Paraguay is a country located in the heart of South America.
The country has access to surrounding trading partners and has an economy worth billions of dollars. The favorable economic conditions in Paraguay thus hold extraordinary business potential as the country is predicted to grow further.
Paraguay is a very attractive country for investors, entrepreneurs, and companies looking to expand to Latin America. As such, starting a business in Paraguay is not only straightforward, but a great opportunity for businesses, entrepreneurs, and investors looking to expand their commercial presence in an unsaturated market.
Why set up your business in Paraguay?
Paraguay is a founding member of the Southern Common Market (MERCOSUR), an economic integration and free trade initiative. Through MERCOSUR, Paraguay is a party to a spectrum of free trade agreements (FTAs). And as of now, Paraguay’s inflation rate is the lowest in MERCOSUR.
- Paraguay operates several free trade zones (FTZs) giving substantial incentives to investors interested in starting a business in Paraguay
- Paraguay’s economy has a strong macroeconomic position.
- In Paraguay, corporate income is taxed on a territorial basis, meaning that income generated offshore is not taxable in the country.
- Paraguay has an open economy with a low tax regime and has initiated reforms to its immigration system that decreases the time it takes to obtain residency.
Despite being landlocked, Paraguay engages in substantial trade with its neighboring countries.
Paraguay company registration procedures
Company registration in Paraguay is relatively straightforward and involves the following key steps:
Select the applicable type of corporation
Which type of company structure best suits the incorporator’s needs will be based on how they want to structure the enterprise, how much liability they wish to accept, and how much capital they intend to invest. The two most popular types of entities chosen by foreign investors are the following;
- Corporation (Sociedad Anonima or S.A): just like many Latin American countries, this is the most common business model for larger companies in Paraguay where liability is limited to the amount of capital
- Limited Liability Company (Sociedad de Responsibilad Limitada or SRL): this is the second most common company in Paraguay. It is very popular because this business model offers a lot of insurance for the investor’s contribution.
Applicants may also consider forming a branch or registering a subsidiary.
Once the applicable company structure is identified you can start with the company’s registration process.
Check the availability of the name
A unique company name must be chosen and the applicant must check the availability of the desired name. Applicants can check the company name availability through an online database, but it is commonly done at the Treasury Attorney’s Office.
Choose a legal representative
If the company shareholders are not present in Paraguay, they will have to appoint a legal representative in Paraguay. This legal representative can be anyone of legal age who isn’t otherwise barred from such a role. The legal representative will carry out the company formation process locally.
Draft and notarize the company’s bylaws
Applicants must acquire the services of a legal attorney for the drafting of the company deeds, Paraguay company registration, and filing of applicants.
Note that the bylaws must include the company name, legal representative name, share capital information, company activities, registered / legal address, management structure, and extinction and liquidation details.
Submit the company documentation to the local centralized platform (SUACE)
Official Paraguay company registration is done at SUACE (Sistema Unificado deApertura y Cierre de Empresas), which is the one-stop shop established by the Ministry of Industry and Commerce. Through the SUACE, the incorporation will be able to submit all mandated documents to the right authority to complete the registration of the company. After submitting, the platform will then assign an identification number to track the progress through the website.
The bylaws and other company formation documents must also be submitted to the Treasury Attorney Office (Abogacía del Tesoro) which will review them and issues a registration and publication order.
Publication in the Official Gazette
Once the company is registered, an extract of the bylaws must be published in the Paraguayan Official Gazette and another newspaper of wide circulation in the market in which the company is located for there. consecutive business days.
Apply for a taxpayer ID
Applicant must also apply for the company’s taxpayer identification number at the Undersecretary of State for Taxation or Subsecretaría de Estado de Tributación (SET)
Obtain the company’s statutory books
The statutory books required by the Law and the Tax Regulations are the Journal, General Ledger, and Inventory. Also, Corporations must have Attendance Book at Assemblies, an Obligations Registry Book, a Shares Registry Book, an Act of Assemblies, and Minutes of the Board of Directors.
Get licenses and permits
For the business to start operating, it is mandatory to comply with all local regulations and get all the necessary licenses and permits needed.
Open a business bank account for your Paraguayan company
It is crucial to choose the right bank according to the company’s needs.
the bank will be chosen on the type of business the company is involved in or the company’s geographic base. The legal representative in Paraguay can advise on the best provider to choose for the corporate bank account.
Paraguay has a small but fast-growing economy and the potential for continued economic growth. Interested in company registration in Paraguay? – Let’s go ahead and contact your Damalion expert now.
