it will comply with the parameters of Law 5841/17 regarding the use of rigid pavement in road infrastructure projects in Paraguay, the regulatory decree of which was enacted in May of this year.

Number of Lots

The Project is divided into two strategic lots:

• Lot 1: covers a length of 53.3 km, starting at km 318.9 and ending at km 372.2.
• Lot 2: covers a length of 36.2 km, starting at km 372.2 and ending at km 409.1.

The total length of the section in question is 90.2 km, with dual carriageways.

Investment amount and financing

Gs. 472.523.161.624 (approximately USD 60,000,000). The Project will be financed with a loan granted by the Development Bank of Latin America and the Caribbean (CAF), approved by Law No. 6235/2018.

Offer Maintenance Guarantee

5% - policy or bank guarantee.

Participation condition

Individuals, legal entities, and/or consortiums, whether established or with a letter of intent, registered in the State Supplier Registry.

Adjudication System

One or a combination of several criteria set forth in Article 52 (i.e., quality, price, life cycle costs of the work, etc.) of Law No. 7021/2022 "On Supply and Public Procurement."

Adjudication criteria

Per lot.

Term for execution of works

20 months counted from the notice to proceed.

Subcontracting

Subcontracting is allowed, but the amount of the subcontracted works shall not exceed 20% of the total contract amount.

Contracting Authority

MOPC

Relevant dates in relation to the Project

• Deadline for inquiries: October 10, 2024 (12:00)
• Bid submission date: October 17, 2024 (09:00)
• Bid opening date: October 17, 2024 (09:30)  

Project supervision

The DNCP has also published Bid 454027, convened under the modality of IPB, for the hiring of consulting services for the supervision of the works planned under the Project.

III. Construction of Reinforced Concrete Bridges in the Department of San Pedro

General Aspects

On September 11, 2024, the DNCP published on its portal the call for Bid 449085 convened by the MOPC under the modality of IPB for the construction of reinforced concrete bridges in the Department of San Pedro (the “Project").

Project Characteristics

The Project aims to address the accessibility issue in the Department of San Pedro (northern zone of the country), particularly in the districts of San Estanislao, Capiibary, and Cruce Liberación. The Project includes mobilization works and the movement of existing roads and bridges, drainage works (culverts and ditches), construction of reinforced concrete bridges and small bridges, vertical and horizontal signage, installation of guardrails, and complementary works.

Number of Lots

The Project is divided into two lots:

• Lot 1: (i) one 30-meter bridge in Colonia Felicidad – Route PY 08 (Liberación); (ii) one 36-meter bridge between Liberación – Colonia Amistad – Cruce Barrio San Pedro; and (iii) one 20-meter bridge on San Isidro Este Street – Arroyo Moroti – Amistad.
• Lot 2: (i) one 36-meter bridge on 2000 Bertoni Street (San Estanislao); and (ii) one 15-meter bridge between 1ro de Mayo – Granja Giménez (Capiibary).

The Project includes a total of five bridges with an overall length of 137 linear meters.

Investment amount and financing

Gs. 22.474.878.645 (approximately USD 3,000,000). The Project will be financed with funds from the loan granted by the FONPLATA Development Bank, approved by Law No. 6237/2018.

Offer Maintenance Guarantee

5% - policy or bank guarantee.

Adjudication System

It will be awarded to the bidder whose proposal substantially complies with the bidding documents and offers the lowest evaluated price.

Adjudication criteria

Per lot.

Term for execution of works

360 days counted from the notice to proceed.

Subcontracting

Subcontracting is allowed, but the amount of the subcontracted works shall not exceed 20% of the total contract amount.

Contracting Authority

MOPC

Relevant dates in relation to the Project

• Deadline for inquiries: October 18, 2024 (12:00)
• Bid submission date: October 25, 2024 (09:00)
• Bid opening date: October 25, 2024 (09:30)

IV. Improvement and Duplication of Highway PY 01 for the section Cuatro Mojones – Quiindy."

General Aspects

On August 26, 2024, the DNCP published on its portal the call for Bid 3101 convened by the MOPC under the modality of IPB for the improvement and duplication of Highway PY 01 for the section Cuatro Mojones – Quiindy , with a length of 108 kilometers (the “Project”). The value of the Project is approximately USD 445,000,000 and will be executed under the Public-Private Partnership modality, in accordance with Law No. 5102/13 and Regulatory Decree No. 1467/2024.

Project Characteristics

The Project aims to improve and duplicate Highway PY 01 in the affected section, which is further divided into 18 functional sub-sections. The Project is divided into three phases: (i) the construction contract, which includes: rehabilitation works; opening of third lanes; tunnels; viaducts; bypasses; comprehensive improvement of the drainage system and signage throughout the mentioned section, among others (the “Works”); (ii) operation contract; and (iii) maintenance contract. In total, the Project will have a duration of 30 years.

Offer Maintenance Guarantee

The Bid requires that bidders submit a bid security guarantee valued at USD 12,000,000. The bid security guarantee may be in the form of (i) a cash deposit, (ii) a stand-by letter of credit, (iii) a bond or bank guarantee, or (iv) an insurance policy with a first demand clause issued by an insurance company authorized to operate and issue surety bonds in the Republic of Paraguay.  

Adjudication criteria

The MOPC will award the Project to the bidder who substantially complies with the requirements and offers the lowest DIP, and whose proposal is deemed "acceptable" in (i) the economic evaluation, (ii) the assessment of administrative backgrounds, and (iii) the technical evaluation.

Special Purpose Vehicle

The awarded bidder will be required to establish a Special Purpose Vehicle (SPV) within a period of 90 days from the date the award resolution becomes final. The SPV must comply with certain requirements, such as: (i) having its registered office in the Republic of Paraguay, (ii) limiting its corporate purpose exclusively to the execution of the Project, (iii) forming a board of directors composed of at least 3 principal members, and (iv) having a share capital of USD 20,000,000 at the time of its incorporation.

PPP Trust

The funds necessary to fulfill the obligations arising from the firm and contingent commitments derived from the Project will be managed by a trust, administered by the Financial Development Agency (Agencia Financiera de Desarrollo) in a separate estate, in accordance with Law No. 921/96 on Fiduciary Business. The State, as the trustor, will act through the Ministry of Economy and Finance (Ministerio de Economía y Finanzas).

Remuneration

The remuneration may be: (i) Deferred Investment Payments (DIP), (ii) Availability Payments (AP), (iii) Traffic-Linked Payments (TLP). Additionally, the awarded consortium will also have the right to receive income in the form of (iv) Exploitation of the Right of Way. It is important to mention that the contract may be assigned to third parties with the authorization of the MOPC.

Term for execution of works

3 years, from the notice to proceed. 

Bid validity period

180 calendar days counted from the deadline for submission of bids.

Offer maintenance guarantee validity period

180 days counted from the submission of bids.

Bidding participation

Only the companies that have been prequalified will be able to participate in the bidding.

Subcontracting and assignment

Subcontracting is permitted for the execution of certain planned works, such as: engineering design, the total or partial execution of the works, conservation and maintenance of Highway PY 01, and toll collection tasks. Subcontractors must formalize and register their contracts with the MOPC before commencing work.

Contracting Authority

MOPC

Relevant dates in relation to the Project

• Deadline for inquiries: November 15, 2024
• Bid submission date: December 18, 2024
• Bid opening date: December 18, 2024  

To obtain more information regarding any of the topics covered in this edition of our newsletter, please contact: Rodolfo G. Vouga (rgvouga@vouga.com.py); Manuel Acevedo (macevedo@vouga.com.py); Silvia Benítez (sbenitez@vouga.com.py); Lucas Rolón (lrolon@vouga.com.py); Yvo Salum (ysalum@vouga.com.py).