Two companies, the same benefit, opposite results. What has changed in the regime, why now is the time to act, and where the risks lie that almost no one sees before crossing the border.

By Priscila Campos — CEO of Grupo International | Specialist in International Corporate and Tax Structuring

Imagine two Brazilian business owners.

Same industry. Similar revenue. Both choose Paraguay, obtain approval for a maquila program, and begin paying the 1% single tax. On the spreadsheet, the savings are identical.

Three years later, the first is moving a second product line across the border and negotiating the entry of an investor into the group.

The second is trying to explain why the product lost its zero-tariff status in Brazil, why the prices charged in transactions with its own parent company became the subject of tax scrutiny, and why the promised savings never reached the shareholders’ accounts.

The law was the same. The benefit was the same. The country was the same.

The difference lay in five decisions made before the company even existed.

This article is about those decisions and why 2026 is the year they have become more important than ever.

Paraguay Is No Longer a Trend. It Has Become an Industrial Extension of Brazil.

Official figures from Paraguay’s Ministry of Industry and Commerce show the scale of this movement:

• US$1.309 billion exported under the Maquila Regime in 2025, an all-time record.
• US$717 million in the first half of 2026, 25% above the same period of the previous year.
• 78% of exports go to Mercosur; Brazil alone accounts for 62%.
• More than 36,000 direct jobs under the regime.
• Of the 339 companies operating under the maquila regime as of December 2025, 231 were Brazilian, nearly seven out of ten.

Paraguay has become an established route. But a route is not a strategy. And the market is full of people selling “company formation in Paraguay” as though it were an off-the-shelf product.

What Has Changed: A More Modern and More Demanding Regime
For nearly 30 years, Paraguay’s maquila regime operated under Law No. 1,064/1997. That cycle has ended.

• Law  nº. 7,547/2025, enacted in September 2025, completely replaced the previous regime.
• Decree  nº. 5,714/2026, issued in April, regulated operating arrangements, current accounts, temporary imports, guarantees, IFRS accounting, and, for the first time, criteria for inadmissibility.
• SE-CNIME Resolution  nº. 14/2026 established the procedures and documentation required for approval through the SIMEX system.

Three changes deserve the attention of any board of directors:

1. Services maquila has emerged. Technology, software, customer service, back-office operations, and exportable professional services are now eligible under the regime.

2. Programs are valid for up to 20 years and are renewable. This provides predictability for businesses that need to amortize investments.

3. The regime has become more selective. Companies with outstanding tax, labor, or social security obligations, or projects without genuine transformation activities, are not eligible.

The Paraguayan government’s message is clear: the country wants added value, skilled employment, and technology. Those who view maquila as a tax shortcut will encounter an increasingly less tolerant regime.

Why Now: The Clock Is Ticking on Brazil’s Tax Reform
While Paraguay simplifies its system, Brazil is entering the largest tax transition in its history. The effective collection of CBS, which replaces PIS and Cofins, begins in 2027. IBS enters its transition phase in 2029, and ICMS and ISS are expected to be phased out by 2033.

These will be years in which two systems coexist, with overlapping compliance obligations. And there is a sensitive issue for labor-intensive companies: payroll does not generate tax credits in the same way as taxed inputs.

For this reason, more and more corporate groups are adopting a hybrid model, keeping part of the production chain in Brazil and moving specific stages to Paraguay. This is not about leaving Brazil. It is about redesigning the value chain to compete.

And it is precisely in this redesign that the risk lies.

The Benefit Is Simple. The Equation Is Not.
On the surface, the rule is straightforward: the maquila company pays a single 1% tax that replaces corporate income tax, dividend tax, and nonresident income tax on income generated under the program. Inputs and machinery enter with taxes suspended, and VAT on local purchases can be recovered.

But the 1% is not levied on a fixed amount. It applies to the higher of two values, one of which is determined by how the Paraguayan operation relates to the buyer of its products.

When the buyer is the Brazilian parent company itself, that calculation becomes relevant to two tax authorities simultaneously.

This is where the benefit stops being merely a tax matter and becomes a structural one.

The 5 Decisions That Separate Profit from Liability

Over more than two decades leading hundreds of business operations in Brazil and abroad, I have learned that every successful project in Paraguay resolves five decisions before incorporation.

None of them appear in the brochure of those selling “ready-made companies.”

Decision 1 — Corporate Architecture

EAS, SRL, or SA. One can be established online in just a few days; another requires a public deed; another offers more robust governance.

Most business owners choose based on how quickly the company can be established.

The mistake is choosing the legal entity before deciding who owns whom: where the parent company will be located, whether there will be a holding company, in which country, how the ultimate beneficial owners will be identified, and how a future investor will enter the structure.

A wrong decision here cannot be corrected with a simple amendment. It requires an entire corporate restructuring.

The risk: A company that operates but cannot be sold, capitalized, or transferred through succession without significant costs.

Decision 2 — The Border Has Two Tax Authorities
The 1% addresses the Paraguayan side. The Brazilian side continues to exist, interacting with the neighboring operation invoice by invoice.

Brazilian transfer pricing rules changed significantly with Law No. 14,596/2023.

Profits earned by foreign subsidiaries and the way those profits reach shareholders are subject to specific tax treatment.

Many structures established before 2024 have still not been reviewed in light of these changes.

The risk: Saving money in Paraguay only to pay the price through tax penalties in Brazil.

Decision 3 — The Number 40
Selling to Brazil at a zero tariff depends on a Mercosur certificate of origin.

And Paraguay has one of the bloc’s most underestimated advantages: with 40% regional value added, products may incorporate up to 60% of inputs originating outside Mercosur, with this treatment guaranteed until 2038.

For supply chains that depend on Asian inputs, this changes the game.

But that percentage must be achieved and documented, and the method for reaching it must be designed into the operation’s cost structure, not addressed after the factory is ready.

The risk: An efficient factory producing a product that reaches Brazil at a higher cost than it should.

Decision 4 — Genuine Economic Substance
Maquila is not merely a registered business address. It involves processes, people, and controls.

The regime requires IFRS accounting, a computerized current account within SIMEX, technical coefficients certified by the INTN, guarantees before the DNIT, and quarterly investment and employment reports.

Labor costs are competitive, with a minimum wage of Gs. 3,044,000 and an employer contribution of 16.5% to the IPS.

However, hiring rules, severance obligations, and special employee protections are specific to Paraguay and do not accommodate businesses that simply import the logic of Brazil’s CLT labor legislation.

The risk: An operation that cannot withstand its first audit in either country.

Decision 5 — The Clock
The countdown begins on the day of approval: 180 days for one stage, 18 months for another, deadlines for the permitted stay of inputs, and time limits on tax suspensions.

Penalties range from warnings to fines of up to 100 minimum wages and cancellation of the program.

The risk: Losing the benefit not because the company was ineligible, but because of inadequate management.

The Question I Ask Before All Others
When a business owner approaches me saying, “I want to open a company in Paraguay,” I do not start with the corporate structure, the city, or the timeline.

I start with a single question.

The answer organizes all five decisions at once: it determines the legal entity, the holding company’s position, the pricing structure between the two countries, the path to achieving the 40% requirement, and the flow of profits to shareholders.

I will not reveal that question here.

Not because it is a secret, but because it only has value when applied to a real business, with real numbers.

Answered in isolation, it leads directly down the path taken by the second business owner in this article.

The Opportunity Almost No One Noticed
While the market is still thinking about factories, the new law has quietly opened another door: services maquila.

No industrial registration, no certification of technical coefficients, export invoices without VAT, and the same single 1% tax.

In 2025, services exported under the maquila regime had already reached US$47 million, even before the regulatory framework was fully implemented.

Very few Brazilian technology and shared services groups have structured their operations to take advantage of this opportunity.

Those who arrive first, with the right corporate architecture, will operate with an advantage that competitors will take years to match.

Take the Test: Is Your Operation Ready?
1. Do you know the exact amount on which your 1% tax will be calculated — and who determines that amount?
2. Can your pricing arrangements between Brazil and Paraguay withstand scrutiny under the rules introduced in 2024?
3. Does your product meet — and can you prove — the percentage required to qualify for zero tariffs?
4. Do you know which stage of your value chain should move to Paraguay and which should remain in Brazil?
5. Do you know how the profits generated there will reach you here, efficiently and securely?
6. Does your corporate structure allow you to sell, capitalize, or transfer the operation through succession in the future?

If you answered “I don’t know” to two or more questions, your company is not yet ready to be established.

It is ready to be structured.

The Benefit Is in the Law. The Result Is in the Structure.
Paraguay currently offers one of the most competitive combinations on the continent: a single 1% tax, preferential access to Mercosur, renewable energy, competitive labor costs, and a recently modernized legal framework.

None of these benefits works in isolation.

The business owner who will capitalize on this moment is not the one who establishes a company the fastest. It is the one who makes the five right decisions before doing so.

This is the central theme of my book: how planning, tax expertise, and corporate organization transform tax benefits into secure, efficient, and sustainable operations.

“Knowing how to establish a company is only the beginning. Knowing how to structure it is what determines its security, efficiency, and ability to grow.”

This content is for informational purposes and does not replace an individual assessment of each project. The conditions of the regime may be updated through supplementary resolutions.