Paraguay’s Maquila Law: What Law 7,547/2025 Changed
The law that governed maquila for nearly 30 years was replaced in September 2025. What changed, and what became possible — including service maquila.
On 8 September 2025 the Paraguayan Congress passed Law No. 7,547/2025 on the Maquila Regime, replacing in full the regime that had been in force for nearly three decades. The implementing decree — Decree No. 5,714/2026 — was signed on 6 April 2026. The regime most available material still describes is no longer the regime in force.
That matters beyond the formal detail: the new law does not merely update procedures — it brings in an entire segment of activity (services) that previously operated without an explicit legal basis.
What did not change: the single-tax logic
The backbone of the regime is unchanged since 1997: a company domiciled in Paraguay (the maquiladora) signs a maquila contract with a company abroad (the parent) to carry out, in Paraguayan territory, a production process — industrial or, now, services as well — using domestic labour and inputs combined with temporarily imported goods or services, with output destined for export.
One recurring error in popular descriptions of the regime is worth correcting here: there is no first-year exemption followed by a 1% rate afterwards. Since the original law, the maquila contract has been subject to a single 1% tax on value added in national territory (or on the export invoice value, whichever is higher) — applicable from the start of the contract, replacing all other domestic, departmental and municipal taxes. There is no phase of full exemption followed by taxation; there is a single, reduced rate from day one.
What changed: from Law 1,064/97 to Law 7,547/2025
| Dimension | Law No. 1,064/97 (repealed) | Law No. 7,547/2025 (in force, implemented by Decree No. 5,714/2026) |
|---|---|---|
| Scope of activities | Industrial and service processes, but with no explicit legal basis for exporting remote services | Formally incorporates service maquila — software, BPO, ITO and remote professional services, with their own tax treatment rules |
| Transfer of goods between maquiladoras | Required a specific customs procedure for each transaction | “Virtual operation” raised to statutory level: transfers between maquiladoras with no separate customs procedure |
| Composition of CNIME (National Council of Export Maquiladora Industries) | Original 1997 structure | Updated, bringing in the DNIT and the Ministry of Labour; operational decisions delegated to the Executive Secretariat |
| Temporary admission period for inputs | Rules of the original law | 24 months in total: 12 months initially, renewable for a further 12 (Article 14 of Law No. 7,547/2025) |
| Customs guarantees | Per transaction | Introduction of global guarantees, with automated clearance cancellation |
| VAT credit refund for service maquila | Not provided for | Refund of 0.5% of input VAT for service maquiladoras |
| Executive Secretariat resources | Dependent on other structures | For the first time, the Executive Secretariat has its own resources |
How it works in practice today
Access to the regime is not automatic: it requires submitting a Maquila Programme to CNIME, setting out the activity, the goods or services to be exported, the planned investment, the number of jobs created and the infrastructure required. Approval of the programme is a precondition of the benefits — the regime is not a tax rate any company accesses automatically on setting up in the country.
Once the programme is approved and the maquila contract signed:
- A single 1% tax on national value added or on the export invoice, whichever is higher, replacing all other domestic taxes.
- Suspension of import taxes on inputs, machinery and equipment tied to the programme, under the Temporary Maquila Import regime (24 months, renewable).
- Exemption from the Dividends and Profits Tax (IDU) on profits distributed by the maquiladora, since the regime taxes only the 1% on value added.
- Exemption from Non-Resident Income Tax (INR) on remittances abroad connected to the operation — payments to the parent, for instance.
- Mandatory monthly reporting to the Directorate-General of Customs, through CNIME, on the volume, type and value of imports and exports. The regime is supervised; it is not an unmonitored zone.
Service maquila: the door the old law did not open
The formal inclusion of service maquila is, on the reading of Paraguayan private sector analysts, the most significant change in the 2025 reform. Activities such as software development, BPO (business process outsourcing), ITO (IT outsourcing) and remote professional services now have clear tax treatment within the regime — something that, under the 1997 law, depended on interpretation, since the original rule was drafted essentially with the physical transformation of goods in mind.
For companies whose operation is entirely digital, that changes the calculation: the regime stops being relevant only to those building an industrial plant and becomes a concrete option for anyone exporting services from Paraguay.
Note on scope: the implementing decree (No. 5,714/2026) is recent — April 2026 — and some of its mechanisms, such as the 0.5% input VAT refund for service maquiladoras and the operational detail of the “virtual operation”, are still being put into practice by the bodies involved (CNIME, DNIT, Customs). Guidance on submitting specific programmes continues to be published by the Ministry of Industry and Commerce through 2026. Before structuring an operation under this regime, we confirm the current regulatory position directly with CNIME.
What the regime is not
The maquila regime is not secrecy, not an absence of supervision, and not a total exemption. It is a formal tax regime, with a pre-approved programme, mandatory monthly reporting to the customs authorities and a documented contractual link between the maquiladora and the parent. Framing maquila as a synonym for “zero tax” or for opacity misdescribes the regime — and creates an expectation that actual DNIT and Customs enforcement does not bear out.
Frequently asked questions
Does the Maquila Law work for any kind of business?
No. It requires a production or service process tied to export, a programme approved by CNIME, and a maquila contract with a company domiciled abroad. It is not a generic low-tax regime for any activity.
Do companies already operating under Law No. 1,064/97 lose the benefit?
The transition between regimes is addressed by transitional provisions in the new framework and by Decree No. 5,714/2026. Programmes already running should have their position verified specifically with CNIME.
Is service maquila operational in practice yet?
The law and the implementing decree are in force; full implementation of mechanisms such as the input VAT refund for services is recent and is being operationalised through 2026.
Does the 1% tax replace VAT on exports?
Yes — maquila operations are exempt from VAT on the export of goods or services produced under the regime, in addition to the other domestic taxes replaced by the single tax.
How to verify for yourself
- Law No. 7,547/2025 on the Maquila Regime — official text at the Ministry of Industry and Commerce (MIC).
- Law No. 1,064/97 (the previous regime, for historical reference) — text at the MIC.
- Frequently asked questions on the current regime — MIC.
- The maquila institutional portal — MIC.
The starting point
A regime of nearly 30 years was replaced less than a year ago, and implemented less than four months ago. Deciding on the basis of the 1997 text means deciding with a map that no longer matches the territory.
If your operation — industrial or services — could benefit from Paraguay’s maquila regime, the next step is to assess whether your business model fits the statutory definition of an exportable production process, and to design the programme for submission to CNIME on that updated basis. It is also worth understanding how the maquiladora fits into the wider corporate and tax picture — covered in Setting up in Paraguay: SA, EAS and the territorial regime.
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.