Paraguay – Business Opportunities in a Little Known Tax Haven

If I advised you a couple of de facto tax haven with a liberal structure the place you should purchase land for $25 per acre, the place you may have made 25% return on a easy checking account within the final yr as a result of foreign money appreciation towards the greenback, and the place you possibly can most likely qualify for a second passport with visa-free journey to Europe in as little as three years… would I’ve your consideration?

I believed so. I am most likely much more excited than you might be about this nation, which I first ‘found’ in 2003 and I’ve returned to many instances since. You is perhaps shocked after I let you know what nation I am speaking about, however right here goes anyway. It is the Republic of Paraguay, in South America.

Paraguayans fondly describe their nation, actually, as the guts of South America. Their neighbours in Brazil and Argentina, nevertheless, have ceaselessly used much less flattering corporal analogies when referring to this small (by South American requirements), little-known landlocked nation.

However that angle is altering… and quick! August fifteenth this yr noticed the swearing in of recent Paraguayan President Lugo, a former Catholic archbishop, now ex-communicated (no matter chances are you’ll prefer to deduce from that). The purpose is the change that’s coming. Increasingly more good buyers in simply these neighboring international locations – Brazil, Argentina and Uruguay – are cashing in on the pinnacle begin they’ve merely from being close by and understanding the regional state of affairs. Paraguay in late 2008 appears to be like more and more engaging as a spot to dwell and do enterprise. Olavarrieta Consulting

This text is about how one can develop into concerned. Paraguay is of curiosity to offshore wealth builders for a number of causes:

o Glorious funding alternatives
o Tax Free Residence
o Second Citizenship and Passport

Whether or not you might be searching for a spot to dwell and retire, make investments, save taxes or all three – and most significantly, why you’d need to!

As any person advised me final month, in Paraguay “every little thing is virgin.” That’s the reason for investing in Paraguay proper now. There may be plenty of alternative in all areas. However my prediction is that for the subsequent decade or so, pure assets would be the driving pressure within the financial system. Within the very brief time period (learn now), hypothesis on land costs appears to be like fascinating, taking into account that you would be able to purchase huge tracts of virgin land for as little as $25 per acre (up from $15 in 2007) Many good buyers from the US and Europe are becoming a member of Paraguay’s neighbours in snapping up bargains. It was even rumoured that household of President George Bush has been shopping for up land in Paraguay, although I’ve been unable to substantiate this.

After quite a lot of visits to Paraguay over the previous 5 years, I’ve not too long ago arrange and am now within the technique of creating a web site for many who are fascinated by doing enterprise, dwelling and/or investing in Paraguay. This text will function an introduction, and if you need to know extra or observe updates as they’re added, I am going to provide you with my internet handle within the Useful resource Part on the finish.

Paraguay is a poor nation on the floor, however it is vitally wealthy in pure assets, that are solely now attracting severe consideration from outsiders. Paraguay has water, oil, iron ore, gold… and huge unexploited agricultural capability. With commodity and meals costs at file highs and nonetheless climbing, these elements imply Paraguay has immediately popped up on the radar of worldwide buyers. By the best way, it is also one of many world’s few forgotten tax havens, with no private earnings taxes.

No one Bothers Paraguay

For a few years vacationers had little purpose to go to poor, empty, landlocked Paraguay. Those that did had particular causes to hunt out its remoteness and the resultant freedom and privateness. Various immigrants included each the persecutors and the persecuted from European wars, in addition to non secular teams as diverse because the Mennonites and the Moonies who looked for and located their secure havens.

In Paraguay, no person actually bothers you, and even watches what you might be doing, offered you do not upset locals. From that perspective it’s extremely a lot “dwell and let dwell.” There isn’t any Massive Brother in Paraguay. (The hearsay of a secret American navy base in Paraguay is just not true – I checked it out personally)

Again in 1864-1870, across the time North America was embroiled in its personal civil battle, the second bloodiest battle ever to be fought within the western hemisphere, The Conflict of the Triple Alliance, was being fought. After the battle, having misplaced two thirds of its male inhabitants, Paraguay was in no match state to hold on its growth for the subsequent few generations.

By some means, because the Paraguayan inhabitants slowly recovered, the world handed Paraguay by. Just a few million poor, primarily indigenous individuals have been merely not value a re-assessment, because the world was much more involved with the Eva Peron in Argentina or the bikinis on Brazilian seashores.

From 1954-1989, navy man Alfredo Stroessner dominated Paraguay with an iron first, throttling all political opposition however dividing his important monetary beneficial properties sufficient to maintain sufficient individuals completely happy. The nation grew to become nonetheless extra remoted, relying primarily on smuggling. Luxurious items have been extraordinarily extremely taxed in Brazil and Argentina at the moment, whereas Paraguay had only some, very low taxes and a really liberal if under-developed financial system.

Stroessner’s grand challenge was the Itaipu energy plant, the development of which within the Seventies gave Paraguay the best progress charge of all Latin America. Nonetheless in the present day, Paraguay is the world’s largest exporter of hydro-electric energy. Paraguay does not want oil in any respect, as a result of it already has much more electrical power than it wants. That is one purpose why these hydrocarbon reserves within the Chaco have been by no means actually developed.

After Stroessner’s exile in 1989, his Colorado Celebration remained in energy via a collection of debatably-free elections. Excessive ranges of corruption have ensured that the nation’s important pure wealth has been concentrated within the arms of some, possibly 500, households. This elite shipped practically all their wealth in a foreign country, within the type of overseas investments and importation of luxurious items like vehicles.

Now quick ahead to 2008, the top of the Colorado regime. The brand new President Lugo, a former Archbishop who was excommunicated by the Catholic Church, has simply been sworn in. No one I talked to will give a committal reply about Lugo. He is perhaps the subsequent ally of Hugo Chavez and neighbor Evo Morales. Then once more, most indicators level in the direction of him following the profitable, free market average stance of one other ex Communist neighbor, Brazil’s President Lula.

On the opposite facet we have now first woman turned Presidenta Cristina Fernandez de Kirchner, working Argentina. Extremely, she tried to all however ban export of one among Argentina’s main, properly, exports – beef. In fact the rich Argentine farmers are livid and are quick shopping for up Paraguayan land over the border, with excessive commodity costs and lack of export taxes (and even earnings taxes, for that matter) making the small further transport prices worthwhile.

Paraguay’s financial system in the present day remains to be laborious to evaluate, due to the massive casual sector. There may be little trade, which I see as a chance over the long run, because the nation progressively grows wealthier.

Agriculture, too, is a good alternative, within the shorter time period. Many Argentine farmers have already observed. Land costs within the Chaco have roughly doubled prior to now yr or so. Meaning they elevated from $25 to $50 per acre. Sure, you learn that proper! European and American buyers, too, have been quietly shopping for up huge tracts of virgin land not too long ago.

Listed below are a number of of the the reason why Paraguay is wanting fascinating:

o Water

What’s going to occur when the oil runs out? Individuals will discover renewable power sources. What’s going to occur when the water runs out? A number of the world’s greatest cities, for instance Los Angeles and Mexico Metropolis, are perilously wanting water already. Paraguay doesn’t have this drawback. There may be loads of water to go round, most of it in sparsely populated areas. This creates excellent circumstances for agriculture.

o Electrical energy

The Itaipu energy plant is among the seven wonders of the trendy world. It produces 14 Megawatts of energy (for comparative functions, that’s 4 instances as a lot as America’s largest coal energy plant, Plant Scherer). By way of energy, the power this monster dam creates on daily basis is equal to 433,000 barrels of oil. Besides, after all, this isn’t oil. That is inexperienced, renewable power. The overall estimated hydropower potential of the River Pirana and its upstream tributaries is 40,000 megawatts. Wow! Paraguay is already the world’s largest exporter of hydroelectric energy, however most of it’s offered to Brazil at a fraction of market worth because of cosy agreements made between corrupt politicians on either side again throughout the navy regimes of the Seventies. The brand new authorities is decided to vary this. This shall be fascinating to observe.

o Oil and Gasoline

The Bolivian territory on to the north-west of Paraguay has South America’s second largest pure fuel reserves (second to Venezuela that’s). It does not take a genius to determine that Paraguay’s northern Chaco bordering Bolivia might need related assets. And that the nation’s financial system might rework nearly in a single day with a giant discover and the beginning of economic manufacturing. The easy reality is there have been simpler areas on the earth for oil and fuel exploration and distribution, which is why after the Suez Disaster huge oil corporations like Texaco who have been searching for oil in Paraguay invested in exploration elsewhere as a substitute. However with the excessive costs of in the present day, exploration in distant areas is worth it, and expertise makes it simpler than it was a number of many years in the past. Oil and fuel corporations like Pantera Petroleum from the USA and CDS Oil and Gasoline UK are already there exploring and declare already to have recognized substantial reserves.

o Land

That is one other factor Paraguay has an abundance of. The land exists, is fertile and pure irrigation is simple. It’s virgin. There aren’t any individuals there. So no person acquired round to creating it or placing in roads. Excessive costs for soya, beef and different commodities have modified this. Argentina’s ban on beef exports has helped too… Argentinean farmers cannot export beef anymore, so they’re quietly exporting their complete beef trade with all its experience as a substitute… to Paraguay. In the meantime Brazilian farmers, damage by the robust actual, are additionally trying to scale back prices with out having to maneuver removed from their acquainted territory. The place are they headed? You guessed it – Paraguay.

o Minerals

Paraguay has established iron reserves, within the south of the nation, alongside the Paraguay River and close to the capital. It’s seemingly that there’s rather more iron within the unexplored Chaco area. As soon as once more, excessive iron ore costs are making exploration worthwhile. The brand new pleasure, nevertheless, focuses on Gold and Uranium, which have been present in Paraguay and extracted informally by locals, however is just not but commercially mined. A lot of the funding is coming from Canada, particularly the businesses Latin American Minerals, Cue Assets and Crescent Assets. Cue’s COO Chris Healey was quoted as saying final month, to Enterprise Information Americas, “Individuals are simply beginning to understand that there’s something there. There may be loads of potential for gold, most likely base metals, actually uranium.” Of the brand new authorities, he says: “They’re very eager on getting overseas funding and the brand new authorities is fairly beneficial for us.”

These developments haven’t been misplaced on world markets. The Paraguayan foreign money, the Guarani, has lengthy been the butt of jokes. However it appreciated greater than 25% towards the greenback over the previous yr. Paraguay is a twin foreign money nation. Day-to-day enterprise in Paraguay is in Guaranies, however most higher-priced objects are tagged in US {dollars}. ATM machines pay out each currencies.

Paraguay can also be very engaging as a private tax haven, as a result of the truth that it has no earnings taxes on overseas supply earnings. It’s a comparatively easy course of to amass formal residency as a foreigner, which can be utilized to cut back your tax liabilities elsewhere (relying, after all, in your private state of affairs). Then after as little as two to 3 years, you possibly can apply for a Paraguayan passport with visa-free journey to Europe and far of the remainder of the world. Twin citizenship is permitted.


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