Paraguay

Paraguay, a landlocked country in South America, is bordered by Brazil to the east, Argentina to the southwest, and Bolivia to the northwest. It consists of 17 departments, with a separate district for the capital city of Asunción. The official languages of Paraguay are Spanish and Guaraní, and the currency is the guaraní (PYG).

Paraguay achieved a significant economic expansion in Latin America in recent years. After an economic contraction of 1.2% of the gross domestic product (GDP) in 2012, the Paraguayan economy showed a recovery between 2013 and 2019, mainly due to record agricultural production and the recovery of international markets for the export of beef, mainly.

Regarding the 2020 period (affected by the COVID-19 pandemic), a GDP contraction of 1% is estimated according to data published by the Central Bank of Paraguay. The sectors affected being industry and services, mainly the latter. Due to the participation of the agricultural sector in GDP, Paraguay became one of the countries with the lowest GDP contraction in the region.

Paraguay stands out as the leading exporter of renewable electricity in South America and is among the largest net exporters of clean energy worldwide. In addition, according to data published by the United States Ministry of Agriculture, Paraguay ranks as the largest exporter of organic sugar in the world, the fourth largest soybeans exporter, and the tenth largest in soybean processing capacity. Paraguay is also the tenth largest exporter of beef, eighth largest corn exporter, and eleventh largest rice exporter in the world.

In Asuncion, in the central region, commercial activities (imports, exports, related services) and financial services have developed significantly.

Paraguay has achieved an important participation in the capital gains markets with the placement of national bonds, due to the macroeconomic stability achieved over the years that mainly includes sustained economic growth, fiscal discipline, and accumulation of international reserves, among others.

It is important to mention that, as of 1 January 2020, a new tax reform is in force. It includes certain changes, such as the extension of the source or territoriality principle, taxation of digital services, and transfer pricing rules, among others. As of 1 January 2021, the transfer pricing regulation is in force, and it follows the Organisation for Economic Co-operation and Development (OECD) guidelines.

Finally, within the demographic statistics it is highlighted that the population of Paraguay is approximately 7.2 million people, of which 48% are economically active. The middle class has increased by 45% and represents approximately 24% of the total population (1.5 million people).

PwC Paraguay assists the principal multinational companies and financial institutions in Paraguay. We support clients with the local knowledge and skills of our people and with access to a broad range of other professionals across the PwC global network of firms.

PwC Paraguay has a branch in Hernandarias, Alto Parana, in the east zone of the country, where the primary area of soy crops, maquila industries, and agricultural industries are located.