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News Link • Economy - International

The truth about residency and citizenship in Paraguay

• www.sovereignman.com

A friend of mine here in Asuncion is a partner in one of the leading investment firms in town. We were having drinks at my hotel the other evening talking about events around the world and thinking about what might happen next.

At one point he told me, “You know, I really feel like the decline of the dollar is going to cause a lot of problems in the world– rising prices, currency imbalances, social unrest… I feel very safe here in Paraguay though because we have everything we need: food, water, and energy.”

He’s right. Paraguay, usually overlooked, really does have just about everything that it needs.  There is so much land here available for livestock or crop production, and the country sits atop one of the world’s greatest freshwater aquifers.

Meanwhile, businesses are feverishly growing alternative fuel crops, and Paraguay also boasts the largest hydroelectric facility in the world with an annual capacity of roughly 90 TWh; they use only a tiny fraction and export more than 85% to neighboring Brazil.

Paraguay’s economy has benefitted from rising commodity prices and overall regional growth… and despite the government’s occasional left-leaning saber-rattling on behalf of the rural poor, politicians generally tend to stay out of the way.

Paraguay’s tax burden (as a percentage of GDP) is among the lowest in the world at around 12%, the same as Hong Kong. It’s 28% in the US and averages 35% among OECD members.  For this reason, Paraguay is a mini tax haven… but not on anyone’s radar.

Paraguay’s individual income tax (first established in 2010, then temporarily suspended) is only 10%; it affects only the higher income earners, and it only applies to income sourced within Paraguay, not worldwide income.

I’ve read a few blogs that say Paraguay does not have an income tax. This is simply incorrect… one of the many inaccuracies I’ve been seeing lately from new monkey see, monkey do expat sites.

The Internet is both a blessing and a curse… and this is the curse– massive factual inaccuracies. The digital world has created a wiki-reality: if enough people believe it, then it must be true.

Internationalization is a rising trend and a lot of new ‘experts’ are jumping on the bandwagon. Unfortunately, this is leading to a lot of misinformation that gets recycled over and over across the blogosphere like a series of rip-off infomercials.

Here’s the truth– establishing a second residency overseas is a great idea; it ensures that you have a place to go should you ever need to leave your home country, and it can even lead to an eventual second passport. Note: “second residency” doesn’t necessarily mean that you have to spend time there.

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