The topic of today’s article opens up a new avenue of opportunity for businesspeople from across the globe. Maquila, short for maquiladora is a term that needs unpacking as it will form the principal focus of the information outlined below, and, in short, can be defined as a warehouse or factory that is owned by a business from outside the country where it is located, and has the function of manufacturing goods using the local workforce, before exporting the products to the country of origin of the main business.
With this definition established, it is important to understand it in context of the real world, in this case Paraguay, a landlocked country in Latin America exhibiting development in numerous sectors, aided by an expanding cross-border industry and growing community of expats.
All of us have struggled over the past year, and for those of you in positions of ownership with regards to corporations, the economic implications of a pandemic on the scale witnessed with COVID-19 are incomparable with other global disasters.
However, with the promise of vaccination rollouts and easing of restrictions on the horizon or already underway in many countries across the world, business opportunity begins to resurface, and one such example is the use of maquilas in Paraguay, especially if you are a business located in either North America or elsewhere in Latin America.
Maquila Law
After coming into effect in 1997, Law Nº 1064, businesses of this type have been facilitated and even encouraged within the borders of Paraguay. However, the law is mutually beneficial, as not only are these corporations benefitting from it, said law also established the rules and regulations for the importing and exporting companies, in order to ensure the safety and legality of all processes of this type taking place.
We briefly touched on the notion of benefits for this type of corporation, and more specifically, they manifest themselves in the form of exonerations, such as:
1. No national, departmental or municipal tax paid
(Though you must pay the 1% Unique Tax)
2. Import of the materials and goods outlined in the Maquila contract
3. The re-exporting of the goods mentioned above
(Also includes goods which underwent repairs or alterations while in Paraguay)
Other benefits of using this type of corporation in Paraguay include:
1. No patent tax for commercial, industrial professions or trades
2. No construction tax on premises approved by the program
3. Exempt from any rates you coincide with during activity due to the Maquila program
4. No VAT charged when leasing anything under the program
5. Anyone is able to take part in Maquiladora corporation business activity if approved by the Maquila Export Program
6. Highly skilled workforces in Paraguay
7. Asunción, the capital city, has international links through the main airport
8. The running costs of premises is comparatively low when compared with other nations in the region
Ultimately, the tax exemptions go hand in hand with low running costs, making Maquilas extremely beneficial for businesses situated in North America, for example, where rent is only rising in a continuously developing business landscape. If you are looking to save money while receiving a high-quality service, Paraguay may well be the best option for you.
So, if you are interested in finding out more about the Maquila regime in Paraguay, as well as other opportunities to develop your business, contact us today! Below this article, you will find a link to set up a free fifteen-minute consultation with us to discuss your options further.
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