Paraguay’s maquila regime has historically been governed by Law No. 1064/97. The country’s maquila law established the rules regarding processing or assembly activities using inputs temporarily imported for processing, assembly, or transformation destined for export.
During its nearly 30-year lifespan, Paraguay’s maquila regime allowed the country to become a competitive export platform offering:
- 1% single tax rate on value-added generated locally
- Duty-free access to imported raw materials and capital equipment
- Market access throughout MERCOSUR member nations
- Competitive labor and energy costs
This policy has successfully attracted export manufacturing projects into apparel, auto parts, plastics, and consumer goods operations.
Much has changed over the last three decades. The proliferation of digital services, nearshoring trends, and the demand for more knowledge-intensive exports have accelerated pressure to institute a new maquila law in Paraguay. Signed into law on August 27th, Law No. 7547/25 initiates a structural reform of Paraguay’s export processing regime, widening its scope and reinforcing its underlying institutions.
“Paraguay is positioning itself as more than a low-cost assembly platform, but rather as a services-enabled hub for exports.”
Outlined below are some of the notable updates to Paraguay’s maquila law.
Software Services Included Under the New Maquila Law in Paraguay
Perhaps the biggest change coming to Paraguay’s maquila regime is its extension into tradable services.
Under Law 7547/25, activities such as software development, call center operations, and business process outsourcing can qualify for maquila treatment.
Specific services include:
- Software development and IT services
- Business Process Outsourcing (“BPO“)
- Information Technology Outsourcing (“ITO“)
- Engineering
- Technical design services
- Call Centers / Shared Service Centers
- Financial Services
- Research and development services
Traditionally, Paraguay’s maquila incentives had been restricted to the production of goods. Law No. 7547/25 allows service-industry exports to benefit from preferential tax treatment under the maquila regime.
Among other implications, the change is expected to allow Paraguay to:
- Attract regional shared service centers (“SSC”)
- Play a larger role in digital services value chains
- Create additional bilingual and technical jobs
- Diversify its economy beyond low-cost assembly activities
The global economy does not revolve around factory jobs anymore. Services exports are critical to Paraguay’s future.
Digitalization & Agility
Another significant piece of the new maquila law in Paraguay is recognition of the importance to digitalize customs and compliance procedures.
Efforts will be made to:
- Digitize the submission and processing of maquila projects
- Digitize maquila compliance filings
- Coordinate customs more efficiently
- Streamline approval timelines for permits
- Ensure proper traceability of goods imported and exported under the maquila regime
Digital filing and track-keeping go both ways. The introduction of digital reporting requirements will increase transparency throughout the lifecycle of maquila projects. To reduce friction at the start of projects, customs authorities are expected to transition towards risk-based inspections.
These changes are the result of Paraguay modeling its customs regime after international standards promoted by multinational organizations. Recommended best practices encourage governments to:
- Reduce red tape
- Ensure regulatory certainty
- Implement digital transparency in its customs and reporting requirements
- Accelerate approvals
- Offer Regulatory Stability
Traditionally maquila projects have been offered tax incentives indefinitely. Law No. 7547/25 changes this by setting a 20-year maximum term for maquila projects. This term can be renewed assuming the applicant meets certain requirements.
Renewable conditions include:
- Jobs created
- Volume of exports
- Investment delivered
- Focus on nationally determined industrial sectors
- Ongoing regulatory and fiscal compliance
Offering a maximum 20-year term at the onset of investment is hoped to balance the need for investor confidence with project accountability.
“Investors need long-term stability. No one is going to start a capital-intensive project if they don’t know whether the regime will still be in power in 15 years. Twenty years allows companies to model their investments.” – Multinational Corp CEO
Opening Up Opportunities for Services Creates High-Quality Jobs
Paraguay’s maquila regime has created approximately 30,000 to 33,000 direct formal jobs since its implementation.
Recent maquila job counts include:
- November 2024 – just under 28,771 direct formal employees
- Mid-2025 – expected to surpass 33,000 direct formal employees
- Growth rates nearing 18% YoY growth
- Increase in women and youth employed under maquila regime
Jobs coming as the result of inclusion of services in new maquila law in Paraguay are expected to include:
- Software engineers
- IT analysts and developers
- Financial analysts
- Multilingual customer support reps
- Computer engineers/designers
- Data entry operators
Additional ways services could expand Paraguay’s labor force:
- Increase in need for STEM graduates
- Encourage bilingual education
- Higher wages than traditional maquila jobs
- Better university-industry coordination
Global value chains for services will require continuous up-skilling of Paraguay’s labor force if the country is to maintain its competitiveness.
Billions in Paraguayan Exports Supported by Maquila Regime
Over time, Paraguay’s maquila regime has become an increasingly important contributor to the country’s exports.
Notably:
- Maquila exports have grown by over 300% since 2016
- The maquila regime accounted for close to USD $927 million of total exports as of October 2024
- Top sectors: auto parts, textiles & apparel, food & beverages, aluminum
- Represents significant portion of Paraguay’s exported manufactured goods. Contributes towards trade balance.
While goods produced under the maquila regime have primarily gone to China and other regional partners, the addition of service industries can open the door to exporting:
- Services to North America
- Services to Europe
- Regional services to other MERCOSUR nations
“As goods are subjected to dock fees, shipping distances impact profit margins. Services provide a layer of resilience because they aren’t subject to the same variables.”
Sectors that rely on agriculture, such as soybeans and beef cattle, could benefit from increased diversification of exports.
Attraction of FDI Into Paraguay
Foreign direct investment in processing or assembly operations has gone into sectors such as:
- Apparel
- Automotive components
- Electronics assembly
- Plastics
- Packaging
- Consumer goods
- Food and beverage
Looking forward, the reform of Paraguay’s maquila law opens the doors for FDI into:
- Technology firms
- Shared Service Centers (“SSCs”)
- Engineering firms
- High-tech manufacturing
- Industrial Parks
Paraguay remains competitive due to:
- Abundant cheap electricity from its binational hydroelectric dams
- Strategic location in Latin America’s South Cone
- Pre-established trade agreements throughout MERCOSUR
- Low labor costs
- Single tax rate
Also expected as a result of the new maquila law in Paraguay:
- Less red tape due to digital filing requirements
- Longer stable terms to model investment against
- Digital platforms to streamline submissions and approvals
These will complement Paraguay’s push to modernize its maquila regime in line with international industrial policy standards.
Summary
Law No. 7547/25 updates Paraguay’s longstanding maquila regime. Responding to calls for increased diversification and digitization of global supply chains, Paraguay has:
- Modernized its customs procedures
- Digitalized its tracking and compliance mechanisms
- Included services within the benefits of the maquila regime
- Added regulatory certainty for investors
- Enabled value-added production in Paraguay
Paraguay is no longer merely a low-cost assembly operation. Through services and knowledge-enabled activities, Paraguay is laying the foundation to become a sophisticated exporter.