The maquila regime and reduced operating costs are attracting investment from sectors such as textiles, auto parts and food.
Brazilian companies have expanded operations in Paraguay in search of lower operating costs and a simplified regulatory environment. According to data from the National Council of Maquiladora Export Industries (CNIME), the Paraguayan body responsible for controlling the Maquiladora regime, 248 foreign companies currently operate in the country, of which 180 are Brazilian, or 72% of the total. The Maquila Law (Law No. 1,064/1997), governed by Decree No. 9,585/2000, allows foreign companies to establish themselves in Paraguay to process goods for export, with an exemption from taxes on the importation of raw materials and inputs, and a single tax of 1% on value added in Paraguayan territory.
Photo: Source: flickr.com / DINO
The movement towards the internationalization of production operations takes place in a context of differences in tax structure between the two countries. According to data released by the National Treasury, Brazil’s gross tax burden reached 32.32% of gross domestic product (GDP) in 2024, representing an increase of 2.06 percentage points from the previous year. In Paraguay, the tax system adopts the model called “10-10-10”, with fixed rates of 10% for value added tax (VAT), personal income tax (IRPF) and corporate income tax (IRPJ), according to data from the Undersecretariat of State for Taxes (SET) of the Paraguayan Ministry of Finance.
Expert analysis
Sandro Christovam Bearare, specialist in business management and graduate in logistics, observes that the Brazilian fiscal scenario has stimulated the search for regional alternatives. “The difference in cost structure between Brazil and Paraguay is significant and measurable. Businessmen evaluate variables such as tax burden, energy costs and wage costs before making investment decisions,” he explains.
For Bearare, the feasibility analysis takes into account several factors: taxation, energy, logistics and labor. “Paraguay, thanks to its strategic location in the Southern Common Market (Mercosur) and the incentives offered, has positioned itself as an alternative to diversify production operations,” he affirms.
Makeup diet
The Maquila law allows foreign companies to establish themselves in Paraguay to process goods for export. The regime provides for an exemption from taxes on the importation of raw materials and inputs, with a single tax of 1% on value added in Paraguayan territory.
According to information from the Paraguayan Investment and Export Network (Rediex), the Paraguayan government agency responsible for attracting investments, the Maquila regime has attracted foreign companies, with a significant presence of Brazilian companies.
Operating costs
The cost of electricity in Paraguay is lower than in Brazil, according to data from the Administración Nacional de Electricidad (ANDE), the Paraguayan public company responsible for energy supply. The difference is attributed to the country’s hydroelectric production capacity, which includes the Itaipu and Yacyretá power plants.
Industrial sectors
According to the National Confederation of Industry (CNI), the most sought-after sectors in Paraguay are textiles, automobile parts, plastics and food. The entity promoted trade missions to the neighboring country to present the opportunities of the Maquila regime.
Bearare emphasizes that this trend reflects a search for operational efficiency. “The internationalization of production operations is a strategy adopted by companies seeking to maintain their competitiveness in increasingly integrated markets,” he assesses.
Outlook
Experts emphasize that the continuity of this movement will depend both on possible reforms of the business climate in Brazil and on the maintenance of conditions in Paraguay. “Competitiveness is dynamic. Countries that offer simpler regulatory environments and lower operating costs tend to attract productive investments. It is up to Brazil to assess what structural adjustments can make the national environment more attractive for industrial activity,” concludes Bearare.
About the specialist: Sandro Christovam Bearare is a business management specialist with a postgraduate diploma in logistics, working in consulting to companies seeking to optimize their operations and internationalize their business.
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