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strengthened a legal framework, which has long given foreign investors unrestricted access in allsectors of the Paraguayan economy.The legal scope embraces both the assembly of products and the performance of services. TheNational Council administers the program for the Maquila Export Industry and the Program Unit, aone-stop-shop that handles the reception and processing of all applications and approvals.Materials and equipment for processing are imported under the drawback system that suspends taxand tariffs payment until the final product is re-exported. The Customs Authority demands a guaranteein order to clear goods imported under the drawback system. It is possible to obtain a bond from aninsurance company in order to fulfill this requirement. Processed materials must be re-exported withina maximum term of six months. Machinery and equipment may remain in the country during saidterm, at the end of which they must be re-exported without incurring in tax payment. MERCOSURregulations of origin are applicable to trade with Brazil, Argentina and Uruguay, whereas WTOregulations of origin apply to trade with all other countries.The Act practically eliminates income tax and, instead, establishes a 1% tax to be levied on the valueadded within the country. The tax is effectively assessed on the value invoiced by the exportingcompany.Paraguay offers good opportunities for maquila operations given its low labor cost, abundant energysupply, and a central geographical location with easy access by road or river to the largest SouthAmerican markets.11. LEASINGLeasing or Financial Lease Act 1295/1998 introduced a commercial and financial alternative into theParaguayan market. The Act focuses on two main objectives: to offer legal security to both the lessorand the lessee and provide tax incentives making the operation attractive for all parties.Leasing companies that wish to operate in Paraguay must constitute a stock corporation and includethe following legal denomination after its trade name: “Sociedad Anónima de ArrendamientoFinanciera” or “Sociedad Anónima de Leasing Financiero.” Registered stocks must represent capitaland the corporate purpose must be limited to the performance of financial and commercial leasingoperations subject to legal terms.12. REAL ESTATE9In the period between 2013, 2014 and 2015, the Capital city will see the emergence of more than600,000 m2 in luxury buildings.Berkemeyer Attorneys and Counselors | Asunción - Paraguay