The ruling confirms that when an administrative authority denies a tax incentive on technical grounds, it must substantiate its conclusion in the administrative decision itself.
Vouga Abogados secured a favorable ruling on behalf of Alcogreen S.A. in administrative litigation challenging Joint Ministerial Resolutions No. 93/2023 and No. 115/2023, issued by the Ministry of Industry and Commerce and the Ministry of Economy and Finance.
The First Chamber of the Tribunal de Cuentas upheld the claim, set aside the exclusion of six vacuum distillation columns from the tax incentive regime under Law No. 60/90, which was in force at the time, and ordered that the incentives be granted for those assets (Acuerdo y Sentencia No. 120 of April 15, 2026, as clarified by Acuerdo y Sentencia No. 258 of August 19, 2026).
The administrative authorities had excluded the equipment on the grounds that “similar domestic production exists.” The Court found that this assertion lacked technical support and that the administrative decision therefore lacked adequate reasoning.
The project
Alcogreen is developing a USD 100 million industrial project to produce ethanol from corn, with a projected annual milling capacity of 424,000 tonnes and estimated bioethanol production of 165 million liters per year.
The project includes imports of technological equipment worth approximately USD 30 million. Among these assets, six vacuum distillation columns valued at PYG 18.552 billion (approximately USD 2.6 million) were excluded from the incentive regime by the challenged administrative decision. The equipment uses specialized, patented technology designed to reduce energy consumption and achieve thermal integration of the production process.
The Tribunal’s reasoning
Relying on Article 12(e) of Law No. 6715/2021 on Administrative Procedures, which requires a statement of reasons for an administrative decision to be valid, the Court held that the administrative resolution “lacks sufficient grounds to be considered adequately supported by the factual and legal considerations required for its lawfulness.”
The Court further held that merely reciting the background and applicable provisions is insufficient: the decision must result from a “reasoning process that is both demonstrable and demonstrated,” yielding a reasonable position supported by a “clear and reasoned statement of grounds.”
The Court did not find that similar domestic production did not exist. Rather, it held that the administrative authorities had not sufficiently substantiated that assertion to provide a lawful basis for the exclusion.
Why the ruling matters
The ruling is a significant precedent for administrative practice and investment projects in Paraguay because it:
Reaffirms that adequate reasoning is a condition of the lawfulness of an administrative decision, rather than a mere formality.
Requires administrative authorities to explain and substantiate the technical considerations on which they rely, particularly when those considerations form the basis for denying a tax incentive.
Although the case was decided under Law No. 60/90, subsequently replaced by Law No. 7,548/2025, the requirement for adequate reasoning remains fully relevant under the new investment incentive regime.
Administrative authorities have the power to decide; however, when an adverse decision rests on a technical consideration, they must demonstrate in the decision itself the reasoning process that reasonably leads to that conclusion.
Case reference: “ALCOGREEN S.A. C/ RES. BIMINISTERIAL N° 93 DEL 31/08/2023 Y RES. BIMINISTERIAL N° 115 DEL 16/10/2023 DICTADAS POR LOS MINISTERIOS DE INDUSTRIA Y COMERCIO Y MINISTERIO DE ECONOMÍA Y FINANZAS”. Case No. 576/2023.
