Brazil is Paraguay’s largest customer and the obvious first market for a Paraguay base. This guide covers selling goods under Mercosur origin and the new maquila law, selling services across the border, the tax presence trap — and the specific triggers that make a Brazilian company necessary.
Brazil took 31% of Paraguay’s registered exports in 2025 — about US$3.4 billion, more than any other country. For the maquila sector, the dependence is starker: of US$1.26 billion of maquila exports, 64% went to Brazil, led by auto parts, apparel, aluminium and food. Paraguay is, in effect, already one of Brazil’s factories.
That makes the Paraguay–Brazil corridor the most practical test of the base-first model in our market-entry guide: a company in Paraguay, customers in Brazil, and the question of how far you can go before Brazil requires you to be Brazilian. This guide answers it for goods, for services and for the point at which a Brazilian company stops being optional.
Law and practice: Banco Central del Paraguay, foreign-trade report, December 2025; Ministry of Industry and Commerce, maquila report, December 2025.
Goods move between Paraguay and Brazil duty-free only if they qualify as Mercosur origin. Under the Mercosur Origin Regime adopted in 2023, the general test is how much non-originating material a product may contain; for Brazil and Argentina the usual ceiling is 45%.
Paraguay has a longer leash. For the tariff lines marked in the regime’s product-specific annex — roughly 13,000 lines across about 60% of the tariff chapters — Paraguayan goods may contain up to 60% non-originating material, meaning only 40% regional content, until 31 December 2038. It is not a blanket rule: check your HS code against the annex before you build the supply chain around it.
The ceiling
Up to 60% non-originating content for listed lines, until 2038.
The certificate
Issued through the export single window (VUE) by authorised chambers and the Ministry of Industry and Commerce.
Less paperwork since 2025
The sworn origin declaration is now filed once per product for a year, not once per invoice.
Digital certificates
A Paraguay–Brazil digital certificate was launched for auto parts at the end of 2025; check whether it covers your product.
Law and practice: Mercosur Common Market Council Decisions 05/23 (Origin Regime) and 06/23 (differentiated treatment for Paraguay and Uruguay), incorporated in Brazil by Decrees 12,058/2024 and 12,059/2024.
Maquila is how most of Paraguay’s exports to Brazil are actually made. A Paraguayan company works under contract for a parent abroad, brings inputs in temporarily, adds value and exports. Since September 2025 the regime runs under a new law, Ley 7547/2025, which replaced the 1997 statute; programmes approved under the old law moved across automatically after a twelve-month transition.
A single 1% tax
On Paraguayan value added or the export invoice, whichever is higher; the maquila contract is exempt from other national taxes.
A foreign parent
A maquila contract with a company domiciled abroad is required, filed within 180 days of approval.
Up to 20 years
Benefits run for up to twenty years, renewable within that ceiling.
Limited local sales
A pure maquiladora may sell up to 10% of the previous year’s exports in Paraguay, under general taxes.
Services too
Service maquila — back offices, software, shared services — is now expressly covered.
Approval
A joint Ministry of Industry and Ministry of Economy resolution, in about 90 days.
Maquila status does not make a product Mercosur-originating by itself. To enter Brazil duty-free, maquila goods must meet the origin rule above, and the extra-zone inputs must have come in under temporary admission — which Mercosur allows in intra-zone trade until 31 December 2030. After that, a further extension will be needed.
Law and practice: Ley 7547/2025 and Decree 5714/2026; temporary admission in intra-Mercosur trade under CMC Decision 24/15 as amended by Decision 10/21.
With a valid certificate of origin, Brazil’s import duty is zero. The other import taxes still apply, and they are your customer’s cost and credit, not yours.
2026
IPI, PIS/COFINS-Import and state ICMS, plus the CBS and IBS test rates.
From 2027
CBS replaces PIS/COFINS; IPI goes to zero for most goods; ICMS phases out from 2029. See our CBS/IBS guide.
The importer
Needs RADAR registration with Brazilian customs — new companies start at a low limit.
The declaration
Imports are moving to the single declaration (Duimp), including by road.
For a business customer on the regular regime, most of these taxes come back as credits. Your price competes on its net-of-tax value — which is where Paraguayan cost and the 1% maquila tax show up.
Most freight still crosses at the Friendship Bridge between Ciudad del Este and Foz do Iguaçu. The Integration Bridge between Presidente Franco and Foz opened in December 2025, but its use was restricted through 2026 while the Paraguayan access road is completed, expected in 2027.
Further west, the Porto Murtinho–Carmelo Peralta bridge on the Bioceanic Corridor reached structural completion in 2026; the Brazilian access road and customs complex are scheduled for 2027. Once they are open, the Chaco gains a direct route to Brazil’s centre-west and on to Chile’s Pacific ports.
A Paraguayan company can invoice Brazilian businesses directly, with no Brazilian entity. Brazil then taxes the payment on the way out — and because there is no Brazil–Paraguay tax treaty, nothing reduces it.
| Tax on a service bought from Paraguay | Rate | Who bears it in practice |
|---|---|---|
| Income tax withheld (IRRF) | 15% on technical or administrative services and royalties; 25% on other services | Withheld from your fee unless the contract grosses it up |
| CIDE | 10% on royalties and technical or administrative services | The Brazilian payer |
| PIS/COFINS-Import (until 2026); CBS from 2027 | 9.25% in 2026 | The payer, usually as a credit |
| ISS on imported services | 2% to 5%, by municipality | The payer |
| IOF on the exchange | Raised in 2025; confirm the current rate with the bank | The payer |
Two practical consequences. First, write a gross-up clause into every contract, or price on the assumption that 15% to 25% of your fee will be withheld; Paraguay taxes territorially, so the Brazilian withholding usually cannot be credited at home. Second, Paraguay is not on Brazil’s list of tax havens or privileged regimes, so the higher rates reserved for those jurisdictions do not apply — though Paraguay’s 10% corporate rate sits below the threshold Brazil uses to define one, which is worth watching.
Law and practice: IRRF: Provisional Measure 2,159-70/2001, art. 3, and Law 9,779/1999, art. 7; CIDE: Law 10,168/2000; ISS: Complementary Law 116/2003; tax-haven lists: IN RFB 1,037/2010 as updated in 2025; IOF: Decree 12,499/2025.
Without a treaty, Brazil applies its own rules. A foreign company is taxed in Brazil on the results of operations carried out through an agent or commission agent in Brazil — and a branch, office or representation is treated as a Brazilian taxpayer outright.
The practical line is authority. A Brazilian contact who promotes your products, sets up meetings and passes on orders is a sales channel. A Brazilian representative who negotiates and concludes contracts in your name is a taxable presence. Keep contract signature and pricing decisions in Paraguay until you have decided to open a Brazilian company properly.
Law and practice: Income Tax Regulation (Decree 9,580/2018), art. 159, II and III.
The base-first model works for longer than most founders expect. These are the points where it stops.
| You want to… | Brazilian company needed? | Alternative |
|---|---|---|
| Sell goods to Brazilian businesses | No | Your customer imports; you export from Paraguay with a certificate of origin |
| Sell services to Brazilian businesses | No | Invoice from Paraguay with a gross-up clause |
| Hire employees in Brazil | Yes | An employer-of-record provider, for a time |
| Sell food, cosmetics or medical products | Yes, as the ANVISA registration holder | A third-party registration holder |
| Be the importer of record yourself | Yes, with RADAR | A trading company that imports for you |
| Sell directly to Brazilian consumers at scale | In practice, yes | A marketplace or distributor |
| Have a local agent who signs contracts | Effectively yes — the agent creates a taxable presence | Agents who promote but do not conclude |
If two or more of these apply, open the Brazilian company — see our guide to forming a Ltda from abroad and the Brazil service page.
A Brazilian company buying from, or paying fees to, its Paraguayan affiliate must price those transactions at arm’s length. Brazil adopted OECD-style transfer-pricing rules in 2023, mandatory from 2024, replacing its old fixed-margin system.
Arm’s length
Traditional methods first; profit split and TNMM where they cannot be applied.
Royalties
The old cap on deducting royalties and technical assistance is gone.
Low-value services
A simplified 5% mark-up on cost is accepted.
Documentation
Master and local files above R$500 million of intercompany transactions; a simplified local file from R$15 million.
Dividends home
Since 2026 Brazil withholds 10% on dividends to Paraguay — see our dividend guide.
Law and practice: Law 14,596/2023 and IN RFB 2,161/2023.
Against the origin annex: does the 60% ceiling apply to your product?
General export company or maquila — and if maquila, the foreign parent contract.
Your Brazilian customer, a trading company, or your own Ltda with RADAR.
Contracts that account for IRRF, CIDE and the rest.
No Brazilian agent who concludes contracts in your name.
Hiring, ANVISA, consumers: the triggers for a Brazilian company.
Yes. Goods can be exported to Brazilian importers with a Mercosur certificate of origin, and services can be invoiced directly to Brazilian businesses. A Brazilian company becomes necessary for local hiring, ANVISA-regulated products, acting as importer of record or large-scale consumer sales.
Yes, if they meet Mercosur rules of origin and carry a certificate. Brazil’s other import taxes — IPI, PIS/COFINS-Import, ICMS, and CBS/IBS from 2027 — still apply and are usually credited by business buyers.
For listed tariff lines, Paraguayan goods may contain up to 60% non-originating material and still qualify as Mercosur origin, until 31 December 2038, under CMC Decision 06/23.
Ley 7547/2025 replaced Ley 1064/97 from September 2025. The single 1% tax remains, on value added or the export invoice, whichever is higher; service maquila is expressly covered and approval is by joint ministerial resolution.
Yes, if they meet Mercosur origin and the imported inputs came in under temporary admission, which Mercosur allows in intra-zone trade until the end of 2030.
Typically 15% income tax on technical services and royalties, or 25% on other services, plus CIDE, PIS/COFINS (CBS from 2027), ISS and IOF on the payer’s side. There is no Brazil–Paraguay treaty to reduce them.
No. Paraguay is not on Brazil’s tax-haven or privileged-regime lists, so the higher 25% rates for those jurisdictions do not apply to it.
When the agent negotiates and concludes contracts in your name. An agent who only promotes and passes on orders generally does not.
The base-first route, market by market.
When the answer is a Brazilian company.
Tell us what you sell and to whom. We set up the Paraguay side — company, maquila or export — and tell you honestly when Brazil needs its own company. Fixed quote within one business day.
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