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Paraguay has substantial natural resources mainly for forestry, agriculture and cattle raising, as well aspotential reserves of natural gas and non-ferric minerals.Abundant fresh water sources and rainfall provide a wide range of investment opportunities related tothe industrialization of timber, agricultural products and food production.Reforestation is encouraged through tax incentives.The economic, political and legal framework for investment in the hydrocarbon sector in Paraguaymoment is outstanding. The government decided to give a strong boost to oil and gas exploration,which, added to the growth of the Gross Domestic Product (GDP) and the results of geological studies,predict excellent prospects for the activities of this nascent industry, with potential incalculable.As for the chances of finding oil, the expectations based upon the work of the private companieswithin areas that belong to the same basins from which oil is extracted since several years ago on theArgentine side, are encouraging.Paraguay shares five sedimentary basins with neighboring countries, in four of which there isproduction of hydrocarbons. Experts say that the prospects for finding hydrocarbons in Paraguay arehigh. However, it is recognized that at the country level exploration is still in its infancy because of 25exploratory blocks in only two activities are carried out, so that there is a great task to develop yet.The studies and oil exploration works made recently showed that serious work began in this area inParaguay, so exploratory projects will come into its decisive phase in 2014 with the drilling of wells.There is no technical reason why this country lacks such resources, but obviously, perforations must bemade to make contact with the potential reservoir.General Hydrocarbon Act 779 of 1995, provides significant tax advantages to investors, and expresslystipulates as follows: "With the exception of fees, prospecting and exploration are exempt from anytax, state and municipal taxes, including permit applications and exploration concessions, and therespective contracts".Only during the exploitation period, paraguayan Act provides the following tax system, low impactcompared to other countries:a) An initial fee of USD 0.30 per hectare;b) An annual operating fee per hectare:i. From 1st to 5th year : USD 0.20ii. From 6th to 10th year : USD 0.60iii. From 11th to 15th year : USD 1.60iv. From 16th to 20th year : USD 2.00For royalties, the grantee shall pay to the Paraguayan Government on the gross production of crude oil:a) From one hundred (100) barrels until 5000 (five thousand) barrels, 10% (ten percent);7Berkemeyer Attorneys and Counselors | Asunción - Paraguay