PARAGUAY Law and Practice Contributed by: Mauro Mascareño, Carlos Vargas and Rodrigo Gómez Sánchez, Mascareño Vargas – Asesores
2.2 Technology Investments Paraguay does not offer a specific patent box regime or any specialised R&D tax incentives akin to those in other jurisdictions. Consequently, there is no direct preferential treatment for royalties stemming from pat - ents or for in-country R&D expenditures. However, as tax law is currently written, the assign - ment of the use of patents, trade marks and rights by a Paraguayan entity that takes place exclusively abroad is not subject to IRE, so it could be understood as a patent box. However, the law does not conceive it as such. Therefore, the transfer of rights, trade marks and pat - ents exploited exclusively abroad is not subject to IRE. Nonetheless, when the company pays its sharehold - ers dividends, there will be IDU to pay, according to the applicable rate, depending on the residence of the partners. However, general investment incentives (not uniquely tech-focused) can apply if a project meets the relevant criteria. For instance, under Law No 60/90, intangible assets such as technology or software may be rec - ognised as eligible investments, potentially benefiting from import tax exemptions or other concessions if approved as part of an overall project. Additionally, Law No 1064/97 (the maquila regime) can offer low effective tax rates for industrial processes or tech-enabled manufacturing geared towards export, although it is not limited to R&D activities. These broader mechanisms may help reduce the tax bur - den for tech-oriented companies, but Paraguay does not currently have a dedicated scheme specifically targeting R&D or patent income. 2.3 Special Incentives Investment Incentives (Law No 7548/25) Paraguay recently enacted a new investment incentive regime designed to modernise and replace the tra - ditional framework established under Law No 60/90. The new legislation aims to attract large-scale produc - tive investment through a combination of tax exemp - tions and financing incentives.
Qualifying investment projects may obtain exemptions from customs duties and VAT on the importation of capital goods, machinery and equipment required for the productive process. In certain cases, raw materi - als and inputs used in the manufacturing of capital goods may also benefit from tax relief. For large investment projects meeting specific thresh - olds (eg, investments of at least USD13 million), additional incentives may apply. These may include exemption from the IDU for a period of up to ten years, as well as exemption from withholding tax ( impuesto a la renta de No residente s – INR) on interest and commissions arising from foreign financing used to fund the project. Benefits are granted on a case-by-case basis through a bi-ministerial resolution approving the investment project. The regime also introduces enhanced moni - toring mechanisms and certain holding requirements for capital goods benefiting from tax incentives. Maquila Regime (Law No 7547/25) Companies operating under Paraguay’s maquila regime are subject to a single tax of 1% calculated on the greater of the local value added or the value of monthly exports. The updated regulatory framework explicitly recog - nises maquila of services, which may be particularly relevant for technology-driven activities and export- oriented service platforms. In addition to the 1% tax, maquila operations benefit from broad tax relief in relation to imports of inputs and capital goods used in export-oriented production processes. The regime continues to be one of Paraguay’s most widely used investment platforms for manufacturing and export services. Electrical, Electronic and Digital Equipment Regime (Law No 7546/25) Law No 7546/2025 establishes a special regime to promote the production and assembly of electrical, electronic, electromechanical and digital equipment in Paraguay. The regime grants tax incentives including exemptions from customs duties and VAT on imported capital goods and certain production inputs, as well as VAT relief on locally acquired capital goods used in the
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