Doing Business In.. 2024 Comparisons

Paraguay has a civil law legal system. The basic organisation of the judicial order in Paraguay is the Supreme Court of Justice, Appeal Courts and Lower Courts.

Paraguay has a strong legal framework supporting and promoting foreign investments. Law No 117/91 “On Investments” guarantees a free exchange regime without restrictions for the entry and exit of capital, as well as for the remittance abroad of dividends, interest, commissions, and royalties for the transfer of technology or other items, which are subject to the taxes applicable by law in Paraguay. The country allows the free contracting of investment insurance within its jurisdiction and abroad, and the establishment of joint ventures.

Furthermore, there are no requirements to record with Central Bank investments or remittance of capital required for investments, settle imports and exports with the Central Bank, or liquidate currency. All investments can flow through the private banking system.

There is no applicable information in this jurisdiction.

There is no relevant information in Paraguay.

The right to appeal is not applicable in Paraguay.

Most legal entities operating in Paraguay are organised as:

• branches of foreign companies;
• joint stock corporations;
• limited liability companies; or
• simplified joint stock companies (EAS).

Joint stock and limited liability companies must have at least two shareholders, who may be either individuals or legal entities. They do not have a minimum share capital and the liability of the shareholders/quotaholders is limited to the capital owned.

Joint stock corporations require:

• a board of directors and a comptroller;
• annual shareholders’ meetings to approve the financial statements; and
• the maintenance of corporate books.

Joint stock corporations offer greater conveniences for the transfer of shares and the appointment of new members to the board of directors, in comparison with limited liability companies.

The administration of a limited liability company does not require corporate books. The representation of the limited liability company is carried out by a management team appointed by the quotaholders in the by-laws. However, limited liability companies lack the conveniences of joint stock corporations; the transfer of shares and the appointment/cessation of managers require an amendment of the by-laws.

Except for financial, banking, insurance, stock exchange, and currency exchange activities (which can only be carried out by a joint stock corporation), from a commercial perspective, there are no differences regarding the activities in which joint stock corporations or limited liability companies can engage. However, the EAS are limited to commercial activities, except those subject to special regulations such as liberal activities of individuals, educational services, mining activities, oil, or other extractive activities.

A branch allows the foreign parent company to conduct business in Paraguay without creating a new legal entity. The parent company must appoint a legal representative and allocate operating capital to the branch. This corporate form does not require keeping corporate books. On the other hand, the liability for the acts of the branch extends to the parent company.

Simplified joint stock companies can be incorporated with a single shareholder (whether an individual or legal entity, national or foreign) and share characteristics with joint stock corporations – corporate books and approval of fiscal year, but they do not require a comptroller. However, various procedures that are already available and implemented for the other forms of legal entities are not yet available for EAS.

The incorporation of any of the legal entities must be instrumented in a public deed certified by a Public Notary (except the EAS incorporated with a single form) and registered at the Paraguayan public registries, prior to the issuance of a report from the corporate surveillance entity. The legal entities acquire legal personality upon registration at the Public Registry of Legal Entities and Commerce and can engage in commercial activities from the registration before the tax authority to obtain the tax ID. This process takes between two to four months.

In Paraguay, private companies are subject to reporting and disclosure obligations. The specific filing obligations and requirements vary depending on the corporate form. Some key filing obligations are:

• Changes of management – any change of management in a limited liability company or a branch office, such as the appointment or cessation of managers/legal representatives, requires its registration in the Paraguayan public registry. On the other hand, the shareholders’ meeting that appoints or dismisses the board of directors in a joint stock corporation or an EAS must be submitted to the corporate surveillance entity. In all cases, an update before the General Directorate of Legal Entities and Structures and the tax authority is required.
• Changes of shareholders/quotaholders – any change of quotaholders in a limited liability company requires its registration in the Paraguayan public registry. On the other hand, the transfer of shares in a joint stock corporation or an EAS must be submitted to the corporate surveillance entity. In all cases, an update before the General Directorate of Legal Entities and Structures and the tax authority is required.
• Amendment to articles of incorporation – any amendments made to the articles of incorporation of a legal entity must be filed with the public registry. This includes changes to the corporate name, registered address, share capital, purpose, or any other significant provisions outlined in the articles, such as a change of management or quotaholders in the limited liability company. Furthermore, the public deed must be registered before the corporate surveillance entity and the information of the legal entity must be updated before the General Directorate of Legal Entities and Structures.
• Approval of financial statements – legal entities are required to prepare and submit annual financial statements, including balance sheets, income statements, and cash flow statements, to the annual shareholders meeting in the first quarter of the year. This meeting must be filed before the corporate surveillance entity.
• Allocation of profits – all forms of legal entities must inform the tax authority of the allocation of profits, if any, approved in the annual meeting or by any other competent body.
• Update before the General Directorate of Legal Entities and Structures – legal entities are required to disclose information about the legal entity, its shareholders/quotaholders, authorities, and their ultimate beneficial owners. This information must be reported annually before 30 June or within 15 days of any change, and failure to comply with the disclosure requirements can result in penalties or other legal consequences.

Legal entities in Paraguay typically follow a one-tier management structure. The law only requires one management body. Nevertheless, it is possible that legal entities create additional bodies such as supervisory or counselling/advisory boards in their by-laws.

The number and duration of the administrative bodies is determined in the by-laws. The directors/managers/legal representatives may or may not be shareholders. They are eligible for re-election and their appointment is revocable. They can be Paraguayan or foreigners with legal residence in the country.

In Paraguay, the liability of legal representatives (directors for a joint stock corporation and managers for a limited liability company) is primarily governed by the Paraguayan Civil Code. The legal representatives are responsible for the administration of the legal entity. They are agents and are jointly and severally liable with the legal entity for the incomplete or deficient performance of their mandate. According to the regulations, legal representatives are accountable to third parties, creditors, and suppliers, as well as shareholders/quotaholders and the legal entity.

Legal representatives must act in accordance with their mandate. Compliance means adhering to the provisions of the by-laws, laws, instructions from shareholders/quotaholders, and generally following the duties of conduct inherent to their position while safeguarding the legal entity’s interests. Failure to comply or fulfil their duties, depending on whether it is done with intent, negligence, or fault, may result in their liability to compensate for damages and losses caused.

The liability of legal representatives may be contractual or non-contractual, depending on the case.

All acts carried out by the legal representatives are considered as performed by the company, as long as they are within their powers or in fulfilment of the corporate purpose. In case of doubt, it will be presumed that the director acted on their own behalf.

In Paraguay, the concept of piercing the corporate veil exists, and under certain circumstances, courts can disregard the corporate entity to hold legal representatives and officers personally liable. However, the conditions and criteria for piercing the corporate veil may vary, and it is subject to judicial interpretation based on the specific facts and circumstances of each case.

Labour relations in Paraguay are regulated by the Labour Code, Law No 213/1993, and governs the relations between employees and employers and in situations in which there is a clear element of subordination. Employment relationships are regulated, in addition, by collective bargaining agreements, internal working regulations and employment agreements.

The employment contract may be verbal or written; contracts that stipulate a remuneration higher than the legal minimum wage must be in writing.

Regarding its duration, the employment contract may be:

• for a fixed term;
• for an undefined term; or
• for a specific work or service.

The contract entered for a fixed term may not exceed:

• one year in the case of blue-collar employees; or
• five years in the case of white-collar employees.

The contract for a specific work or service will last until the total execution.

There is a maximum working time applicable to salaried employees.

The ordinary working day is:

• 8 hours per day or 48 hours per week for day work (from 06:00 to 20:00);
• 7 hours per day or 42 hours per week for night work (from 20:00 to 6:00); and
• 7.5 hours per day or 45 hours per week for mixed work (which covers periods of time between day and night work).

Daytime overtime hours worked outside the agreed working hours are paid with a 50% surcharge when they correspond to working days, and 100% when they correspond to holidays and rest days. Night-time overtime hours are paid with a 100% surcharge on the value of the night hour.

Overtime may not exceed 3 hours per day; and the total hours worked in a week may not exceed 57 hours per week, including ordinary and overtime hours.

The termination of individual employment contracts may occur due to the initiative of the employee or the employer indistinctly, with or without just cause in accordance with the provisions of the Labour Code. The Labour Code establishes a trial period of 60 days during which it is possible to terminate the employment relationship without liability for any of the parties (only the salary corresponding to the days worked, and the proportional Christmas bonus, is paid).

Upon termination of the employment relationship in an undefined-term contract, the employer must pay the employee the outstanding salary corresponding to the days worked, the proportional Christmas bonus, and the amount corresponding to the accrued vacations that are pending to be taken.

In case of unjustified dismissal, the employer must also pay an indemnity equivalent to 15 daily wages for each year of service or fraction of six months, plus an amount, that varies according to the seniority of the employee, of between 30 and 90 daily wages as notice, in case of failure to give prior notice of dismissal. The employee is also entitled to be paid a proportional amount corresponding to vacations not yet accrued in relation to the time worked, according to the employee’s seniority in the company.

Upon termination of contracts for a defined term or for work, the salary for the month and the proportional Christmas bonus must be paid. In the event of termination of the contract before the established term, the Paraguayan law establishes that a judge may determine the indemnity, the maximum amount of which may be equal to the remainder of the contract. In practice, in these cases the employee is paid as if it were a contract for an undefined term, paying the notice and the corresponding indemnity according to the time worked.

Collective redundancies are permissible under the same rules as for termination of individual employment contracts – no consultation is required.

There is no applicable information regarding employee representations in this jurisdiction.

In Paraguay, both employees and employers are required to pay taxes in the context of an employment relationship. The specific taxes that must be paid vary depending on the employee’s income and the employer’s industry – eg, corporate/personal income tax and social security contributions.

Corporate Income Tax (IRE)

The IRE rate is 10% and levies Paraguayan source revenues from activities developed, goods located, or economic rights used in Paraguay, regardless of the nationality, domicile, or residence of the parties involved in the operations or the place where they are held. IRE also considers Paraguayan-sourced income from activities carried out abroad. Nevertheless, to avoid double taxation, taxes paid abroad can be offset against the tax owed in Paraguay.

Value Added Tax (IVA)

The VAT is levied upon the sale of goods and the rendering of services, excluding those of personal character that lend in dependency relations, and the introduction of goods into the country. The standard rate is 10%, with a lower 5% rate applying to supplies of basic foodstuffs, pharmaceutical products, agricultural products in their natural state, hunting and fishing animals, alive or not, in their natural state, and the transfer of the right to use goods or immovable property. Exports are zero-rated. Exemptions include raw farm products, some fuels, foreign currency, books, and newspapers.

Tax on Dividends and Profits (IDU)

The IDU is levied on the distribution of dividends or profits to the shareholders of a company incorporated in Paraguay. The rates of this tax depend on the place of residence of the partner or shareholder: (i) 8% if resident in Paraguay; or (ii) 15% if not resident in Paraguay. In the case of corporations, the obligation is triggered when the ordinary assembly decides upon the distribution of dividends, regardless of the time of payment. In the case of limited liability companies or entities that do not have the obligation to hold a meeting, the profits will be considered distributed within the term stipulated in their by-laws; if they are not specified in their by-laws, they will be considered distributed in the fourth month after the closing of the fiscal year.

Non-resident Tax (INR)

The INR is levied on income from Paraguayan sources obtained from activities carried out, assets located, or rights economically used in the country by individuals or legal entities not resident in Paraguay. This tax is paid through the withholding that must be applied by the taxpayer paying the income to the non-resident. The general INR rate is 15% and is applied on the net presumed income, calculated on a percentage of the total amount paid to the non-resident. The percentages are stipulated by the Tax Law and range from 30% to 100% of the gross amount paid to entities or individuals domiciled abroad. The effective rates vary from 4.5% to 15% of the amount paid.

The OECD Two-Pillar Solution

Paraguay has approved the OECD’s Two-Pillar Solution that addresses the tax challenges resulting from the digitalisation of the global economy, along with 141 other jurisdictions. Implementation has not yet been announced, as of 16 July 2024, and a domestic top-up tax is yet to be confirmed.

Tax Incentive Regime for Domestic and Foreign Capital Investment

This regime promotes investments and reinvestments of capital through the granting of tax special benefits. To obtain these benefits, the foreign investor must submit an investment project to the Ministry of Industry and Commerce, and the analysis of the project is carried out by a commission composed of representatives of the regulatory agencies of the investment industry.

Free Trade Zone Regime

The Free Trade Zone Regime constitutes a duly delimited area within the customs territory, where free trade activities are allowed free of customs duties and fiscal taxes established for the rest of the country. The main objective is to develop business centres, prevent smuggling and piracy, and increase the competitiveness of exports.

To obtain the free-zone concession, the petitioners must submit their application to a council integrated by members of the Ministries of Finance, Industry and Commerce, and Public Works. Once the petition is approved, a contract is signed with the executive branch, which establishes the terms and conditions of the concession.

Maquila Regime

The Maquila Regime establishes that companies incorporated abroad hire the services of a company domiciled in Paraguay to carry out, totally or partially, industrial or service processes, to transform, manufacture, repair, or assemble foreign products.

The objective of is to export to the international market. However, the companies can allocate a small proportion of their production to the local market, without losing the tax exemptions they enjoy.

The Maquiladora companies can operate under any of the figures established in the national legislation, which may be natural or legal persons, national or foreign, domiciled in the country. There is no limitation regarding the participation of capital. It can be a 100% national, foreign, or joint venture.

Maquila operations are exempt from all taxes or duties affecting the process, from the import of raw materials and inputs, and the manufacture of the products, to the export of the products, including VAT. In return, a single tax must be paid, with a rate of 1% on the value added in Paraguay or on the invoice value, whichever is higher.

National Product and Employment Regime

This regime establishes a mechanism to support domestic industrial production by granting a certification for the use of national labour and products, which grants a 20% preference margin on public bids.

National Automotive Policy

The National Automotive Policy seeks to promote domestic and foreign capital investment by granting tax benefits for the manufacture and/or assembly of motorised and non-motorised vehicles, and automotive parts.

The benefits are 0% tariff on the importation of capital goods, raw materials, components, kits, parts, pieces and spare parts, and manufacturing supplies that are required for the manufacture of motorised and non-motorised vehicles, and automotive parts.

It also grants an advantage in the liquidation of VAT. Reducing the taxable base to 20% of the amount of the customs value. That is, the CIF value of the goods.

Investment Guarantees, Promotion of Employment Generation, and Economic and Social Development

This regime promotes and protects capital investment in the creation of industries and other productive activities in Paraguay.

To apply the incentives of this law, the beneficiaries must submit the investment project to the study of an investment council. Once this council approves the granting of benefits to the project, a contract is signed with the state.

Among the benefits of this regime, it is possible to agree on the invariability of the IRE tax rate for a period of ten years as from the start-up of the corresponding company, which corresponds to the start of operations corresponding to the investment project. The term of invariability of tax rates may be extended to fifteen years if the investment project exceeds its maximum value.

Special Regime for the Importation of Raw Materials

The main objective of this regime is to promote investment and stimulate existing industrial companies, by means of tariff liberations, improving the competitiveness of industries as a source of employment and adding value.

The tax benefit is that of importing raw materials at a 0% tariff for each import.

To be a beneficiary of this regime, companies must apply, indicating in an Annual Production Program the raw materials to be imported during the year and describing which will be the final products resulting from these imports. Additionally, there is a duty to report, bi-monthly, the quantities produced during the two-month period. To date, all these procedures are carried out electronically.

Paraguayan tax law does not allow tax consolidation.

As per thin capitalisation rules, the deduction of royalties, technical assistance, and interest paid to related entities are topped at 30% of the net income before deducting these amounts.

IRE taxpayers are obligated to apply special rules that regulate transactions between related or linked companies since 2021.

The breach of such rules allows the tax authorities to revise and determine the revenues and deductions considering the values that would have been used by independent parties in comparable operations.

The Tax Law basically provides that the arm’s length principle must be observed in order to determine whether a transaction is being conducted between related entities at market value or not. To assess this, the following methods are introduced:

• comparable uncontrolled price (CUP);
• resale price method (RPM);
• cost plus method (CPM);
• profit split method (PSM);
• residual profit split method (RPSM);
• transactional net margin method (TNMM); and
• market value method (MVM).

The INR rules were created to prevent the avoidance of IDU. This is the only specific rule for this purpose.

Paraguayan Competition Law No 4,956 (the “Competition Law”) was enacted in 2013 and its regulatory Decree No 1,490 in 2014. The Competition Law introduces, for the very first time, a concentration control mechanism in Paraguay. The governmental agency responsible for enforcing the competition framework in Paraguay is the National Antitrust Commission (Comisión Nacional de la Competencia or “CONACOM” for its Spanish acronym). The members of the commission were formally appointed in 2015 and the commission has only been operative since then.

An economic concentration (either merger or acquisition) is considered to take place by the exercise of control over a legal entity previously independent, as a result of the acquisition of part or all of its assets, and is subject to merger control clearance to the extent that one of the following thresholds is reached if:

• after giving effect to the transaction, the parties involved, considered together, have a market share equal or over 45% of a relevant market; or
• the parties’ combined turnover in Paraguay in the last fiscal year is equal to or exceeds SMM100,000 (approximately PYG228.932 billion; USD33.22 million; and EUR28.16 million).

Below are the details of the merger control process in Paraguay.

Preliminary Review

From the date of filing, the competition authority has a period of five business days to verify that the notification has all the documentation and basic information required by the regulation.

In case the competition authority considers that information is missing, the notifier is requested to submit the missing information within five working days.

After this submission, the competition authority has again a period of five working days to verify that the information submitted complies with the requirements. After this, the formal review of the file begins.

Estimated time: five to 15 working days.

Formal Review

The formal review comprises two stages: (i) first stage of review lasting 30 working days; and (ii) second stage of review lasting 60 working days.

In either of the two stages the competition authority may request information from the notifier, the effect of which is to suspend the review period until the required information is submitted (the competition authority may ask follow-up questions on the information submitted in each case).

Estimated time: three to six months.

The Paraguayan Competition Law generally provides that all individual or concerted practices, activities, or recommendations that aim to restrict, limit, hinder, distort or impede existing or future competition in a relevant market are prohibited. Further, the Paraguayan Competition Law prohibits collusive practices, understood as concerted or consciously parallel agreements, decisions, or practices, regardless of whether they are written or verbal, formal or informal, that have as their purpose to produce or possibly produce the effect of preventing, restricting, or distorting competition in all or part of the market.

The Paraguayan Competition Law provides a non-exhaustive list of agreements that are deemed to be anti-competitive by default, regardless of the market power of the parties involved:

• price fixing, including collective price fixing agreements in the context of associations;
• limitation, restriction, or control of the market, including production, distribution, technical development, or investments, to the detriment of competitors or consumers;
• market partition, including customers or supply sources;
• discriminatory commercial conditions;
• subordination of products or services to the acceptance of supplementary benefits that, by their nature or in accordance with commercial usage, have no relation whatsoever with the purpose of such contracts;
• collusive bidding;
• restrictions on production or sales, in particular through market shares;
• the concerted refusal to acquire; and
• unjustified collective denial of participation in an agreement, or admission to an association, which is decisive for competition.

When analysing practices, activities, or recommendations that aim to restrict, limit, hinder, distort, or impede existing or future competition in a relevant market, the Paraguayan Competition Law provides that the Competition Authority must take into consideration:

• the result in economic efficiency gains for the economic agents involved within the scope of the Paraguayan Competition Law;
• the possibility of obtaining such efficiencies from alternative practices; and
• the benefit passed on to consumers.

The Paraguayan Competition Law neither provides for a standard of analysis of what can be interpreted as an economic efficiency gain, nor has limits for such interpretation.

The Competition Law prohibits the abuse of a dominant position by one or more undertakings unless the CONACOM considers that there are efficiency gains resulting from the agreement, and that these gains offset the market restrictions.

According to the Competition Law, an undertaking has a dominant position whenever it is not exposed to substantial and effective competition. This is analysed taking into account:

• the substitutability of the product in the relevant market;
• regulatory restrictions limiting market access of other products;
• number of offerors or suppliers to the market; and
• the market power of the undertaking to unilaterally influence price formation or restrict supply or offer in the market.

The Paraguayan Competition Law does not contemplate a percentage of market share to define a dominant position. Note, however, that, based on recent precedents issued by the Competition Authority, a market share of 45% is to be considered a preliminary indication of market dominance, notwithstanding that further analysis is to be made based on the criteria indicated above.

The Patent Regime in Paraguay is regulated by Law 1.630/00 “On Invention Patents” (“Patent Law”) which specifically protects the rights of owners of inventions and utility models.

Patent Law provides that new inventions of products or processes that involve an inventive activity and are susceptible to industrial application shall be patentable.

The following items are not patentable:

• simple discoveries, scientific theories, and mathematical methods;
• purely aesthetic creations;
• economics, business or advertising schemes, plans, principles, or methods, and those related to purely mental or intellectual activities or game matters;
• computer programs considered in isolation;
• the diagnostic, therapeutic, and surgical methods for treatment of people or animals; and
• the different ways of reproducing information.

In addition, inventions whose commercial exploitation must be impeded to protect public order or morality, to protect health, life of people or animals, and to preserve plants, to prevent serious environmental damage, and plants and animals, except micro-organisms, and essential biological processes to produce plants and animals, which are not non-biological or microbiological processes, are excluded from patent protection. The products or procedures included in the state of the art developments cannot be patented either.

The patent gives the owner the exclusive right to use it for a maximum period of 20 non-extendable years, counted from the date of filing the application for registration with the Paraguayan Intellectual Property Office (PYIPO). As of the third year of the application for registration, annual fees must be paid to keep the same in force.

Any person or company, national or foreign, can obtain a patent upon request and undergo the process before the PYIPO. The application form includes the information of the applicant and the inventor (name and address), the denomination and description of the invention, claims, and drawings (if applicable), and a summary of the invention.

The application will remain in the secrecy period for 18 months if priority has been invoked. Once this period has expired, the PYIPO will carry out a formal examination. The applications without a priority invoked will also undergo the formal examination approximately 18 months after the filing date. Once the formal examination is approved, the PYIPO will issue a publication order. The application must be published for five days in a newspaper of mass circulation.

Once the publications are filed, the application will be ready to undergo the substantive examination. If no official objections are issued or third-parties’ observations are filed, the application will be deemed as ready to be granted. A new publication order shall be issued at this point. The requirements of the first publication must be met. Once all the requirements established by law have been fulfilled, the PYIPO authority will grant the patent registration certificate.

Once a patent is granted in Paraguay, the patent holder can enforce their rights against any unauthorised use or infringement. The enforcement and remedies related to patent infringement include:

• Civil action to claim the right to the patent – when a patent for an invention or utility model has been applied for or obtained by someone who had no right to obtain it, or to the detriment of another person who also had such right, the affected person may claim their right before the competent judicial authority requesting that the pending application or the patent be transferred, or that the affected person be recognised as applicant or co-owner of the right. In the same action, the affected person may claim compensation for damages.
• Civil action for infringement of patent rights – the owner of a patent may initiate, before the competent judicial authority, the corresponding actions against whoever carries out acts in violation of the rights arising from the patent.

As precautionary measures, the judicial authority may order:

• the immediate cessation of the acts constituting the infringement;
• the seizure of the products resulting from the infringement and of the materials, instruments, and means that served to commit the infringement; and
• the suspension of the importation or exportation of the products, materials, or means that served to commit the infringement.

The Trade Mark Regime in Paraguay is regulated by Law 1.294/98 “Trademark Law”, which specifically protects the rights of owners of trade marks.

The Trademark Law defines the trade marks as any signs used to distinguish products and services. They may consist of one or more words, mottos, emblems, monograms, seals, vignettes, reliefs, names, fanciful word forms, letters and numbers in distinctive shapes or combinations, and arrangements of colours, labels, containers, and wrapping. They may also consist of the shape, presentation, or packaging of products or their containers, wrapping, the mode, or place in which the corresponding products or services are provided.

Trade mark registrations are valid for ten years and may be extended indefinitely for further ten-year periods, provided that their renewal is requested within the year preceding their expiry and subject to completion of the same formalities as those required for registration. The new term shall be computed from the date of expiry of the preceding registration.

The registration process starts with the filing of the application. Once the application is filed, the PYIPO carries out a formal examination to confirm whether the application complies with all the formal requirements established in the Trademark Law, including the registration of the POA before the PYIPO.

Once the formal examination is approved, the publication order is issued. The application must be published for three days, after which the opposition term starts running (60 working days). If no opposition is filed, the application undergoes the substantive examination. Providing that no precedents are found and no registrability objections are raised, the application is declared as ready to be granted. On the assumption that no opposition is filed, and no objections are raised, the registration process should take about 12 to 18 months.

Trade mark licences: the pertinent agreements must be recorded before the PYIPO in order to have legal effects vis-à-vis third parties.

Once a trade mark is registered in Paraguay, the owner can enforce their rights and take action against trade mark infringement. The enforcement and remedies related to trade mark infringement include civil and criminal actions.

The resolution issued by a judicial authority may order:

• the immediate cessation of the infringing acts;
• the payment of the costs and expenses of the lawsuit and compensation for damages;
• the seizure of the products resulting from the infringement including the containers, packaging, labels, printed or advertising material and other materials, and means that were mainly used to commit the infringement;
• the suspension of the importation or exportation of the products, materials, or means that served to commit the infringement; and
• the prohibition of the importation or exportation of the infringing products, materials, or means.

Paraguayan trade mark law also provides for administrative proceedings, opposition, cancellation for non-use, and nullity actions to address disputes and maintain the integrity of the trade mark registration. Additionally, the owners of registered trade marks can also file criminal complaints with a public prosecutor who must investigate the alleged criminal action.

The Industrial Designs Regime in Paraguay is regulated by Law 868/81 “On Industrial Designs” (“Industrial Designs Law”), which specifically protects the rights of owners of industrial designs.

The Industrial Designs Law defines “industrial designs” as any combination of lines and colours, and “industrial model” as any plastic form of lines and colours, intended to give a special appearance to an industrial or handcrafted product and that serves as a prototype for its manufacture.

Industrial designs may be registered if they are new and do not serve only to obtain a technical effect, nor are contrary to public order, morality, and good customs.

The grace period for filing applications from disclosure is six months.

The protection granted by registration shall last for five years from the filing date of the application and may be renewed for two consecutive periods of the same duration.

The application form may be filed before the PYIPO along with the description of the design, its graphic representation, and the class of product for which the design will be used.

The registration process starts with the filing of the application. Once the application is filed, the PYIPO carries out a formal examination to confirm whether the application complies with all the formal requirements established in the Industrial Designs Law, including the registration of the POA before the PYIPO.

Once the formal examination is approved, the files undergo the substantive examination. Once the substantive examination is approved, the publication order is issued. The application must be published for one day, after which the opposition term starts running (60 working days). Providing that no opposition is filed, no precedents are found, and no registrability objections are raised, the application is declared as ready to be granted, and the registration process should take about 12 to 18 months.

The owner of an industrial design registration may file a judicial action before the Civil Court to request the cease-and-desist of the acts constituting the infringement and the compensation for damages. Criminal complaints can also be filed by the owners of registered industrial designs.

Copyright refers to the legal protection granted to the creators of original literary, artistic, and intellectual works. It gives the creators exclusive rights over their works, allowing them to control the reproduction, distribution, display, and adaptation of their creations.

Copyright protection is generally based on the life of the author plus 70 years after their death and shall be transmitted according to the provisions of the Civil Code. For collective works, the protection lasts for 70 years from the date of death of the last co-author.

Copyright registration is not mandatory for acquiring protection. Copyright protection is automatically granted to original works as soon as they are created, and the registration is merely declaratory and not constitutive of rights. However, registering a copyright can be beneficial as it provides evidence of ownership and facilitates enforcement actions. The registration process may involve applying, along with providing the necessary documentation (a copy of the work) before the Copyright Office from the PYIPO.

Paraguayan copyright law provides various enforcement mechanisms and remedies to protect copyright holders. If a copyright infringement occurs, the copyright owner can initiate legal proceedings before the competent court. Remedies for copyright infringement may include:

• Injunctions – the court may issue an injunction to prevent further infringement or to order the cessation of ongoing infringement.
• Damages – copyright owners may be entitled to claim monetary damages, which can include actual damages suffered due to the infringement and any profits gained by the infringer.
• Seizure and destruction – the court may order the seizure and destruction of infringing copies or materials.
• Criminal penalties – in cases of intentional and commercial copyright infringement, criminal penalties such as fines and imprisonment may be imposed.

The software and databases are protected by the provisions of the Copyright Law.

The protection of undisclosed information related to industrial and trade secrets is governed by Law 3283/07 “Of protection of undisclosed information and test data for pharmaceutical records” (“Law 3283/07”).

The mentioned law provides that legitimate holders of undisclosed information, whether natural or legal persons, may prevent unauthorised access, disclosure, use, or acquisition of such information by unauthorised third parties in a manner contrary to honest commercial practices.

Undisclosed information refers to:

• all kinds of technical, commercial, or business information that is secret in the sense that it is not generally known or easily accessible to persons who normally deal with the type of information in question;
• knowledge that has commercial value because it is secret; and
• content that has been subject to reasonable measures by the natural or legal person who produced it or legitimately controls it to keep it secret.

The protection conferred by Law 3283/07 does not create exclusive rights in favour of whoever possesses or has developed the information. Unauthorised access by third parties to the information, contrary to honest commercial practices, shall entitle the possessor to exercise the relevant civil actions.

The processing of personal data is regulated by the Protection of Personal Credit Data Law No 6534/20 (“Data Protection Law”).

Currently there is a draft bill under consideration in Paraguay’s legislature that aims to establish a more comprehensive regulatory framework for data protection.

The Paraguayan Constitution (1992) provides that all individuals have the right to:

• access:
1. public databases containing general information; and
2. information and data about them or their assets, regardless of whether it is stored in public or private data registries;
• know how and for what purposes their personal information is being used; and
• request a court order to update, rectify, or delete inaccurate or unlawfully impacting personal data that infringes upon their rights (Article 135, Constitution).

The Data Protection Law governs the handling of personal data collected or stored within Paraguay. This encompasses various information systems, files, and records, as well as physical, electronic, and digital databases utilising manual, automated, or partially automated methods for collecting data.

Processing and transferring personal data without the explicit, informed, and voluntary consent of the data subject is deemed illegal.

Regarding the transfer of personal data to third-party countries or international organisations, such transfers are only permissible if they meet the requirements, guarantees, or exceptions stipulated in the Data Protection Law.

The Data Protection Law is currently undergoing further regulation to provide more precise guidelines. The regulatory agencies have not yet established the mechanisms necessary to determine whether third-party countries and international organisations meet the minimum required standards. Under current regulations, data transfer agreements for cross-border transfers do not need to be approved by the relevant Paraguayan authorities.

Two regulatory agencies, namely the Central Bank of Paraguay (BCP) and the National Secretariat for Consumer and User Defense (SEDECO), have been designated under the Data Protection Law to act as supervisory authorities. These agencies possess the power to impose sanctions in cases of violations, but they do not have the direct authority to enforce monetary penalties (fines) against non-compliant entities or individuals who refuse to pay voluntarily.

In situations where fines imposed under the Data Protection Law are not voluntarily paid, the enforcing authority would need to initiate legal proceedings to seize and sell assets belonging to the liable entity or individual in order to effectively collect the fines. Additionally, the affected party has the option to file a civil lawsuit through the regular courts to claim damages.

Within their respective areas of expertise, the BCP and SEDECO can impose various sanctions on those found responsible for breaches of the Data Protection Law through prior administrative proceedings. These sanctions include the following.

• Issuing a warning.
• Imposing fines of up to 15,000 minimum wages (approximately USD200,000), which may be doubled for repeat offences. In cases where the liable party is an individual or a company with an annual turnover exceeding PYG6 billion (approximately USD822,000), the fines can reach up to 50,000 minimum wages (approximately USD675,000).
• Suspending activities related to data processing for a maximum of six months, along with prescribing necessary corrective measures.
• Disqualifying individuals from holding positions or roles within the financial and credit system, as well as credit information bureaus, for a duration ranging from six months to five years.
• Temporarily closing operations related to data processing if the corrective measures ordered by the regulatory authority are not implemented after the suspension period.
• Immediately and definitively shutting down operations that involve the processing of sensitive data.

These administrative sanctions can be graduated by the competent enforcement authority based on their severity. It is important to note that these sanctions are independent of any corrective or precautionary measures issued by the authorities to protect the public interest as outlined in the Data Protection Law. It is possible to appeal these sanctions before the administrative court.

From an employment law perspective, no major reforms are expected in Paraguay.