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El Poder Ejecutivo promulgó y publicó la Ley N° 7158, que crea el Ministerio de Economía y Finanzas (“MEF”) en la Gaceta Oficial N° 162 del 23 de agosto de 2023. Esta ley tiene vigencia desde el 24 de agosto de 2023.

El MEF es el resultado de una reestructuración del Ministerio de Hacienda, por la cual se incorpora a su estructura orgánica la Secretaría Técnica de Planificación y a la Secretaría de la Función Pública como viceministerios. El MEF absorbe las competencias y funciones de las 3 instituciones antecesoras, por lo que toda referencia legal a cualquiera de ellas debe entenderse al MEF o a sus viceministerios, según corresponda.

Las autoridades de las 3 instituciones fusionadas seguirán en funciones hasta tanto el Presidente de la República designe al primer Ministro del MEF. Los reglamentos dictados por las instituciones fusionadas seguirán vigentes hasta tanto sean modificados por el Poder Ejecutivo o por el MEF.

Pronto informaremos más detalles.

Executive summary:

On August 4, 2023, the Executive Branch enacted and published Law No. 7,143/2023 (the "DNIT Law"), which established the creation of the National Directorate of Tax Revenues (the "Tax Directorate"). This new law is part of the restructuring project of the Paraguayan State and creates a new public law entity, the purpose of which is to collect the State's internal and customs taxes, merging the Undersecretariat of State for Taxation ("SET") and the National Customs Directorate ("DNA"), with their respective functions.

The Tax Directorate is a new public law entity, autarkic and autonomous, which communicates with the Executive Branch through the Ministry of Finance but is no longer part of the latter. The DNIT Law establishes that its effective date will be determined by the decree to be issued by the Executive Branch within ninety (90) days of its enactment; and that the organizational structures of the SET and the DNA existing before the DNIT Law shall remain in force until the Organic Structure and the Manual of Functions of the Tax Directorate and its dependencies are approved.

More information:

In order to understand the scope of the DNIT Law and the proposed restructuring, it is necessary to know the composition that the Tax Directorate will have and the functions of its respective units, as well as when this restructuring will come into effect and the resources it will have for the development of its functions.

• Composition of the Tax Directorate

The Tax Directorate is composed as follows:

The Tax Directorate is governed by the National Directorate, whose highest authority is the National Director, who may be appointed and removed by the President of the Republic at the proposal of the Minister of Finance. President-elected Santiago Peña announced this week that the current Vice Minister of SET, Oscar Orué, will be the National Director during his administration.

Then, below the National Directorate are the following General Managements: (a) Executive Management; (b) General Management of Internal Revenue; and, (c) General Management of Customs. These will have General Directorates, Directorates, Coordinations, Departments, and Specialized Units. Each General Management will be managed by General Managers, who will be appointed and removed by the National Director.

Access and promotion to positions within the Tax Directorate will be developed through merit and aptitude competitions, excluding positions of trust. According to the DNIT Law, the following are positions of trust: (a) National Director; (b) General Manager; (c) General Director; and, (d) Director.

• Functions of each unit

Each unit has its own functions. In the case of the General Internal Taxes and Customs General Managements, these functions are directly connected with the taxes they administer:

(a) National Directorate: is the highest authority of the Tax Directorate and will mainly have the following functions:

• To administratively interpret the provisions on taxes under its jurisdiction.
• To establish general rules for administrative procedures, to dictate acts necessary for the application, collection and control of taxes.
• Resolve hierarchical appeals on administrative acts issued by the agencies under its charge, when the administrative procedure regulations provide for such appeal.

(b) Executive Management: is a body that has the following functions:

• Represent the Tax Directorate in meetings of international organizations and in integration agreement processes.
• To provide technical collaboration in the study and negotiation of international agreements on matters within the Tax Directorate's competence, as well as to promote their adequate implementation and compliance.
• To review draft tax regulations and propose the pertinent amendments, and to advise the National Directorate in the interpretation and application of tax and customs regulations.

(c) General Management of Internal Revenue this body deals with internal taxes, which are defined as those levied on income or profits, the alienation of goods, the rendering of services, as well as any act of commerce carried out in the domestic market. Its functions are as follows:

• To apply or execute the legal provisions related to internal taxes, their collection and control.
• To issue operational instructions for the collection and control of internal taxes, based on the legal system in force.
• To issue the administrative acts through which taxes are determined and penalties are applied to taxpayers, responsible parties and third parties.
• Authorize the refund or reimbursement of internal taxes and their accessories, when applicable.

(d) General Management of Customs: this body deals with all matters related to customs duties, which are defined as import and export taxes. Its functions are as follows:

• Enforce customs legislation, collect import and export taxes, control the traffic of goods through the country's borders and airports. Exercise its attributions in primary zones and carry out tasks of repression of contraband in secondary zones.
• To prevent, investigate and combat smuggling and all other customs offenses or infringements.
• To issue the administrative acts by means of which import and export taxes are determined and sanctions are applied to taxpayers, responsible parties and third parties.
• To carry out the tariff classification of the merchandise, its valuation and verification; for such purpose it shall issue mandatory classification criteria. Authorize the release of goods.
• Authorize the refund or restitution of customs duties and their accessories, in the corresponding cases.

According to the DNIT Law, when a provision prior to this law refers to the SET, the Vice Ministry of Taxation or the Tax Administration, it shall be understood to refer to the General Internal Revenue Service. On the other hand, when a provision prior to the analyzed law refers to the DNA, it shall be understood that it refers to the General Customs Management.

• Sources of institutional funds of the Tax Directorate

According to the DNIT Law, the Tax Directorate has the following sources of income to finance the expenses foreseen in the General Budget of the Nation. These revenues constitute institutional revenues of the Tax Directorate:

1. 0.7% of the collection of taxes under its jurisdiction.
2. The 0.5% tax on the customs value of imported goods, in addition to the taxes for customs services rendered to users.
3. 50% of the proceeds of fines for customs offenses by difference and fines for fraud and omission of payment of internal taxes.
4. 50% of the proceeds from the auction of goods confiscated due to smuggling.
5. The resources or income allocated in accordance with the General Budget of the Nation

The institutional source of income foreseen in section (i) implies an increase of twenty (20) basis points concerning the 0.5% of SET's collection currently allocated for its technological infrastructure, also expanding its object of expenditure to any need of the Tax Directorate. Likewise, the basis for calculating this source of income is broadened, which is no longer limited only to income from internal taxes, but also includes customs income.

• Distribution of penalties

The officials of the SET and the DNA have a direct participation regime in the penalties they used to collect from the taxpayers, which consists of the distribution among their officials of 50% of such penalties. The DNIT Law eliminates this system, which has been questioned in the past. It replaces it with a bonus for performance or goals achieved according to each officer's position, based on the estimated income foreseen by the Tax Directorate.

• Information management

In general, the Tax Directorate continues with the duty of secrecy of the information received from its administrators, which has characterized the SET throughout the years. However, the DNIT Law has added the Tax Directorate's power to make public the following information: (i) affidavits determining Corporate Income Tax, (ii) financial statements of these taxpayers, and (iii) import and export movement of goods under certain conditions.

• Entry into force of the restructuring

The structures of the SET and the DNA that pre-existed the DNIT Law remain in force until the Organic Structure and the Functions Manual of the Tax Directorate, and its divisions are approved.

The Executive Branch must establish the term for the effectiveness and implementation of the provisions of the DNIT Law, within ninety (90) days of the enactment of the law. Said term expires at the beginning of November 2023.

By means of Circular SS. SG. N°84/2023, the Superintendency of Insurance (“SIS”) reminds all insurance entities and insurance intermediaries authorized to operate in the local market about the validity of Resolution SS.SG. No. 45/13 (the "Resolution"), dated 8 August 2013. Specifically, the SIS emphasized the conditions stipulated in Article 1° of the Resolution, which is of particular relevance to the sector.

According to the Resolution, commissions for intermediation and other concepts, agreed between insurance companies and insurance agents or brokers, in the case of life insurance (regardless of whether or not they contemplate the constitution of Mathematical Reserves), may not exceed 30% of the tariff premium as a component of the same, incorporated in the Technical Note approved by the SIS. This means that such commissions must be kept within a reasonable limit regulated by the supervision authority.

In the event that the commission rates set out in the Technical Notes registered with the SIS are lower than the maximum allowed percentage of 30%, the rates set out in these Technical Notes will apply.

It is important to note that this limit also applies to Insurance Hired on Behalf of Others, in accordance with the provisions of article 1565 and concordant articles of the Civil Code.

The SIS reminds the importance of complying with these provisions, which aim to promote transparency and fairness in the insurance market, thus protecting the interests of both insurance companies and customers and policyholders.

The Superintendency of Insurance ("SIS") announced changes in the form of data recording for insurance entities, through Resolution SS.SG. No. 157/23 which amends Resolution SS.SG. N° 166/06. These changes will be effective as from 1 September 2023.

The first modification is in Annex I of Resolution SS.SG. No 166/06, where the first paragraph has been restated as follows: "The name of the file shall be the code (four-digit) of the Insurance Entity, as established by the SIS, plus the year and month of the movement. The file extension shall be TXT. Example: 7036200607.txt".

With the second change, the Length, Description and Format of the field "Identifies the insurer" of Record Type-1 "Header Record" established in Annex I of Resolution SS.SG. No. 166/06, and the configuration for this field has been established as follows:

Field	Type	Length	Description	Format
Identifies the Insurer	Number	04	Code of the Insurance Entity established by the Superintendency of Insurance.	9999

Likewise, in the third adjustment, the Length and Format of the field "Identifies the user" of Record Type-1 "Header Record" established in Annex I of Resolution SS.SG. No. 166/06 are modified, establishing the configuration for this field as follows:

Field	Type	Length	Description	Format
Identifies the user	Alphanumeric	20	Name of the user account responsible for submitting information to the Superintendency of Insurance	aaaaaaaaaaaaaaaaaaaa

By means of Circular N° 157/2023, the Superintendency of Insurance informs the insurance market that as of 1 September 2023 a new platform will be available for the submission of data from the Accounting Module corresponding to the period August 2023 onwards, disabling the previous platform.

To access this new platform, all insurance entities must complete the user authorization request form, which will be available on the Financial Communication Network under the "SS Instructions" section. This section will also hold the instructions for the use of the Accounting Module platform, thus providing a detailed guide for its correct use.

In the "SS Structure" section of the Financial Communication Network, the validation parameters used for the admission of information submitted through the new platform will be available. All submissions made by the supervised entities shall comply with the provisions of Resolution SS.SG. No. 157/2023 dated 18 July 2023, entitled "Modification of Resolution SS.SG. No. 166/06 dated 13 July 2006".

It should be noted that the information corresponding to the Central Information Module and the Electronic Books Module will continue to be submitted using the current procedures, with no changes to the platform or users involved in these processes.

The Secretariat for the Prevention of Money or Asset Laundering (SEPRELAD) issued Circular No. 04/23 last July 23, in which it communicates important changes for the Regulated Entities under Resolution No. 490/22 "Whereby the Regulation for the Prevention of Money Laundering (LA) and Financing of Terrorism (FT) based on a Risk Management System for Non-Profit Organizations (NPOs)", which have dependent entities within their constitution and structure, is approved. According to the circular, these NPO entities, which may be internal units, subsidiaries or branches, must manage their registration in the Integrated Operations Reporting System (SIRO) through the parent entity.

For this purpose, the parent entity will be responsible for declaring all its internal units, subsidiaries or branches at the time of registration or re-registration in the SIRO application. This will generate a single registration or re-registration, and a single proof of registration will be issued. It should be noted that registration or re-registration requests submitted by dependent entities independently in the SIRO system will not be accepted.

The issuance of the new registration or re-registration certificate through SIRO to the parent entity will be sufficient for the internal units, subsidiaries or branches to be able to open accounts or other services in entities of the financial system and/or cooperatives. These measures seek to strengthen controls in the prevention of money laundering and provide greater efficiency in the registration of entities dependent on the NPO sector.

The Securities Market Commission (CNV) issued on July 17, 2023 the Circular No. 024/23 in order to introduce modifications to the mandatory formats for the daily remittance of information established in Circulars CNV/DIR No. 005/2022 and 010/2022. Pursuant to the provisions of the General Regulations of the Securities Market, the fund management companies must submit daily information related to the transactions closed within the portfolios of the managed funds, in accordance with the instructions issued by the CNV through Circulars.

In this regard, the Board of Directors of the CNV established the following changes:

1. Modification of CNV/DIR Circulars Nos. 005/2022 and 010/2022;
2. Replacement of the mandatory daily information submission format, provided under CNV/DIR Circular No. 010/2022, with an electronic spreadsheet format attached to the Circular; and
3. Precise instructions are included for filling out the electronic spreadsheet, among which the prohibition to alter the format, the name of the sheets or the linking of cells to other files by means of formulas.

It is important to note that the information must be submitted daily, and the fund management companies must ensure that all the columns of the spreadsheet are completed with the requested information, using the format and the "cloudCNV" platform enabled for such purposes. In addition, in case of updates or modifications, the files hosted on the platform must be maintained and differentiated with the label "modified" followed by the corresponding number.

The fund management companies shall strictly comply with these provisions and observe the preparation guide provided in Annex 2 of the Circular. Any non-compliance or alteration of the format may give rise to penalties in accordance with the provisions of the regulations in force. In the event of any changes or queries, the fund management companies should contact the Directorate of Economic Studies and Financial Analysis of the CNV.

The National Securities Commission (CNV) issued on July 31, 2023 Resolution No. 39/23, by which it introduces amendments to the General Securities Market Regulations (the "Regulation"), addressing key areas related to the valuation of investments and registration requirements for issuing corporations (the "SAEs").

Valuation of Investments and Accounting Criteria

One of the main amendments made by Resolution No. 39/23 is the modification of Article 1 of Chapter 7 and Annex D of Title 19 of the Regulation with respect to Investment Management Companies and Equity Funds. This amendment establishes that the valuation of investments of equity investment funds shall follow internationally accepted parameters and shall be included in the internal regulations of the relevant entities. In addition, the valuation of real estate investments must be shown in the fund's financial statements at their historical cost value, excluding any adjustment based on technical revaluations.

The CNV also reserves the power to evaluate and issue instructions regarding the form of valuation of the fund's investments. This provision seeks to ensure that investments are valued accurately and transparently, fostering investor confidence in the market.

Modification to the Registration Requirements for SAEs

Another important aspect of Resolution No. 39/23 relates to the registration requirements for SAEs. Said resolution modified in particular paragraph j) of Article 1 of Chapter 1 of Title 4 of the Regulation, deleting the obligation of the SAE to add to its bylaws the clause previously required to register as such before the CNV, which stated: "The company may issue shares and securities for trading in the stock market, through the Bolsa de Valores y Productos de Asunción S.A. or other entities that may be created, prior authorization of the Comisión Nacional de Valores and in accordance with the laws that regulate the matter. In case of discrepancy between these bylaws and the laws regulating the public offering and the stock market, the provisions of the rules governing the public offering and the stock market shall prevail".

Notwithstanding the above, it is worth nothing that such provision remains in force for the SAECAs.

Through a press release, President-elect Santiago Peña announced his choice to lead the Central Bank of Paraguay (BCP). The appointee is the economist Carlos Dagoberto Carvallo Spalding, who held positions in the private sector and previously held the position of director at the BCP during the period from 2015 to 2020. Peña’s appointment must be ratified by Congress.

The Central Bank of Paraguay ("BCP") by Resolution No. 1, Act No. 35 dated 11 July 2023, approves and brings into force the General Regulation of the Payment Systems of Paraguay (SIPAP Regulation). This new resolution also repeals several previous resolutions regulating the matter, including Resolution No. 1, Act No. 67 dated 27 December 2012 "General Regulations of the Payment Systems of Paraguay", the former SIPAP regulations, Resolution No. 24 of Act No. 54 dated 25 August 2011 "Project for the Modernization of the Payment Systems of Paraguay - Alternative Network for the Payments and Securities Systems of the BCP", Resolution No. 1, Act No. 26 dated 17 May 2022, "General Regulations of the Payment Systems of Paraguay", among others.

The new SIPAP Regulation includes innovations aiming to modernize Paraguay's Payments System. These innovations consist of the introduction of new defined terms that the previous regulation did not contemplate, among them; "Alia-s", "Commercial Customer", "Return of Funds", "Central Addressing Scheme (CAS)", "Payment Initiation Service Provider (PISP)", "Request for Return of Funds", "Request for Payment", "Self-managed Credit Transfer", and some modifications to terms already established by the previous regulation.

Another relevant change affects Securities Depositories (DEPO), in the case of non-fulfilment of bids. Closed bids in the DEPO that are not settled in the forms and at the times stipulated by the BCP, will make the participants who demand or offer liquidity liable to the following penalties:

• If the default is on the part of the claimant participant, the BCP may debit the equivalent of interest to the claimant participant to comply with the payment of the amount borrowed plus interest to the offering participant.
• In the event of default due to lack of funds or securities of the bidding/complaining participant, the latter may not trade in tripartite repo operations, short-term liquidity management (ADL) and permanent deposit facility (FPD) for a period of 5 business days.
• In the event of a repeat offence within 3 months of the last offence, the participant will be suspended for a period of 10 working days for the aforementioned operations.

The SIPAP Regulation also modifies the section of service participants, to whom it assigns new responsibilities, among them;

• The Beneficiary Participant, whether or not the sender of the transaction, shall be responsible for the validation of the Beneficiary Customer's data. It is mandatory to validate the correspondence of at least the following data: account number, type and number of identification document.
• The Paying Participant shall, prior to the remittance of the transfer, request confirmation from its customer of at least the following data of the beneficiary customer: name of the beneficiary, account number, type and number of identification document. Once confirmed by the customer, the transaction can be executed. This validation is required for both CAS and non-CAS transactions, in which case the data uploaded by the customer must be used for validation.
• The Paying Participant is responsible for including a data revalidation step in their applications before confirming the credit transfer by the customer, where at least the following is displayed: the account number, the name of the beneficiary and the entity.
• The Beneficiary Participant is responsible for validating and communicating to his client the receipt of a funds transfer, through the communication channels available to his clients, such as: SMS, email, push messages, etc.

Additionally, the SIPAP Regulation includes substantial amendments to the instant payment system (SPI), where new functionalities will be implemented and made available to customers from 11 September; such as:

• Return of funds: to return a transfer that was received incorrectly.
• Requesting a refund: if a mistake is made when making a transfer, the sender can request a refund. The return of the money is subject to the acceptance of the other party.
• Sub-participant: for cooperative customers, they may send and receive transfers up to Gs. 5,000,000, 7 days a week, 24 hours a day.

The SIPAP Regulation also includes new functionalities for customers starting 16 October, including;

• Payment initiation request: a business may contract a service from a third party (e.g. payment operators), in order to collect payments through the apps.
• Payment request: a business may contract the service of its bank or financial institution, in order to make payments through the apps provided by its institution.
• Use of aliases: the alias will be the only data required to make a transfer. The types of aliases enabled will be: ID number, RUC, mobile phone or email.