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Damalion Paraguay desk

Doing business in Paraguay

Known as the “Heart of South America” due to its central location on the continent, Paraguay is a stable South American country and a Mercado Común del Sur (MERCOSUR) member. 

In addition to its financial privacy and friendly tax system, Paraguay has also shown robust and stable macroeconomic policies that have enhanced its economic performance in the last few years. And this has made the country a very attractive one for investors, entrepreneurs, and companies looking to expand to Latin America. 

Paraguayan law ensures equal treatment for foreign and domestic investment, and companies operating in Paraguay may be fully owned by foreign companies or individuals. In addition to this, Paraguay is a party to a range of free trade agreements (FTAs), and it operates several free trade zones (FTZs) giving vast incentives to investors interested in starting a business. As such, starting a business in Paraguay is a great opportunity for entrepreneurs, and investors looking to expand their presence in an unsaturated market. 

Main advantages of doing business in Paraguay 

  • Paraguay is situated in the heart of South America, with access to primary transportation routes and borders with other South American powerhouses such as Brazil. This has made it an excellent location for businesses looking to expand their operations in the region. 
  • Paraguay has a friendly tax system, e.g., corporate income is taxed on a territorial basis, meaning that income generated outside Paraguay is not taxable in the country. 
  • Paraguay has a stable political environment and a pro-business government, with no exchange or currency controls. 
  • Paraguay has a young and growing population, meaning there is a large and growing consumer market, as well as a pool of young and qualified workers. 
  • The country has considerable reserves of natural resources, including agricultural land, and minerals, and this makes it an attractive location for businesses in these sectors. 

Although Paraguay may be a landlocked country, it has powerful neighbors, and this gives it access to outstanding trading partners that offer more trade opportunities. Also, the favorable economic conditions in Paraguay hold incredible business potential as the country is anticipated to grow further.


Paraguay has a civil law legal system, which is influenced by Spanish and Roman law, as well as indigenous legal traditions. 

The Paraguayan legal system is divided into three branches: the judiciary, which is responsible for interpreting and enforcing the law, the executive which is responsible for enforcing the law, and the legislation which is responsible for making laws. 

Paraguay’s constitution provides for the protection of human rights and individual freedoms, and there are several laws in place to ensure equality before the law. 

Entity Choice in Paraguay 

Aside from a few sectors that are considered strategic by the Paraguay government, and are reserved for the Paraguayan Government, which are not open to private investment (either domestic or foreign), Paraguay is generally welcoming of direct foreign investments, and the government has been implementing policies and initiatives to attract foreign investors to the country. 

The country promotes foreign investment and has implemented a series of policies to create a business-friendly environment and as such, Paraguay has remained an attractive destination for foreign investors. 

Investors and entrepreneurs looking to establish a business in Paraguay can choose among the following types of business structures: 

Individual Entrepreneur (Empresario Individual) 

This is a business structure where an individual is the owner and has full control over the business. It has unlimited liability, which means the owner’s assets can be used to pay the company’s debts. 

Limited Liability Company (Sociedad de Responsabilidad Limitada) 

This is a business structure where at least two come together to form a business with limited liability. 


  • Each partner contributes to the capital of the company. 
  • It requires two or more people. 
  • Each partner’s liability is limited to the amount of their capital contribution. 
  • The company agreement governs the operation of the company. 
  • It does not require complex administrative procedures. 

Joint Stock Company (Sociedad Anónima) 

This is a Paraguayan business structure where the company is owned by shareholders who invest in the company by buying shares. 


  • this is the most common business model for larger companies in Paraguay 
  • It is owned by shareholders who invest in the company by buying shares. 
  • The shareholders have limited liability. 
  • The company is managed by a board of directors appointed by the shareholders. 

General Partnership (Sociedad en Comandita Simple) 

This is a Paraguayan business structure where at least two people come together to form a company with unlimited liability. 


  • It requires two or more people 
  • All partners are personally liable for the partnership’s debts. 
  • One partner manages the business while the other provides the capital. 

Limited Partnership (Sociedad en Comandita por Acciones) 

This is a Paraguayan business structure where the company is owned by partners who have limited liability. 


  • It requires two or more people to establish 
  • One partner – limited partners manage the business while the others – general partners provide the capital. 

Branch Office 

Companies constituted abroad may opt to set up a branch office in Paraguay. 


  • It must operate under the same name in Paraguay as that of its origin country. 
  • It requires a legal representative based in Paraguay. 
  • It may only initiate operations when it has been fully registered. 
  • It doesn’t impose the performance of ordinary or extraordinary assembly meetings. 

When deciding on a business structure in Paraguay, it is advisable to seek professional advice before choosing a business structure. Contact your Damalion expert now and let us help.


The Paraguay banking system is quite stable and sound, with adequate regulatory oversight from the Central Bank of Paraguay (BCP) which sets rules and regulations to ensure the soundness of the banking system, and also supervises banks to ensure compliance with those regulations. 

Banking sector in Paraguay 

The banking sector in Paraguay is dominated by Commercial Banks, Savings and Loans Associations, Credit Unions, and Financial Institutions. 

Banks in Paraguay offer a range of services including savings accounts, checking accounts, foreign exchange, loans, mortgages, and investment products. 

Opening a bank account in Paraguay 

If you decide to live or work in Paraguay, a bank account is essential. It saves from a lot of financial liabilities and it makes life a bit easier. 

Opening a bank account in Paraguay is relatively straightforward, but there are some requirements and documents applicants must provide. The process of setting up a Paraguay bank account usually involves the following steps: 

  • Choose a Bank 
  • Gather Required Documents such as a valid ID, proof of address, and proof of income. 
  • Visit the Bank and Complete Application 
  • Deposit Funds 

Receive Account Details – after the account is opened and funded, the bank will provide account details. 

Aside from a personal bank account, legal entities can also open a bank account for their business. But business owners should consider carefully which financial entity is the most applicable before opening a corporate bank account.


Aside from its natural beauty, the mild climate all year long, and the friendliness of its people, Paraguay is a free country, that welcomes all nationalities with open arms. 

As a foreign national, if you seek divine historical surroundings among other things, Paraguay residency is an excellent option for you. With Paraguay residency, you can live, work, and study in the country. 

Options for getting Paraguay residency 

Highlighted below are some of the common ways to get a Paraguay residency. 

  • Investment 

Paraguay offers an investment visa for foreigners who invest a certain amount in the country. For this, you are not required to spend the amount at once but you must give a business plan that indicates your company will spend such an amount in 10 years. Some of the activities that are regarded as valid for the investment program are engaging in commerce, and offering services. 

  • Retirement 

Paraguay offers residency by retirement to foreigners who have a guaranteed monthly retirement income of a certain amount. There are no age limitations for this. 

  • Bank deposit 

Foreign nationals can also opt for depositing a certain amount in a Paraguay bank in order to get a Paraguay residency. 

  • Work 

If you have a job offer from a Paraguayan company, you can apply for a work visa and get residency. 

  • Family 

If you have a Paraguayan immediate family (spouse or parent), you may opt for a family visa, which enables you to reside in Paraguay permanently. 

Getting Paraguay citizenship 

After three years of receiving your permanent residence permit, foreign nationals can apply for citizenship in Paraguay. 

Paraguay has an open economy and has initiated reforms to its immigration system that decreases the time it takes to obtain residency. To obtain residency in Paraguay, contact your Damalion experts now.


Paraguay offers the most reasonable low-tax solutions in the Southern Common Market (MERCOSUR), economic integration, and free trade initiative. In Paraguay, income is taxed according to the territorial system, so foreigners living in Paraguay are subject to tax on the income originating in Paraguay. 

Paraguay’s tax regime is relatively simple and low compared to other countries in the region. The main taxes in Paraguay are: 

National Taxes in Paraguay 

  • Value Added Tax (VAT) 

Value Added Tax in Paraguay is levied on the sale of goods, the provision of services, except personal services provided in a relationship 

of dependence, and the importing of goods. This tax is charged at a rate of 10% in Paraguay. 

  • Income Tax 

This tax is charged on individuals and corporations in Paraguay. The tax rate for individuals is progressive, and it ranges from 8% to 10% of their income. And for corporations, the tax rate is 10% of their net income. 

  • Excise Tax 

In Paraguay, this tax is imposed on certain goods, such as alcohol, tobacco, and gasoline. 

  • Personal Assets Tax 

This tax is charged on individuals but it depends on their net worth. The rate range from 0.5% to 1% of their net assets. 

Local Taxes in Paraguay 

  • Municipal Tax 

This is a tax charged by Paraguay local governments on activities within their jurisdiction, e.g, property tax. 

  • Stamp Tax 

This tax is charged, in Paraguay on legal documents, such as contracts and agreements. 

Tax treaty in Paraguay 

Paraguay has signed many treaties and agreements with other countries to avoid double taxation and facilitate international trade, especially. These treaties will reduce the tax burden on companies and individuals who engage in cross-border transactions in Paraguay. 

Paraguay has signed tax treaties with countries like Uruguay, Chile, Belgium, Germany, and Argentina. 

Paraguay also has a regional trade agreement with Argentina, Brazil, Paraguay, Uruguay, and Venezuela.


Paraguay has a strong legal framework for the protection of intellectual property rights, and the country is devoted to upholding those rights. 

Intellectual property protection is overseen by several laws and regulations in Paraguay, including the Industrial Property Law which provides for the registration and protection of trademarks, patents, and industrial designs., Copyright Law, and similar regulations. 

The types of intellectual property protected under Paraguayan law include the following: 


  • A patent is a legitimate monopoly granted to an inventor for a new and valuable invention. 
  • Patents in Paraguay are registered by the National Directorate of Intellectual Property (Dirección Nacional de la Propiedad Intelectual – DINAPI). 
  • Paraguay provides for the registration and protection of patents for 20 years from the filing application date. 


  • A trademark is a unique sign used to identify goods or services in the market. 
  • The National Directorate of Intellectual Property (Dirección Nacional de la Propiedad Intelectual – DINAPI) in Paraguay. 
  • Paraguay provides for the registration and protection of trademarks for 10 years which can be renewed indefinitely. 

Industrial designs 

  • An industrial design is the ornamental aspect of a useful article. 
  • A design in Paraguay is registered by the National Directorate of Intellectual Property (Dirección Nacional de la Propiedad Intelectual – DINAPI). 
  • Paraguay provides for the registration and protection of industrial designs for 20 years. 


  • Copyrights protect literary and artistic works, such as books, films, and software. 
  • The Copyright Law in Paraguay authorizes whole rights to the creators of such works and gives the protection of those rights through civil and criminal penalties for violation. 
  • Copyright in Paraguay is registered by the National Directorate of Intellectual Property (Dirección Nacional de la Propiedad Intelectual – DINAPI), but the registration of copyright is only for declarative purposes. 
  • Paraguay provides for the protection of copyrights for the life of the author plus 70 years. Moral rights are imprescriptible and continual.

Paraguay labor and employment laws are governed by the Labor Code, which was authorized in 1992 and has been modified several times since then. The Labor Code provides for the rights and responsibilities of employees and employers in Paraguay, it also regulates issues pertaining to labor contracts, working conditions, wages, etc. 

Employment contract in Paraguay 

In Paraguay, employment contracts must be in writing and signed by both the employer and the employee. The contract should clearly state the terms and conditions of employment, including the Duration of the Contract, Probationary Period, Working Hours, Salary and Wages, Termination of Contract, etc. 

Types of employment Contracts in Paraguay 

  • Fixed-Term Contracts: these types of contracts usually have a defined start and end date, and are used for a specific project, or for a predetermined period of time. 
  • Indefinite Contracts: these types of contracts have no specific end date and are planned to continue until either the employee or employer terminates the contract. They are used for regular, ongoing employment. 

Other types of employment contracts that may be used in Paraguay include Part-time Contracts and Probationary Contracts. 

Employment benefits in Paraguay 

  • Working hours: the basic workweek in Paraguay is 48 hours or 8 hours per day. Overtime work is allowed but is capped and compensated. 
  • Minimum wage: the minimum wage for employees in Paraguay is set by the government and is adjusted occasionally. 
  • Vacation: Aside from specific public holidays, Paraguayan employees are entitled to annual paid vacation, which ranges between 12 to 30 days, based on their length of service. 
  • Sick leave: Paraguayan employees who are unable to work due to illness or injury are entitled to paid sick leave for up to 26 weeks per year upon the provision of a medical certificate. 
  • Maternity and paternity leave: in Paraguay, female employees are entitled to 14 weeks of paid maternity leave, with 30 extra days in case of multiple births. Male employees are entitled to two weeks of paternity leaves. 
  • Termination/Severance Pay: in Paraguay, an employment contract can be terminated by either the employer or the employee with prior notice or payment instead of notice. Paraguayan employees who are terminated for reasons other than misbehavior are entitled to severance pay based on their length of service. But this is not relevant unless termination is without just cause.

So, are you ready to enter the Latin American market market?

If you’re ready to enter the Latin American market and want to take advantage of the Paraguayan economy, contact your Damalion expert now. 

We assist foreign legal entities in setting up a business in Paraguay. 

We have a devoted team on hand to help with everything from company formation to compliance, entity management, accounting, taxation, payroll support, and many more across Paraguay. Contact us now to register your company in Paraguay.

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