Paraguay’s Maquila Regime: What Law 7,547/2025 Changed
A single 1% tax, no dividends tax and no withholding on remittances — but the regime gained a maximum term and now formally recognises service maquila.
Almost all available coverage of Paraguay’s maquila regime describes Law No. 1,064/97 as though it had remained untouched since its implementing rules in 2000.
It has not. In 2025 Paraguay enacted a package of three laws that modernised precisely this regime — and which, as at the date of this article, still does not appear in most available content: Law No. 7,547/2025 (maquila modernisation), Law No. 7,546/2025 (a new assembly regime) and Law No. 7,548/2025 (which replaced the old Law 60/90).
This article maps what stayed the same and what changed.
What the regime has always offered
Maquila, regulated since 1997 by Law 1,064/97 and implemented in 2000, allows a company domiciled in Paraguay (the maquiladora) to process goods or services of foreign origin, imported temporarily, combining them with domestic labour and inputs, exclusively for export — under a maquila contract with a parent company domiciled abroad.
The pillars of the tax regime, retained by the 2025 reform:
- A single 1% tax on value added in national territory, or on the export invoice value — whichever is higher — replacing all other domestic taxes on the operation.
- Suspension of import taxes: inputs, machinery and equipment enter under temporary admission, with no customs duties or VAT.
- IDU exemption: profits distributed by the maquiladora are exempt from the Dividends and Profits Tax — because the regime already taxes, exclusively, only the 1% on value added.
- Non-resident income tax exemption: payments abroad made by the maquiladora — to the parent or to non-resident suppliers — are not subject to withholding.
- VAT recovery: input VAT on local purchases can be recovered, in the form of endorsable and tradable credits.
The regime coexists with the Free Trade Zone regime (Law 523/95) and with the new general incentives regime (Law 7,548/2025) — it falls to the investor to assess, project by project, which instrument fits best.
Before and after: what Law 7,547/2025 changed
| Dimension | Law 1,064/97 (original regime) | Law 7,547/2025 (in force) |
|---|---|---|
| Service maquila | Accepted in practice, but with no regulatory definition of its own | Express definition, covering outsourcing, software, call centres and digital processes destined abroad |
| Duration of benefits | No time limit set | Maximum term of 20 years, renewable |
| VAT credit refund in service maquila | Not expressly provided for | Provided for, capped at 0.5% of turnover or national value added (whichever is higher), excluding professional fees |
| Donation of obsolete regime assets | No specific treatment | Exempt from nationalisation taxes when donated to non-profit entities or public institutions with an educational purpose |
| Operating models | Maquila and sub-maquila contracts | Express recognition of models such as the shelter (a Paraguayan company acting as a platform for foreign projects) and idle-capacity maquila |
| Supervision | National Council of Maquiladora Industries (CNIME) | Reinforced electronic control mechanisms, with a DNIT representative added to CNIME |
Context worth noting: exports under the maquila regime hit a historic record in 2024, concentrated in auto parts, textiles, food, aluminium, plastics and pharmaceuticals — with most maquiladoras located near the Brazilian border, the destination of more than half the regime’s exports.
Note on scope: to access the regime, the investor must submit a Maquila Programme to the competent authority, setting out the activity, the goods or services to be exported, the planned investment, the jobs to be created and the infrastructure required. Approval of the programme is a precondition of the benefits. The implementing detail for the newest models — shelter and idle capacity in particular — was still bedding in operationally at the last verification.
The new Assembly Law (Law No. 7,546/2025)
Alongside the maquila modernisation, Paraguay created a dedicated assembly regime with Law No. 7,546/2025 — aimed at goods assembly activity that does not fit precisely within maquila’s classic export logic. It is a new, complementary instrument whose implementing rules and detailed access criteria remain in consolidation.
How this fits the wider incentives picture
Following the 2025 package, an investor assessing Paraguay for an industrial or export services project now has four instruments to compare: maquila (Law 7,547/2025), assembly (Law 7,546/2025), free trade zones (Law 523/95) and the general incentives regime that replaced Law 60/90 (Law 7,548/2025). The right choice depends on the sector, the destination market and the project’s corporate structure — there is no single answer.
Frequently asked questions
Is maquila still governed by the original Law 1,064/97?
The original law remains in force as the base, but it was substantially modernised by Law No. 7,547/2025 — which introduced a maximum term for benefits, recognition of service maquila and new operating models.
Do maquila benefits last indefinitely?
Not any more. Under Law 7,547/2025, benefits run for a maximum of 20 years, renewable — unlike the original regime, which set no term.
Is service maquila (software, call centres) officially recognised?
Yes, since Law 7,547/2025, which introduced an express definition for that category — something the original law did not spell out.
Are maquila and the new incentives regime (the former Law 60/90) the same thing?
No. They are distinct and complementary regimes — Law 7,548/2025 replaced Law 60/90 as the general investment incentives regime, while maquila (Law 7,547/2025) remains the specific instrument for production or services destined for export.
How to verify for yourself
- Law No. 1,064/97 and Law No. 7,547/2025 — Biblioteca y Archivo Central del Congreso Nacional (BACN).
- Law No. 7,546/2025 (Assembly) — BACN.
- Official Maquila Regime factsheet — Ministry of Industry and Commerce (MIC) and REDIEX.
The starting point
The maquila regime remains one of the most competitive instruments in the region for exporting from Paraguay — but in 2026 it is no longer the regime of 1997. A maximum term, recognised service maquila and new operating models change the calculation for anyone deciding where to site an industrial or services operation aimed at foreign markets.
One conversation is enough to know whether it makes sense to proceed.
Informational content. It does not constitute legal, tax or investment advice. The rules cited were verified against the official sources indicated in July 2026 and may be amended or further regulated. Individual situations produce different outcomes and should be analysed case by case.