PARAGUAY LAW AND PRACTICE Contributed by: Manuel Arias, Carla Sosa, Martin Carlevaro, Milena Sljivich, Alexander Berkemeyer and Antonio Villa Berkemeyer, BKM - Berkemeyer
• transfer of profits – it is permissible to transfer tax benefits to new owners during sale or restructuring, under certain conditions. Eligibility Legal entities and sole proprietorships, national or foreign, can join if they are legally constituted. An investment project must be submitted to the Minis - try of Industry and Commerce (MIC) for Bi-Ministerial Resolution approval. Compliance with tax and labour obligations and an Environmental Impact Statement are required. Projects worth more than USD13 million need a technical report from registered local consult - ants. New national policy for the production and assembly of electrical, electronic, electromechanical and digital equipment – Law No 7546/2025 This new policy creates a specific regime for manu - facturing and assembling electrical, electronic, elec - tromechanical and digital equipment within Paraguay. Key aspects include the following: • a customs tax exemption on imports of capital goods and materials (excluding service fees); • a customs tax exemption and 1.5% import VAT for the import of materials; • the local purchase of materials with 1.5% VAT and 4.5% on the circulation of all produced and assem - bled goods; • a 20-year term for benefits, extendable for an equal period; and • a dual monitoring system (on-site and off-site) with scalable corrective actions up to benefit revoca - tion. Additional Framework Investments – Law 117/91 Law 117/91 is designed to promote the social and economic development of Paraguay by ensuring equality between domestic and foreign investments. The key provisions of the Law are as follows: • equal treatment is guaranteed for all investors; • investors can obtain investment insurance at both local and international levels;
• it establishes the requirements for the incorpora - tion of joint ventures; and • it allows parties to submit disputes to national and international arbitration. Investment Guarantee – Law 5542/15 Law 5542/15 aims to create a stable and secure envi - ronment for investments by providing robust protec - tion and incentives. The key provisions of the Law are as follows: • it safeguards investors’ rights and interests; • it mandates the application of the most advanta - geous exchange rate for the transfer of capital and profits; and • it offers fixed income tax rates for up to 20 years. Free Trade Zone – Law 523/95 Law 523/95 aims to stimulate economic growth by promoting investment, job creation, exports and inter - national trade through the establishment of free trade zones (FTZs). The key provisions of the Law are as follows: • it exempts businesses operating within FTZs from national, departmental and municipal taxes; • it imposes a 0.5% tax on the total income value of sales to developing countries; and • it exempts partners of companies generating income tax under the free trade zone tax from income tax on those profits. These laws collectively create a favourable investment climate in Paraguay, offering a range of incentives and protections to attract and retain both domestic and foreign investors. 2. Recent Developments and Market Trends 2.1 Current Economic, Political and Business Climate Paraguay enjoys economic and political stability. A significant development is the new Capital Markets and Products Law (Law No 7572/2025), a comprehen - sive regulatory framework modernising and unifying capital and products markets.
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