Key incentives include exemptions on customs duties, VAT, nonresident income tax, and dividend/profit tax for substantial investments in capital goods, industrial or agricultural production, and large-scale tourism or entertainment projects, subject to specified thresholds and investor criteria.

Paraguay has published Law No. 7548/25 in the Official Gazette on 8 September 2025, introducing new tax incentives for domestic and foreign investments, which updates and consolidates the provisions of Decree-Law No. 27/90 and Law No. 60/90.

The key provision of incentives are:

VAT relief

  • Domestic capital goods: Sales of locally produced capital goods that are directly used in the production process are exempt from VAT.
  • Imported capital goods: Importation of capital goods for industrial or agricultural purposes is also exempt from VAT.

Dividend and profit tax exemption (IDU) 

Investors who contribute at least USD 13 million and are domiciled outside low- or no-tax jurisdictions can benefit from a 10-year exemption on dividend and profit taxes (IDU) from the first generation of dividends, as long as the dividend tax cannot be credited in the investor’s home country.

Investors seeking these benefits must submit their project to the Investment Council, which includes representatives from Ministries of Industry and Commerce (MIC), Economy and Finance (MEF), Agriculture, and Labor; the Central Bank; DNIT (the National Tax Revenue Directorate); FEPRINCO (the Federation of Production, Industry and Commerce); and UIP (the Paraguayan Industrial Union).

Customs duty benefits

Capital goods and raw materials used to manufacture capital goods are eligible for exemption from customs duties.

Special incentives for tourism and entertainment projects

Large-scale tourism and entertainment investments of USD 20 million or more will have both customs and VAT exemptions on imported capital goods.

Exemption on financial charges

Nonresident income tax (INR) does not apply to financial charges sent abroad, provided the investment is at least USD 13 million and the lender is a recognized international financial institution.

The Council reviews the project within 60 days, after which the MIC and MEF will issue a biministerial resolution within 15 days based on the Council’s recommendation.

Law No. 7548/25 took effect immediately upon publication.