Historic Tax Reduction Approved for 685 Hectares in Asunción's Historic Center

The "Tax Balance" ordinance, approved by the Municipality of Asunción, introduces a reduction of up to 52% in property taxes and additional benefits for heritage properties, with the aim of stimulating investment, restoring the old town, and promoting the repopulation of the downtown area.

The recent approval of the "Tax Balance Project" marks a turning point in the revitalization of downtown Asunción. Promoted by the Asunción 500 Years Commission—led by the Office of the First Lady in close coordination with the Municipality of Asunción—the initiative introduces a reduction of up to 52% in the property tax applicable to numerous properties in the historic center, in addition to an additional 5% reduction in the construction tax for buildings classified as heritage sites. This measure, considered the most significant tax measure in recent years for the historic center, seeks to encourage investment, restore the value of the architectural heritage, and promote the repopulation of the area.

The agreement is the result of more than six months of technical and collaborative work between various institutions, resulting in the presentation and subsequent approval of the municipal ordinance creating the new Urban Zone 16 (U16). This decision unifies the former tax zones U05, U06, and U11 under a single, more balanced tax regime consistent with current market values. Scheduled to come into effect in 2026, the ordinance establishes a revised tax base that corrects distortions accumulated over decades and allows for a fairer redistribution of tax burdens within the historic center.

According to architect Omar Cubas Fanego, executive director of the Historic Center of Asunción, the project seeks to reverse a process of "urban, social, and economic degradation" resulting from low property tax collection and a significant number of abandoned or underutilized properties. The proposal aims to reactivate the 490 hectares that make up the historic center—with approximately 2,696 lots—and the 195 hectares of buffer zone—which includes approximately 3,366 lots—initiating this process through a substantial reduction in the tax burden.

Before the reform, tax values in the downtown area were outdated and fragmented. The average payment was around 540,000 G per square meter, a figure that did not reflect the market reality. With the creation of Urban Tax Zone 16 (ZU16), a new base was established equivalent to that of ZU7, with a value of 257,795 G per square meter. This adjustment will allow property owners in the core area of the historic center to see reductions ranging from 50% to 52%, while in the buffer zone the decrease will be between 30% and 33%.

Map delineating the Historic Center of Asunción, distinguishing the core area and the buffer zone included in the new Urban Zone 16 (U16).

The project also introduces specific incentives for heritage properties recognized by the National Secretariat of Culture. Those in good structural condition will receive an additional 25% discount on the building's value. At the same time, the Municipality will be able to grant exemptions of up to 12% on certain municipal taxes for owners who submit restoration projects for abandoned buildings, thus stimulating building restoration and the reactivation of construction activity in the area.

The proposal also includes a progressive tax equalization plan in other areas of Asunción, especially in highly developed real estate and commercial areas, with the goal of balancing tax rates between sectors with different urban dynamics. Architect Justo Martínez, coordinator of the Historic Center, illustrated the current disparity by pointing out that a downtown building of less than 300 m² could pay an estimated annual tax of 30 million guarantors, while a 500 m² home in the Mburucuyá neighborhood was valued at just 190,000 guarantors per square meter. This gap, which reflected an outdated tax structure, will be gradually addressed through new adjustment criteria.

To ensure the regular updating of these values, the ordinance incorporates a five-year review mechanism that will allow for a re-examination of tax trends every five years. Cubas Fanego recalled that the last tax assessment in the area had been conducted for more than three decades, which contributed to the loss of competitiveness of the downtown area compared to other areas of the city.

The approval of the "Tax Balance Project" ultimately represents a decisive step toward a fiscal policy that supports the vision of a more inclusive, heritage-responsible, and urban-planning balanced Asunción. By reducing taxes, encouraging private investment, and creating more equitable conditions for urban development, the municipality seeks not only to recover the splendor of the historic center but also to position it as an attractive area for living, investing, and conservation. The measure lays the foundation for a structural transformation that could mark the beginning of a new era for the historic heart of the Paraguayan capital.