Maquila is a production system in which companies located in Paraguay can produce goods and services for export. Production is done in the order of a matrix located on the outside and can be shipped to all countries in the world. It can operate as a maquiladora any individual or legal entity, national or foreign resident in the country is authorized to carry out acts of commerce.
Law No. 1,064 / 97 called the Maquila Law, promulgated by Decree 9,585 / 2000 in Paraguay, has as executing agency and regulator of the maquiladora industries the CNIME – National Council of Maquiladoras and Exporters – belonging to the Ministry of Industry and Commerce of the country and acts in line with the Mercosur Treaty, with a view to fostering regional development.
The term Maquila itself, which comes from the Arabic Makeil, refers to the unit of measure and presupposes outsourcing or manufacturing, whose main objective is to attract investors, mainly regional, to manufacture their products in Paraguay.
News – Paraguayans have better economic climate in Latin America
Paraguay is at the top of the list of countries with the best economic climate in Latin America alongside Colombia, according to a survey conducted by the Instituto Ifo and the Brazilian Institute of Economy of the Getúlio Vargas Foundation (FGV). In the last survey, for the month of April, the ICE of the country was 135.8. The index for Brazil, which is in the 9th position, is 82.5.
In 2013, Paraguay reached the third largest economic growth in the world, with 14.1%. For this year, the outlook is 5.5% to 7%, leveraged mainly by industry and construction. One of the bottlenecks of the country today is the precarious infrastructure. According to a survey by the Paraguayan government, the country needs investments of $ 15 billion in the sector.
There is a lack of improvements in airports, highways and power distribution lines. With low taxes, the country’s revenue is small. Therefore, the government bets on the so-called Public-Private Alliance to attract investors. The law has already been passed, but it needs regulation.
Supervision – Rules and conditions for performance
The National Council of the Export Maquiladora Industries is responsible for the supervision of the maquilas. Although they have tax advantages, companies need to follow rules to the letter. The same amount of imported raw material needs to be transformed into product and exported. Only 10% of production can be sold in the Paraguayan market, but only after the company reaches one year.
At the time of export, the type and quantity of raw material used to manufacture the product must be reported. The transformation into product has to be made within a year. All maquiladoras need to have a matrix abroad.
Packed by economic growth to give envy to South American neighbors – GDP grew by 14.1% in 2013 – Paraguay slowly leaves behind the poor cousin of Mercosur and becomes a showcase for new investments. One of the pillars of this development are the “maquiladoras”, companies that import parts and components of foreign matrices so that the products are manufactured (assembled) in Paraguay and later exported.
Understand how the Maquila Law works
The country currently has 60 maquiladoras in the most diverse sectors, of which at least 20 are of Brazilian capital. They are confections, textile industries, plastic factories, auto parts, auto parts and even call centers. Some of them are mixed in nature and were formed from partnerships between Brazilian, Paraguayan and Argentine investors. There are also contributions from Japanese, Korean and Spanish.
Inspired by Mexican law, the Paraguayan Maquila Law (No. 1,064 / 2000) provides for exemption from taxes to import machinery and raw materials. When the manufactured goods leave the country, the incident tax corresponds to 1% on the value of the export invoice.
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