Why companies set up in Paraguay
Paraguay has become a common destination for Brazilian and international companies that want a simpler tax structure, lower operating costs and a base inside MERCOSUR. The corporate income tax (IRE) is 10% on net income, VAT has a general rate of 10%, and foreign investors can generally own 100% of a company, subject to the chosen legal form and any sector-specific requirements.
Those advantages are real, but they only materialise when the company has genuine operations in Paraguay: people, contracts, invoicing and decisions made locally. A structure created only on paper tends to create problems both in Paraguay and in the investor's home country.
Legal forms available
The right legal form depends on the number of partners, the size of the operation, how you plan to bring in investors and whether you need to operate under a special regime.
| Form | Partners | Key features | Typically used for |
|---|---|---|---|
| S.A. (Sociedad Anónima) | One or more shareholders; shares must be nominative | Board of directors and statutory auditor; flexible to bring in investors | Industrial projects, maquila, larger operations |
| S.R.L. (Sociedad de Responsabilidad Limitada) | Two or more partners | Liability limited to contributed capital; simpler governance | Small and mid-sized trading or service companies |
| EAS (Empresa por Acciones Simplificada) | One or more shareholders | Created by Law 6480/2020; digital incorporation through SUACE | Start-ups, single-owner companies, fast launches |
| Branch (Sucursal) | Foreign parent company | Not a new entity; the parent answers for its obligations | Foreign groups that want a direct local presence |
Requirements and documents
Most delays come from documentation. Preparing these items before you start avoids rework:
Shareholder identification
Passport or ID for individuals; for corporate shareholders, articles, good-standing certificate and board minutes — apostilled and translated into Spanish.
Articles of incorporation
Company name, corporate purpose, capital, management rules and shareholder data, normally formalised before a Paraguayan notary.
Legal address in Paraguay
A local commercial address is required for the registry, the RUC and the municipal licence. It can be an office, a leased space or a service address.
Legal representative
A person with local domicile who represents the company before banks and authorities. It can be a partner, a director or an appointed attorney.
RUC (taxpayer number)
The tax ID issued by DNIT, the national tax and customs authority. Without it, the company cannot invoice or open a bank account.
Beneficial owner registry
Paraguayan law (Law 6446/2019) requires companies to report their ultimate beneficial owners to the administrative registry.
Step by step
The order matters: some decisions (legal form, activity code, address) affect every later step.
Define the operating model
What the company will sell, to whom, from where, with which people and under which tax regime. This determines the legal form and the registrations needed.
Prepare and legalise documents
Apostille and sworn translation of foreign documents; powers of attorney for non-resident shareholders.
Incorporate the company
Execution of the articles before a notary (or digital filing for an EAS) and registration with the Public Registry.
Obtain the RUC at DNIT
Registration as a taxpayer, choice of obligations and electronic invoicing set-up.
Open the bank account
Corporate account with know-your-customer and beneficial-owner checks.
Municipal and labour registrations
Municipal licence (patente), registration with the Ministry of Labour (MTESS) and with IPS, the social-security institute, before hiring.
Start operating and keep compliant
Monthly and annual tax filings, bookkeeping by a registered accountant and renewal of licences.
Main taxes for companies
Paraguay's system is simple compared with most of the region, but it is not a single-tax system. The main obligations for an operating company are:
| Tax | Rate | What it covers |
|---|---|---|
| IRE — Business income tax | 10% | Net income from business activities with Paraguayan source. |
| IVA — Value-added tax | 10% general / 5% reduced | Sale of goods and services; reduced rate for items such as basic foods and medicines. |
| IDU — Dividend tax | 8% resident / 15% non-resident | Dividends and profits distributed to shareholders. |
| IPS — Social security | ≈16.5% employer + 9% employee | Contributions on salaries of registered employees. |
| Maquila single tax | 1% | Single Maquila Tax calculated on the statutory taxable base of an approved maquila program, replacing most other taxes. |
Rates are a general reference for October 2026 and do not replace advice from a licensed Paraguayan accountant. Special regimes, withholding and municipal charges may apply.
Brazil × Paraguay: what to compare
Paraguay's general IRE corporate income tax rate is 10%. Cross-border comparisons with Brazilian taxation depend on the taxpayer's regime, profit base, ownership structure and applicable international tax rules. Any comparison is only meaningful if the profit is genuinely earned in Paraguay.
Moving operations is usually not a "transfer" of the Brazilian company. It means creating or reorganising a Paraguayan operation and reviewing contracts, transfer pricing, the shareholders' tax residence and Brazilian rules on foreign-controlled entities. These points should be assessed with advisers in both countries before any filing.
Common mistakes
- Choosing the legal form before defining the operating model.
- Assuming every company pays only 10% — VAT, IDU, social security and municipal charges also apply.
- Underestimating the time needed to apostille and translate foreign documents.
- Using a service address without real activity, which creates problems with banks and tax authorities.
- Ignoring obligations in the home country (tax residence, controlled-entity rules).
General information subject to legal, tax, accounting and regulatory validation for each project. © 2026 HUBPY.
