Paraguay has held relatively free and regular presidential elections since the country's return to democracy in 1989.
Its government recognizes the need to diversify its economy and has taken steps in recent years to do so. In addition to looking for new commodity markets in the Middle East and Europe, Paraguayan officials have promoted the country’s low labor costs, cheap energy from its massive Itaipu Hydroelectric Dam, and single-digit tax rate on foreign firms. As a result, the number of factories operating in the country – mostly transplants from Brazil - has tripled since 2014.
Made up of 17 departments, most of the population resides in the eastern half of the country; to the west lies the Gran Chaco (a semi-arid lowland plain), which accounts for 60% of the land territory, but only 2% of the overall population
Asunción (population 525,294)
|Major cities|| |
|Unemployment rate|| |
7.4% (July, 2019)
|Main industries|| |
sugar processing, cement, textiles, beverages, wood products, steel, base metals, electric power
|Interest rate|| |
4% (September, 2019)
|Political key info|| |
President Mario Abdo Benitez and Vice President Hugo Adalberto Velazquez Moreno have held their positions since 15 August 2018. Both are directly elected on the same ballot by simple majority popular vote for a single 5-year term. Election last held on 22 April 2018 and the next will be held in April 2023.
2.6% (September, 2019)
|Total Car park|| |
|New vehicle registrations (Cars, LCV, Trucks)|| |
2018 (light passenger vehicles and light commercial vehicles)
|Top 5 brands (total market)|| |
1. Chevrolet, up 43.6% (15.6% share)
|Model preference top 5 (total market)|| |
1. Toyota Hilux, up 13.4%
|Used car market/renewal cycle|| |
The used car market, supported by local auto parts providers known as "maquiladoras", is a very big business in Paraguay. However, the Paraguay government is being pressured by neighboring countries such as Brazil and Argentina to prohibit their used car import activities as they are unable to sell new cars in Paraguay.
For instance, as Brazil is a large buyer of auto parts from Paraguay, the Brazilian government is threatening import tax on these auto parts unless Paraguay stop importing used cars.
The basis of company car taxation in Paraguay is reflected in this overview. Different types of taxes are considered here: taxes related to the registration of the vehicle, income taxes and VAT aspects. Expected future developments are also briefly listed, if any.
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The import of vehicles and production carried out by assembling companies installed in Paraguay, the transfer onerous or free of charge.
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Individuals and legal entities.
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Flex vehicles are exempt from the customs tariff payment at the moment of importation, as a promotion for the consumption of absolute alcohol and alcohol fuel.
Likewise, as an incentive for the importation of flex vehicles, it is established that the State Bodies and Entities must acquire a minimum of 30% of these vehicles. The volume of purchase should increase gradually until achieving the total change of the fleet of vehicles propelled by biofuels.
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In the import, and sale of vehicles made by the assembly companies.
1. Income tax
1) Tax Debit greater than the Tax Credit: Fiscal Debit - Tax Credit = Value Added Tax payable (Tax rate 10%).
2) Fiscal Debit less than the Tax Credit: Fiscal Debit - Tax Credit = Balance in favor of the taxpayer to be used in the following periods.
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Unlike the past, OEMs are offering accessible financing plans nowadays with the help of national development bank BNF. The bank has a credit line which offers financing for 0km first vehicles (imported or domestic) known as “Vehículo 0 Km para la gente” (0km Vehicle for the people). It offers loans of up to 100mn guaraníes (approx. US$16,028) with 8.95% annual interest or loans up to 150mn guaraníes at a rate of 9.95%. The loans periods run up to 60 months.
It offers loans of up 100mn guaraníes with 8.95% annual interest or loans up to 150mn guaraníes at a rate of 9.95%. The loans periods run up to 60 months.
Average gasoline price per liter: US$1.08
World average: US$1.13
(est. April 8, 2019)
Some of the reginal characterestics which could curb TCO are the low cost of automobile maintenance, the strong autoparts industry, and the fact that there is no mandatory insurance related to bodily harm in the case of an accident. Running without insurance, however, may not be a good idea as this could cost you much more if a serious accident occurs.
Unlike many countries in Latin America, Paraguay does not require any type of mandatory insurance related to bodily harm in the case of an accident.
Currently, only about 30% of drivers have insurance which covers medical expenses as a result of an accident, according to the traffic and road safety agency of Paraguay.
Owing to this, the agency - in 1Q19 - was putting together a bill which establishes manadatory traffic accident insurance, SOAT, and it is expected to be debated in congress in 2019.
As for telematics, some of the largest companies are operating within the country but more for industrial firms and governments.
In the capital city of Asunción, despite the introduction of low sulfur fuels, vehicle emissions are still quite high as many of the cars in the city are old and poorly maintained.
There is a high concentration of Particulate Matter (PM) 2.5 in the city, with registered values being well above the limits set by the World Health Organization (WHO).
In 2012, a tax incentive law for the importation of electric cars was approved in Congress. However, two years later, the regulation underwent modifications that practically rendered the benefits ineffective, according to representatives of the industry.
At the beginning of 2019, there were approximately 250 electric and hybrid vehicles circulating in the county. Most of them are imported from Miami.
In April, 2019, the Ministry of Public Works and Communications (MOPC) was analyzing regulatory changes to the Metrobús project in Asunción which is aimed at permitting the use of electric buses.
According to latest studies, the current passenger demand is some 12,000/hour.
Of the 95,856 cars imported in 2018, 65.6% of them were used cars, with the vast majority being more than 10 years old.
Despite this, the new car market has been booming, growing by some 30% per month in 2018. And the trend is expected to continue thanks to the “Vehículo 0km para la gente” (0km Vehicle for the people) program being offered by national development bank BNF.