Draft amendment to Law No. 4,457/12 for MSMEs – Brief analysis.

The draft amendment to Law No. 4,457/12 for MSMEs introduces significant changes to several articles of said legislation; some are repealed and others are expanded, thus aiming to optimize the regulatory framework for micro, small and medium-sized enterprises (MSMEs) in Paraguay. Among the most relevant changes is the redefinition of the categorization of MSMEs, which would now be based on updated criteria for billing and assets, in addition to the number of employees.

This new categorization establishes turnover thresholds and, in the case of newly created companies, places considerable emphasis on the amount of assets. This more flexible classification seeks to better adapt to the economic reality of each company and allows micro, small and medium-sized companies to opt for specific incentives and benefits according to their size and productive capacity. The categorization will be updated by the Ministry of Industry and Commerce (MIC) based on the parameters defined in the project, ensuring that MSMEs maintain the appropriate category for access to benefits.

On the other hand, the National Registry of MSMEs (RENAMIPYMES) is established, which centralizes and categorizes all MSMEs registered in the country. This database will be integrated and updated in real time through collaboration between the Ministry of Industry and Commerce (MIC), DNIT, the Social Security Institute (IPS) and the Ministry of Labor. The creation of RENAMIPYMES facilitates the formalization and supervision of companies, while ensuring agile and centralized access to the benefits provided by law.

Regarding financing, the project establishes a minimum annual budget support equivalent to 15,000 (fifteen thousand) minimum wages within the General Budget of the Nation, intended to meet the financing needs, technical cooperation and other requirements of MSMEs within the framework of the aforementioned law. The National Fund for MSMEs (FONAMIPYME) is created, an autonomous fund that will allow channeling financial resources through trusts and other instruments managed by the Vice Ministry of MSMEs. FONAMIPYME will function as an exclusive and cumulative asset each year, which may receive additional contributions from public and private entities, both national and international.

Regarding tax incentives, the bill proposes that microenterprises with MIPYMES registration be exempt from all mandatory fees during their first three years of operation. Starting in the fourth year, microenterprises will be able to access a 75% discount on fees for government services, while small businesses will receive a 50% discount. This benefit includes exemption from the municipal business license during the first three years for microenterprises and progressive discounts for small businesses based on their age.

From the labor point of view, a special contracting regime is introduced for micro and small businesses. The conclusion of fixed-term contracts of up to 12 (twelve) months will be permitted, with the possibility of renewing said contracts for a maximum of 36 (thirty-six) months without the obligation of notice or compensation upon expiration. After this period, micro businesses will be able to pay salaries equivalent to 80% of the minimum wage. In addition, the inclusion of employees in the Single Worker Registry and the presentation of any contract extension to the labor authority in advance is required.

These reforms aim to strengthen the competitiveness and formalization of MSMEs in Paraguay, facilitating their access to financing, reducing tax burdens and simplifying their operations within the formal economy.