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The Paraguayan government recently enacted the last law of a package of ten laws that it has been putting into effect since the beginning of October 2019, as part of its strategy to approve the evaluations of compliance with the 40 Recommendations of the Financial Action Task Force (FATF), which began on November 18 with the arrival in the country of a special delegation from the FATF for that purpose.

The following are general comments on each of the new laws:

1. Law No. 6,431/2019 that Creates the Special Procedure for the Application of Confiscation, Special Confiscation, Deprivation of Benefits and Profits and Autonomous Confiscation. With it, Law No. 4,575/2012, which established a special procedure for the application of confiscation, is repealed, replacing it with one that allows the judge a wider scope of application with a view to making it more effective, and thereby curbing the operations of organized crime by hitting it economically. Its main novelty is the regulation of “autonomous confiscation”, which allows it to be carried out outside the framework of an ordinary criminal proceeding, in cases where one has not already been initiated.

2. Law No. 6.446/19 which creates the Administrative Registry of Legal Persons and Structures and the Administrative Registry of Beneficial Owners of Paraguay. The law creates two registries that will be under the responsibility of the Ministry of Finance: an Administrative Registry in which all legal persons of Paraguay as well as trusts and investment funds must be registered; and a single registry of all natural persons that directly or indirectly have significant participation, benefit or control over legal persons of Paraguay. This law unifies the timely, accurate and necessary information of the beneficial owners, as they were previously scattered in many registries.

3. Law No. 6.430/19 that Prevents, Criminalizes and Punishes the Punishable Acts of Transnational Bribery and Transnational Bribery. This law adapts the criminal legislation to the provisions of the UN and OAS Conventions against Corruption by extending the effects of the existing articles on bribery and bribery in the Paraguayan Criminal Code to officials of foreign states and international organizations.

4. Law No. 6.419/2019 that Regulates the Immobilization of Financial Assets of Persons Linked to Terrorism and the Proliferation of Weapons of Mass Destruction and the Procedures for Dissemination, Inclusion and Exclusion in Sanctions Lists Prepared in Pursuance of the Resolutions of the United Nations Security Council. It obliges all financial intermediation entities and other companies indicated by law to proceed to immobilize, without notice to the affected party, all funds or assets of which they are aware that may be linked to terrorism, financing of weapons of mass destruction, the sanctions lists of the UN Security Council resolutions or requests to immobilize funds for the same reasons coming from third countries, which circulate through them. SEPRELAD must act in the same way.

On the other hand, the law establishes the procedure for the receipt and dissemination of the lists of persons sanctioned by the resolutions of the United Nations Security Council to public and private entities obliged to cooperate with the pursuit of terrorism, the financing of nuclear weapons and money laundering; as well as the procedure and criteria for the inclusion and exclusion of individuals and legal entities in such lists.

5. Law No. 6.379/2019 that Creates Jurisdiction in Economic Crimes and Organized Crime in the Jurisdiction of the Criminal Court. Two new classes of specialized jurisdiction are created for guarantee, execution, and sentencing courts, and appeal courts of the criminal jurisdiction.

One of them is the competence in economic crimes and corruption, and includes all lawsuits on money laundering, on punishable acts against property, against patrimonial rights, against the exercise of public functions, on tax evasion and fraudulent acquisition of investments, as well as against customs collection and against the securities market; provided that the value of the lawsuits exceeds the amount indicated for each case.

The other competence is in drug trafficking and organized crime, and includes all trials on terrorism, drug trafficking, human trafficking, illicit manufacturing and trafficking of firearms.

6. Law No. 6,452/2019 which amends several provisions of Law No. 1160/1997 “Criminal Code” and its amendment Law No. 3,440/2008. This new law modifies the articles on special confiscation of substitute value, fraudulent promotion of investments and asset laundering of the criminal code; at the same time it adds three new criminal offenses, market manipulation, private bribery and private bribery.

Thereafter, the special confiscation may be substituted by another good of the same value as the thing obtained from a punishable act when a special confiscation order cannot be executed. Regarding money laundering, the punishable acts that may constitute it if an attempt is made to disguise the origin of the proceeds obtained therefrom are detailed with precision; and as a novelty, the express clarification that a money laundering proceeding may be initiated without a prior conviction for the punishable act that generated the goods or proceeds to be laundered.

With regard to the new criminal offenses, market manipulation condemns certain bad faith maneuvers to take personal advantage to the detriment of third parties in the securities markets; and the new criminal offenses of bribery and private bribery extend the existing provisions on bribery and bribery to private legal entities when this is done to obtain benefits that unfairly harm other competitors in the market.

7. Law 6399/2019 which amends Articles 3° and 4° of Law No. 5,895/2017 “Which establishes transparency rules in the regime of companies incorporated by shares” and establishes transitory measures. It extends the deadline given by Law No. 5895/2017 for all corporations in Paraguay and their shareholders to fully exchange their bearer shares for registered shares, which shall be set by the Ministry of Finance and may not exceed six months from December 10, 2019. It is also relevant to note that new consequences are added for the non-compliance with such term, such as, for example, if after six months from the expiration of such term the exchange of shares is not carried out as established by law, the company must be dissolved and liquidated immediately.

8. Law No. 6396/2019 amending Article 46 of Law No. 5876/17 “On the administration of seized and forfeited assets”. It establishes the form of distribution of the proceeds of seized and forfeited assets. 20% is intended to cover the expenses generated by the seizure or forfeiture together with its maintenance costs; 30% is to be distributed by allocating 5% to each of the following institutions: the Public Prosecutor's Office, the National Center for Addiction Control of the Ministry of Public Health and Social Welfare, SEPRELAD, SENAD, SENABICO (an agency specialized in the administration of seized and forfeited assets), and the National Police. Fifty percent is allocated to projects for the rehabilitation of addicts and social reintegration, and projects for the prevention of money laundering, organized crime, financing of terrorism, and financing of the proliferation of weapons of mass destruction and drug trafficking.

9. Law 6408/2019 which amends Article 3 of Law No. 4024/2010 “That Punishes the Punishable Acts of Terrorism, Terrorist Association and Financing of Terrorism”. It broadens the range of application of the criminal type of financing of terrorism and financing of the proliferation of weapons of mass destruction, while increasing its penalty for the case in which the money used for such financing also comes from punishable acts.

10. Law No. 1.015/97 “That Prevents and Represses the Illicit Acts Intended for the Legitimization of Money or Goods” and its amendment Law No. 3.783/09”. This new law introduces changes of great importance, which for ease of understanding can be classified as follows: 1) New actions, obligations and procedures to prevent money laundering and financing of terrorism; 2) Modification of the nature and organic composition of SEPRELAD; 3) Restructuring of administrative sanctions and procedural issues.

Thus, ten of the thirteen bills submitted by the Paraguayan executive with a view to bringing the country's regulations up to date with FATF requirements were enacted. With respect to the other three bills, one of them was unified with the bill of Law No. 6419/29, and was included in said law; another one, which sought to create a Financial Intelligence Secretariat to replace SEPRELAD, was withdrawn; and the last one, which sought to repeal Art. 3 of Law No. 4673, modifying the Income Tax on Personal Services, did not obtain the necessary support in Congress to be approved.

With these laws, important measures are being taken in order to face the tests in question. The GAFILAT evaluations will last about thirteen months and if Paraguay does not pass, due to insufficient actions taken since 2012, it will be granted one year, until December 2021, to correct the problems found; otherwise it will be included again in the Gray List, as in 2008.

Should you require further information, please do not hesitate to contact Carlos Vouga (cvouga@vouga.com.py) or Rodrigo Fernandez (rfernandez@vouga.com.py).

Last December 9, the Executive Branch signed the new Decree No. 2992/19 regulating Law No. 2051/03 “On Public Procurement” and its amending Law No. 3439/17 (the “Decree”). 

The main reasons for the Decree are, on the one hand, to save on public procurement through the policy of improving public expenditures, and on the other hand, to reconcile and unify the current regulations, since the Public Procurement Law was regulated in more than ten regulatory bodies.

Among the most important novelties introduced by the Decree are the following aspects:

• Unifies regulatory provisions of the Public Procurement Law. For example, it unifies the different contracting modalities by including regulations regarding the modalities of prequalification, bidding with financing, bidding with two or more evaluation stages and electronic low bidding.
• Allows joint purchasing between two or more public entities or agencies that require the same service, good or work. Greater benefits will be obtained by purchasing in volume.
• Through its new sustainability criteria, the environmental and social impact that the contracting would imply is taken into consideration, and not only the price of the offer. The National Directorate of Public Procurement will regulate the mechanisms for the application of these criteria.
• Seeks to implement technological means to carry out processes more quickly, efficiently, transparently and easily.

It is important to highlight the fact that the Decree will become effective on January 01, 2020.

For further information, please contact Walter Vera (wvera@vouga.com.py), Georg Birbaumer (gbirbaumer@vouga.com.py) and/or Lorena Salcedo (lsalcedo@vouga.com.py).

Mediante la Resolución N° 3109/19 el Ministerio del Trabajo, Empleo y Seguridad Social (MTESS) crea el Certificado Laboral, el cual será expedido por el Viceministerio de Trabajo a todas aquellas empresas que cumplen con todas las normal laborales en vigor. Este Certificado reemplaza a las constancias de Inscripción Patronal y constancia de presentación de Planillas Anuales.

Las empresas que obtengan el certificado del Viceministerio de Trabajo tendrán la oportunidad de participar en concursos públicos, licitaciones entre otras ofertas laborales. Los requisitos para obtener el certificado son: inscripción en el Registro Obrero Patronal, presentación de planillas laborales anuales, no tener multas pendientes de pago por incumplimiento de normas laborales.

El pago de aranceles para la obtención del certificado se hará de forma telemática (Infonet Cobranzas o APP Pago Móvil de Bancard). Una vez hecho el pago se genera un código con el que posteriormente se debe ingresar a la página del MTESS en la sección de Sistema de Presentación de Planillas y Comunicaciones y cargar el código completando los datos solicitados. El Certificado será expedido dentro de los 5 días hábiles de su solicitud y tendrá un costo de un jornal mínimo.

Para utilizar el servicio de Pago Móvil las empresas interesadas deberán ingresar a la página https://www.infonet.com.py/ y registrarse o también pueden acudir a la versión para smartphones, donde el interesado podrá descargar e instalar la aplicación Pago Móvil de la APP Store de Android o Apple. Se deberá registrar con sus datos personales, buscar en la grilla de servicios Ministerio de Trabajo, Empleo y Seguridad Social y elegir la tarjeta (débito o crédito) con la que va a procesar el pago.

Mediante la Resolución N° 3903/2019 (la Resolución), el Ministerio de Trabajo (MTESS) estableció un régimen transitorio de facilidades de pago, para que los empleadores se pongan al día con sus obligaciones laborales, incluyendo las deudas que se encuentren en proceso de gestión por parte de la institución o en instancia judicial.

Durante el régimen transitorio, los empleadores puede acceder  acceder a beneficios, mediante un plan de facilidades de pago y exoneración de intereses, así como la no aplicación de sanciones por el incumplimiento de normas laborales, en atención a la coyuntura económica actual.

De acuerdo con lo dispuesto en el Art. 1 de la Resolución, la exoneración seguirá las siguientes reglas:

1- Entrega inicial mínima equivalente al 20% de la deuda, de acuerdo al monto establecido por la autoridad administrativa mediante resolución o certificado de liquidación de deuda.

2- Tasa de interés anual de financiación del 0%.

3- Hasta 12 cuotas mensuales, iguales y consecutivas, para aquellos empleadores que se encuentren adeudando hasta 100.000.000 guaraníes y hasta 24 cuotas mensuales, iguales y consecutivas para aquellos que tengan deudas a más de 100.000.000 de guaraníes.

Este Régimen excepcional y Transitorio estará en vigor hasta el 31 de diciembre de 2019. 

El pasado 6 de noviembre de 2019 el Poder Ejecutivo promulgó el Decreto 2817/19 que reglamenta la Ley 6339 que Regula el Empleo a Tiempo Parcial. Entre los aspectos más resaltantes podemos destacar los siguientes:

La forma y el contenido del contrato: El contrato a tiempo parcial deberá ser instrumentado mediante acuerdo privado y por escrito y deberá contar, entre otras, con las siguientes cláusulas (i) importe de la remuneración/tarifa horaria, la forma y el periodo de pago, (ii) inscripción a la Seguridad Social, (iii) duración y tipo de jornada de trabajo (iv) una cláusula de no exclusividad del trabajador con el empleador.  

La cantidad de horas límite: Los contratos a tiempo parcial tendrán una duración mínima de 16 horas y de máximo 32 horas semanales. El total de horas que resultase del mes trabajado será la base de tiempo a ser utilizada para el cálculo de la remuneración.

Horas extraordinarias: Esta modalidad permite las horas extraordinarias; las mismas podrán ser de hasta el 10% de total de horas convenidas, siempre y cuando, el total de horas no excedan las 32 horas semanales.

Tasas de aporte a la Seguridad Social: serán las mismas que para el trabajador a tiempo completo.

Base imponible: La base imponible de las cotizaciones al seguro social se calculará sobre el total de las remuneraciones percibidas mensualmente.

Proporcionalidad para la licencia por lactancia materna: La licencia por lactancia se aplicará de acuerdo a las horas trabajadas por día y serán proporcionales a las mismas.

Creemos que el presente Decreto es un paso más, hacia la formalización de una práctica bastante extendida en nuestro país y que aportará beneficios a todas las partes interesadas.

Para más información acerca de las nuevas disposiciones del MTESS, no dude en contactar con Perla Alderete (palderete@vouga.com.py) y Daniela Leguizamón (dleguizamon@vouga.com.py)

Fuente: MTESS

On October 31, 2019, the Executive Branch issued Decree 2787/2019 (the Decree) establishing the schedule of the effective dates and the effectiveness of the provisions contained in Law 6380/2019 (the Law/Reform).

In view of the foregoing, the Reform will be effective and will impact the taxes according to the following schedule:

1. For the Corporate Income Tax (IRE), it will have the following cuts:

a. The Reform will become effective on January 1, 2020 for those companies whose next fiscal year-end is December 31, 2019.

b. The Reform will become effective on May 1, 2020 for those companies whose next fiscal year-end is April 30, 2020.

c. The Reform will become effective on July 1, 2020 for those companies whose next fiscal year-end is June 30, 2020.

2. Regarding the Special Valuation Standards for Transactions: The Reform will become effective on January 1, 2021.

3. Regarding Dividends and Profits Tax (IDU): The Reform will be effective as of January 1, 2020.

4. Regarding Personal Income Tax (IRP): The Reform will be effective as of January 1, 2020.

5. Regarding the Non-Resident Income Tax (INR): The Reform will be effective as of January 1, 2020.

6. Regarding Value Added Tax (VAT): The Reform will become effective as of January 1, 2020.

7. Regarding the Selective Consumption Tax (ISC): The Reform will become effective as of January 1, 2020.

8. With respect to the General Provisions: Except for articles 144, 145, 149, 151 and 152, the Reform will become effective as of January 1, 2020.

On the other hand, the provisions related to the Income Tax on Commercial, Industrial or Service Activities and the Income Tax on Agricultural Activities will remain in force until April 30 and June 30, 2020, so that taxpayers who have their tax closings on such dates may comply with their tax obligations in an orderly manner.

Likewise, the system of Advances and Withholdings affecting the payment of the IRE, provided for in Article 24 of Law 6380/19, will not enter into force until January 1, 2023.

Article 3 of the Decree establishes that the Electronic Invoice will come into force once the State Secretariat of Taxation (SET) has regulated the Integrated Electronic Invoicing System (SIFEN).

Finally, the Decree authorizes SET to take the necessary measures for the correct application of the Law.

We believe that the Decree is in line with the spirit of the Law; on the one hand, it seeks that the regulation of the same be carried out as expeditiously as possible, and on the other hand, that the introduction of the reforms be carried out in a gradual, orderly and staggered manner in order to allow the best possible adaptation by the subjects affected by the Reform. 

For further information on the Tax Reform Law and its application, please contact Andrés Vera, our associate expert in fiscal and tax matters (avera@vouga.com.py)  

Vouga Abogados advised TMF Paraguay S.R.L. in its capacity as guarantee agent in the framework of part of the financing of the project for the design, rehabilitation, construction, operation and maintenance of Routes 2 and 7. This is the first project to be implemented under the Public-Private Partnership (“PPP”) modality.

The financing obtained by the successful bidder, Rutas del Este S.A., amounted to a total of USD 658 million. Of this amount, USD 458 million was obtained through the issuance of debt and USD 200 million through financing granted by the Inter-American Development Bank (“IDB”) and IDB Invest.

Vouga Abogados' advice consisted in the review of the collateral structure and guarantee documents corresponding to the USD 200 million financing granted by the IDB and IDB Invest.

For further information, please contact Cynthia Fatecha (cfatecha@vouga.com.py), Geor Birbaumer (gbirbaumer@vouga.com.py) or Carlos Vouga Z. (cvouga@vouga.com.py)

The Executive Branch enacted Law 6399/2019 which imposes the exchange of 100% of the bearer shares to registered shares. The deadline to proceed with the exchange was extended until December 10, 2019.

During this period, Corporations may update their bylaws and request the corresponding opinion from the Treasury Solicitor's Office. 

The Ministry of Finance is expected to issue the corresponding Regulations in the next few days, which will provide more details about the administrative procedure for the share exchange. 

Failure to proceed with the exchange will result in penalties ranging from the suspension of economic rights to the loss of such rights.

Through Resolution No. 4118/2019, the National Directorate of Public Procurement (DNCP), regulates the implementation of the Electronic Bidding Form for the acquisition of goods, in any process governed by Law No. 2051 “On Public Procurement”. 

The objective of the implementation of the Electronic Bidding Terms and Conditions is to speed up and improve the efficiency of the purchasing entities, as well as to improve transparency in the bidding processes.  

The implementation will affect, in the first instance, all those entities that were part of the pilot plan; with respect to the other entities, the training and implementation process will be staggered, starting in 2020. 

The IFLR100 directory, the world's leading guide specialized in banking and financial law, has ranked Vouga Abogados as a Tier 1 firm in the areas of Financial and Corporate Law. Likewise, this directory has included our Firm among the 5 firms considered as Active in the area of Project Development. 

Thus, the Corporate Law Department obtained the best rating in the three most prestigious directories worldwide: Band 1 in Chambers and Partners; Tier 1 in The Legal 500 and finally, Tier 1 in IFLR1000. In the area of Banking and Finance Law, the Firm obtained the best rating in 2 of the 3 directories mentioned above: Band 1 in Chambers and Partners; Tier 1 in IFLR1000 and Tier 2 in The Legal 500.

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