Maquila Law encourages Brazilian companies to choose Paraguay

More than 200 Brazilian industries chose to concentrate their operations in Paraguay, motivated by the Maquila Law. This strategic tax regime allows companies to import machinery and raw materials with total tax exemption, requiring only a single tax of 1% on the final value of the product, which must be destined for export.

To join the regime, a “maquila program” must be presented to the government, detailing the operation, cost structure and projections.

Among the requirements for joining the program is the so-called productive transformation. This requirement determines that the company’s products go through some industrial process in the country, generating local value. Speaking in practical terms, this means that the industry will inevitably have to carry out steps such as cutting, assembly, sewing, finishing or industrialization in Paraguay.

Updates to the regime were recently announced, enabling the inclusion of service and technology activities, as well as new tax incentives aimed at attracting investment.

Through an announcement on the official website of the Paraguayan government, the country’s president, Santiago Peña (Colorado Party), stated that the objective “is not only to create jobs, but also to guarantee competitive salaries that allow workers to realize their dream of owning a home and provide their children with an excellent education. We are combating prejudices and demonstrating that Paraguayan talent is synonymous with global excellence.”

President Peña highlighted that the advancement of the industrial sector is not only linked to tax incentives, but also to predictability, economic stability and the qualification of the workforce. Furthermore, the government intends to adopt administrative modernization measures, including the simplification of processes and the use of technological tools to accelerate the opening of new companies.

In addition to tax advantages, businesspeople mention that cheaper labor and less bureaucratic labor laws in the country are also factors taken into consideration when deciding to operate in Paraguay. According to some experts, for many companies going to Paraguay is considered definitive.