ASUNCIÓN, PARAGUAY – Asunción City Hall has achieved a remarkable 40% increase in tax revenue compared to the same period last year, following the recent public release of a large list of delinquent taxpayers. The city stated that this measure prompted many taxpayers to come forward and pay their overdue taxes.
Agustina Román, the Director of Revenue at Asunción City Hall, announced that the city's tax revenue increased by 40% when comparing June 2024 to June 2025. This is seen as a positive sign for the stabilization of the city's finances.
Director Román emphasized, "After the publication of the extensive list of delinquent taxpayers, a significant number of citizens visited City Hall to pay their outstanding taxes and resolve their delinquency issues." This suggests that the public disclosure of names can be an effective tool to encourage compliance with tax obligations.
However, despite this increase in tax revenue, Director Román added, "It is still not enough to cover all the city's obligations and responsibilities," indicating that financial difficulties persist.
5 Trillion Guaraníes in Uncollected Taxes, Tax Exemption Benefit Controversy
Asunción City currently holds approximately 5 trillion Guaraníes (approximately 900 billion Korean Won) in uncollected taxes, accumulated since 2020. Director Román explained that a significant portion of these uncollected taxes is related to property tax exemptions granted to certain types of real estate, such as sports clubs and churches, under Paraguayan Tax Law 125/91.
While these exemption benefits are intended to encourage the activities of these organizations, there are criticisms that they simultaneously weaken the city's tax base. Especially with the accumulation of a large amount of uncollected taxes, the appropriateness of these exemption benefits is expected to become an increasing point of contention.
Tax Statute of Limitations: Requires Application, Not Automatic Expiration
Some have raised questions about the possibility of long-overdue taxes automatically expiring due to the statute of limitations. In response, Director Román clearly stated, "The expiration of the tax statute of limitations is not an automatic process; taxpayers must apply for it directly."
She added, "This year, applications for tax statute of limitations expiration are possible for taxes up to 2019. If there were no notifications, actions, or business closure measures, then under current law, it would take another five years for the statute of limitations to expire." This indicates that the city is actively pursuing the collection of overdue taxes.
Commercial Patent Arrears Issue: "30,000 out of 60,000 Unused for Over 10 Years"
Carlos Ferreira, a temporary auditor recently dispatched to Asunción City, caused a stir by revealing in an interview with Radio Monumental that significant arrears related to commercial patents have been discovered.
Director Román explained in this regard, "Approximately 60,000 commercial patents are registered in Asunción City, and 30,000 of them are currently suspended." Most of the suspended commercial patents are for businesses that have not had any activity for over 10 years, which likely means these businesses no longer exist. Only 39,000 commercial patents are currently active.
This highlights the need for the city to effectively manage uncollected taxes related to commercial patents and to promptly clear out those for businesses that are no longer operating. Furthermore, uncollected taxes on commercial patents with no active business are likely to be little more than 'book value' that is difficult to recover, and this should be considered when assessing the city's true financial health.
Continued Efforts Required to Secure City's Financial Soundness
This increase in tax revenue can be seen as an important step for Asunción City in securing its financial soundness. Aggressive measures like publishing the list of delinquent taxpayers appear to have positively impacted tax revenue.
However, the accumulated 5 trillion Guaraníes in uncollected taxes and the significant potential losses related to commercial patents still place a heavy burden on the city's finances. Furthermore, the controversy surrounding tax exemption benefits for certain organizations could lead to future discussions about amendments to the city's tax laws.
Building on this increase in tax revenue, Asunción City should continue its multifaceted efforts to establish a more transparent and efficient tax collection system and achieve long-term financial stabilization. It seems crucial to secure the city's financial soundness by effectively recovering overdue taxes, along with reducing unnecessary expenditures and improving the quality of services provided to citizens.
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