The Government of Paraguay has recently implemented the Decree (No. 2063/24) of the Shopping Tourism Regime (RTC), which regulates the import and marketing of certain goods to foreign individuals not domiciled in the country, that is, tourists.

A notable aspect of this decree is its article 12, which modifies the Compensatory Remuneration provided for in article 5 of Decree No. 4212/2015 on Compensatory Remuneration for Private Copying, regulating Law 1328/98 on Copyright and Related Rights. This change establishes that the amount of remuneration will be 0.5% on 50% of the value of entry into the national territory of the products and devices subject to said payment, when they are entered under the RTC.

The modification has been interpreted by Paraguayan authors and collective management entities of Intellectual Rights as a significant decrease in royalties, which could affect authors and record labels in the country, since it translates into a 50% reduction of current royalties.

The article in question establishes a modification in the way in which the Compensatory Remuneration is calculated for certain products and devices imported under the Shopping Tourism Regime (RTC). Here is the detailed explanation contained in the decree:

“It is hereby established that the amount of the Compensatory Remuneration provided for in numeral 1) of article 5 of Decree No. 4212/2015, “By which Chapter IV “On compensatory remuneration rights” of Law No. 1328/1998, “On copyright and related rights” is regulated and Decree No. 6780/2011 is repealed”, will be zero point five percent (0.5%) on fifty percent (50%) of the value of entry into the national territory of the products and devices subject to the payment of said emolument and entered under the RTC.”.

What is Compensatory Remuneration?:

A type of payment made to compensate authors and copyright holders for the use of their works. This payment is typically applied to products and devices that can be used to reproduce, copy, or store copyrighted works, such as electronic devices.

Modification of calculation:

According to the new decree, the amount of this Compensatory Remuneration will be 0.5% (zero point five percent).

Reduced Calculation Base:

This 0.5% will not be applied to the total value of the product, but to 50% (fifty percent) of the value of entry into the national territory of the products and devices.

Application under the RTC:

The modification applies specifically to products and devices that are brought into the country under the Shopping Tourism Regime (RTC).

Practical example:

Suppose a device has an entry value into the national territory of $100. Under the new provision:

Reduced Calculation Base: the value on which the Compensatory Remuneration is calculated would be 50% of $100, that is, $50.

Percentage Applied: 0.5% is applied to those $50, resulting in a Compensatory Remuneration of $0.25.

Impact:

For authors and rights holders, this provision may result in a significant reduction in the income they receive from Compensatory Remuneration, since both the calculation base (only 50% of the value) and the percentage applied (0.5%) are reduced.

For Importers and Traders, the measure can reduce the costs associated with importing these products under the RTC, making them more competitive.

In summary, Decree No. 2063/24 introduces important modifications to promote shopping tourism, reducing operating costs for companies and offering tax incentives. However, it also poses challenges for copyright and compensation to domestic creators, as it adjusts the way Compensatory Remuneration is calculated by reducing both the calculation base and the percentage applied, which could have significant implications for both copyright holders and importers operating under the RTC.

If you are interested in receiving more information regarding this matter, contact us at infoparaguay@clarkemodet.com.