Paraguay Property Ownership

Foreign Investment Law 117/91 gives foreigners the same guarantees, rights and obligations enjoyed by Paraguayan investors. Paraguay has signed the Multilateral Investment Guarantee Agency Agreement (Miga) of September 13 1991. The Miga, created under the umbrella of the World Bank, insures investors against risks such as expropriation, currency inconvertibility and damages caused by revolution, war or civil strikes. A similar agreement with the Overseas Private Investment Corporation of the US is in effect. The US agency has lifted restrictions regarding investments in Paraguay in recognition of its progress (IFLR 1000).

Corruption has also been a major issue. Paraguay has been repeatedly rated
among the most corrupt nations in the world by various NGOs. Both political and
business environments have historically involved significant patronage.
However, the Duarte Administration has made progress in combating corruption.
A new website for open government procurement was inaugurated in 2004,
several officials have been removed for corruption, and various legal initiatives to
curb corruption are underway (US Export Guide, 2005).

Paraguay Transaction Information

Procedure 1. Obtain a certificate of tax compliance at the Ministry of Finance
Time to complete: 2 days
Cost to complete: Gs 2,000
Comments: The seller obtains a certificate of property tax payments at the Ministry of Finance. This certificate is usually obtained by the notary public.


Procedure 2*. Obtain a Non-Encumbrance certificate and a Certificate on Free Disposability of Assets from the General Direction of Public Registries
Time to complete: 8-12 days
Cost to complete: Gs 74,802 each certificate
Comments: Obtain a certificate of conditions of ownership (Non-Encumbrance certificate) and a certificate of inhibition of the vendor and spouse (Certificate on Free Disposability of Assets) at the General Direction of Public Registries. These certificates are obtained by a notary public.


Procedure 3*. Obtain tax clearance from the Municipality
Time to complete: 20 days
Cost to complete: Gs. 2,000
Comments: Obtain a certificate of tax clearance regarding the payment of Property Taxes and Special Urban Taxes at the Municipality.


Procedure 4*. Obtain a cadastre certificate
Time to complete: 8 days
Cost to complete: Gs 74,802
Comments: Obtain a Certificate of Cadastre (or Zoning Certificate) from the National Service of Cadastre This certificate is usually obtained by the notary public.


Procedure 5. Preparation and notarization of the transfer deed by a public notary
Time to complete: 10 days
Cost to complete: Notary fees according to the following schedule, plus 10% VAT:

Value of property (in Gs): Notary fees (% of property value)
Below 50,000,000: 2.00%
From 50,000,000 to 100,000,000: 1.75%
From 100,000,000 to 150,000,000: 1.25%
From 150,000,000 to 200,000,000: 1.00%
Above 200,000,000: 0.75%
Comments: Once all the previous documents have been collected, a notary public prepares and notarizes the transfer deed
Documentation shall include: Certificate of conditions of ownership (obtained in Procedure 1)
Certificate of inhibition of seller (obtained in Procedure 1)
Municipal tax clearance certificate (obtained in Procedure 2)
Certificate of property tax payments (obtained in Procedure 3)
Cadastre Certificate (obtained in Procedure 4)
Certificate of payment of water and electricity services
Photocopy of buyer and seller’s ID
Property title


Procedure 6. Payment of the Municipal Tax on transfers
Time to complete: 1 day
Cost to complete: 0.3% of property price
Comments: The Municipal Tax on transfers is paid (usually by the notary) at the Municipality after the contract has been notarized.

In Asuncion, the tax is 0.3% of the property value.

In other cities of the country it is 0.2%. The amount of the tax will be estimated according to the same principles applied to the Judiciary Fee.


Procedure 7. Registration of the notarized documents at the Public Registry
Time to complete: 15 days
Cost to complete: Gs 187,000 (charge for administrative expenses) + 0.74% of property value (Registration fee)
Comments: The notarized document is registered at the Public Registry, usually by the notary public.

The registration fee (0.74% of the highest of the price of the transaction or the fiscal valuation) is paid at the Public Registry when submitting the application.
Documentation shall include: Notarized document (obtained in Procedure 5)
Proof of payment of Municipal Tax (paid annually) (Word Bank, 2005).

Paraguay Trade Associations

Asociación Paraguaya de Empresas Loteadoras (APEL)
Alberdi N° 456 C/ Oliva
Edificio "Cardinal"
3° Piso - Of. 9 y 10.
Asunción
Paraguay

Phone : +595 21 490263
Fax : +595 21 490263
e-mail : apel@apel-capei.com.py
Web : www.apel-capei.com.py

Paraguay Real Estate Info Summary

Property Taxes:

Applies to real estate property located in national territory, and taxpayers are owners or users
thereof. When ownership is shared tax is paid by any one of owners.
Fiscal valuation of real estate as set by National Survey Service. Property values shall be
increased until they match prices set by market following consumer price index, but increases
shall not exceed 15% per annum. In case of rural properties any improvements or build ings
shall not be computed in tax base.

Tax Rate is 1% of fiscal value per year, reduced by 50% in case of rural properties less than
five hectares in areas utilized for small scale farming (Lexumundi, 2004 ).