PARAGUAY Trends and Developments Contributed by: Mauro Mascareño, Carlos Vargas and Rodrigo Gómez Sánchez, Mascareño Vargas – Asesores
the authorised maquila programme and the contractu - al arrangements with the foreign contracting entity. In this context, services are generally determined within the framework of the approved programme, and the transfer pricing rules applicable to related-party trans - actions under the general tax regime may not apply in the same manner as they would for companies oper - ating outside the maquila system. Recent reforms have further modernised the maquila framework and clarified its applicability to service- based activities. As a result, companies providing services to foreign clients, including software devel - opment, information technology services, business process outsourcing and other technology-enabled services, may structure their operations under maquil a programmes where the services are rendered to for - eign markets and generate local value added. From the perspective of cross-border service exports, the maquila regime provides a particularly competi - tive framework. By combining a simplified regula - tory structure with a single tax applied at a low rate, the regime has increasingly attracted attention from investors exploring Paraguay as a potential location for export-oriented service operations. Conclusion The growing importance of cross-border services is reshaping how companies organise their operations and allocate economic activities across jurisdictions. Business models based on digital platforms, remote work and regional service centres increasingly require tax frameworks capable of accommodating geo - graphically distributed activities. Paraguay’s tax system offers a distinctive struc - ture in this context. Its predominantly source-based approach to taxation, combined with moderate cor - porate tax rates, shareholder-level taxation primarily upon distribution and the absence of CFC rules, cre - ates a framework that differs in important respects from the worldwide taxation models commonly found in many jurisdictions.
In addition, the evolution of the maquila regime, par - ticularly its extension to service-based activities, pro - vides a specialised mechanism designed specifically to support export-oriented operations. The availability of a simplified tax structure based on a single maquila tax has further strengthened Paraguay’s position as a potential location for companies providing services to foreign markets. As cross-border service activities continue to expand, these structural characteristics may increasingly attract attention from investors evaluating alterna - tive jurisdictions for outsourcing operations, shared service centres and technology-enabled service plat - forms. In this evolving landscape, Paraguay’s tax framework may play a growing role in supporting export-oriented service activities within the region. At the same time, as Paraguay continues to position itself as a platform for cross-border service activities, further alignment with certain emerging international standards may help strengthen this trajectory. In par - ticular, the effective implementation of the recently adopted data protection framework, continued inte - gration with modern international payment platforms and financial infrastructure, and greater regulatory clarity in areas such as digital assets and cryptocur - rency transactions may become increasingly relevant as service-based and technology-driven business models expand. Addressing these aspects in a grad - ual and pragmatic manner could further support Para - guay’s efforts to consolidate its role in the evolving global landscape of cross-border services.
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