MercoPress. South Atlantic News Agency

Paraguay decrees tax cut to boost sales to foreign residents in bordering cities

Authorities seek to lure residents of bordering cities into doing their Holiday shopping in Paraguay

Paraguayan authorities have decided to cut down the Value Added Tax (VAT) by 1% until March 2022 in a move to boost across-the-border trade. The measure applies to goods imported through the so-called Tourism Regime and includes beverages and perfumes.

The idea is to help those sectors most affected by the COVID-19 pandemic, explained Finance Minister Óscar Llamosas while making the announcement together with Deputy Minister of Taxation Óscar Oué, who added that the measure seeks to help businesses in areas bordering Brazil and Argentina.

The deductions will also apply to restaurants, events, hotels, tourism and rentals.

Oué added that reductions would also apply to the selective consumption tax (ISC) on alcoholic beverages and perfumes, with decreases in retail prices varying according to each product. In the case of perfumes and make-up, the rate was set at a maximum of 2%.

Minister Llamosas stressed that the idea of these measures is to continue supporting the items that have a more gradual recovery than the rest. He pointed out that this represents a great effort for the Government because it implies a lower collection to finance public programs.

Oué also pointed out that consumption tends to increase at this time of the year, so the initiative is expected to have a volume impact on Holidays shopping.

Meanwhile, authorities from Paraguay and Argentina also announced Thursday a reopening of land borders between the two countries through a “safe corridor” that meets all the requirements. The crossings slated for reopening are: Puerto Falcón – Clorinda; Alberdi – Formosa and Nanawa - Clorinda.

Authorities are also considering the creation of a registry of residents in bordering cities to speed up daily commuting.