Countries › Paraguay › Guide › 3. Investing › Investment guarantee contracts in Paraguay: income tax rate stability of up to 20 years under Ley 5542/2015

Investment guarantee contracts in Paraguay: income tax rate stability of up to 20 years under Ley 5542/2015

Last verified: 2026-10-28 · Status: Stable

Ley 5542/2015 lets domestic and foreign investors sign a contract with the State, by public deed, that freezes the income tax rate for up to 10 years from start up, 15 years for projects from US$50 million to under US$100 million and 20 years for industrial projects of US$100 million or more. The project must be run through a dedicated S.A., capital must be paid in within two or five years, accounts must be externally audited, and the contract survives a sale of the company. Ley 6380/2019 expressly kept the regime alive and extended it to the current corporate income tax (IRE).

USD figures use PYG 5,868.31 per US dollar, the Banco Central del Paraguay reference quotation for 28 October 2026, retrieved on the verification date. Conversions are for orientation only.

Key facts

Maximum income tax rate stability term (industrial projects of US$100 million or more)	20 yearsLey 5542/2015 art. 12, as of 2026-10-28 · in force
Standard income tax rate stability term from start up	10 yearsLey 5542/2015 art. 5 a) 2, as of 2026-10-28 · in force
Investment band for up to 15 years of stability	50000000 to under 100000000 USDLey 5542/2015 art. 12, as of 2026-10-28 · in force
Maximum period to pay in capital for investments above US$5 million	5 yearsLey 5542/2015 art. 4, as of 2026-10-28 · in force
Maximum period to pay in capital for investments below US$5 million	2 yearsLey 5542/2015 art. 4, as of 2026-10-28 · in force
Waiting period before capital can be remitted abroad	2 years from start upLey 5542/2015 art. 5 a) 1, as of 2026-10-28 · in force
Required vehicle for the contract	Dedicated sociedad anónima textLey 5542/2015 art. 4, as of 2026-10-28 · in force
Annual canon on the investment declared for the year (MIC information sheet)	1 %MIC sheet on Ley 5542/2015 and Decreto 6100/2016, as of 2026-10-28 · in force
Corporate income tax (IRE) rate that a contract signed now would freeze	10 %Ley 6380/2019 art. 21, as of 2026-10-28 · in force
BCP reference rate	5868.31 PYG per USDBCP reference quotation, as of 2026-10-28 · in force

The rule

1. Who qualifies and how. The law protects capital invested in industries or other productive activities in Paraguay that create jobs and contribute to economic and social development, mainly by adding value to Paraguayan or imported raw materials. Paraguayan and foreign individuals and companies may apply, whether they create a new company or adapt an existing one. Capital can be cash brought in through a bank or financial entity, physical goods, or capitalisable technology, whose value the Investment Council must verify within 60 days (after which the company's sworn estimate stands). Approval is recorded in a contract between the State and the company, signed by public deed. Before signing, the investors must form a sociedad anónima (S.A.) dedicated to the contracted activity, or adapt the bylaws of an existing S.A.
Cost to do it: The law sets no application fee. The MIC information sheet on the regime lists an annual canon equal to 1 percent of the investment declared for the year: on PYG 58,683,100,000 (US$10,000,000) invested in a year, PYG 586,831,000 (US$100,000). Notary fees for the public deed and for forming the S.A. are market priced.Ley Nº 5542/2015 De garantías para las inversiones y fomento a la generación de empleo y el desarrollo económico y social, Art. 1, 2, 3 and 4, 2015-12-11 official text · verified 2026-10-28

2. Capital deadline and start up. The contract fixes the period within which the full capital must be paid in: no more than five years for investments above US$5,000,000 (or the guaraní equivalent) and no more than two years below that amount, counted from the approval resolution. The project must state the maximum date for start up (puesta en marcha), defined as the start of operations once the company can carry on its business, and the stability period runs from that date, not from signing.
Example: An investment of PYG 35,209,860,000 (above US$5,000,000) may be paid in over up to five years; one of PYG 23,473,240,000 (below US$5,000,000) must be paid in within two years. / US$6,000,000 project: up to five years to pay in capital. US$4,000,000 project: two years.Ley Nº 5542/2015, Art. 4 and 8, 2015-12-11 official text · verified 2026-10-28

3. Tax rate stability. The company is entitled to keep the income tax rate that applies to its activity unchanged, at the percentage in force on the date the contract is signed, for up to ten years from start up. For investments from US$50,000,000 to under US$100,000,000 in projects meeting the purpose of the law, the term may be extended up to fifteen years depending on the investment. For investments of US$100,000,000 or more in industrial projects, stability may exceptionally be granted for up to twenty years. Only the income tax rate is frozen: the company remains subject to environmental, labor, social security law, the general tax regime and all other laws not specifically altered by Ley 5542.
Example: A company that signs in 2026 locks the 10 percent IRE rate of Ley 6380 art. 21. On PYG 5,868,310,000 of taxable profit its IRE stays PYG 586,831,000 a year during the stability term, even if the general rate later rises to, say, 12 percent (which would have cost PYG 704,197,200). / Per US$1,000,000 of taxable profit: IRE fixed at US$100,000. A hypothetical 2 point rise in the general rate would be worth US$20,000 a year to the contract holder.Ley Nº 5542/2015, Art. 5 a) 2, 9 and 12, 2015-12-11 official text · verified 2026-10-28

4. Regime kept alive by the 2019 tax reform. Ley 6380/2019 repealed all laws granting tax exemptions or special tax regimes, but expressly excepted Ley 5542/2015 (together with Ley 60/90, maquila, free zones and others), and provided that the benefits these laws granted for the old IRACIS corporate tax extend to the IRE.Ley Nº 6380/2019 De modernización y simplificación del sistema tributario nacional, Art. 153 num. 5 lit. p and last paragraph, 2019-09-25 official text · verified 2026-10-28

5. Capital and profit remittances. The company may transfer its capital and net profits abroad. Capital may be remitted once two years have passed since start up; profit remittances have no waiting period. The exchange rate is the most favourable the investor can obtain from any entity authorised by the Central Bank, and access to the FX market is subject to anti money laundering rules. Capital gains may only be remitted when they come from selling the shares or rights representing the investment or from total or partial liquidation of the company; on liquidation, import taxes exempted up to that date must be paid. Net proceeds of those sales are exempt from any tax up to the amount of investment actually made, and any excess follows the general tax rules. Export projects may keep part of their foreign currency abroad to pay authorised obligations or remit profits.
Example: A company that invested PYG 58,683,100,000 and is sold for PYG 70,419,720,000: the first PYG 58,683,100,000 of net proceeds is exempt; tax applies only to the PYG 11,736,620,000 excess under the general rules. / US$10,000,000 invested, sold for US$12,000,000: the exemption covers US$10,000,000; the US$2,000,000 excess is taxed normally.Ley Nº 5542/2015, Art. 5 a) 1, 6, 7 and 13, 2015-12-11 official text · verified 2026-10-28

6. Non discrimination and legal certainty. Covered investments follow the ordinary legal regime and cannot be discriminated against directly or indirectly. A rule is discriminatory if it applies to the whole of a productive activity but excludes the covered investment, or if the investment cannot access a sectoral or zonal special regime despite meeting its conditions. The holder may ask the authority to remove the discrimination within one year of the rule being issued; the authority must answer within 60 days, and if it does not, denies the request or cannot fix it administratively, the holder may go to the ordinary courts. Covered investments cannot be subject to any form of appropriation or confiscation and are protected by the constitutional principles of non retroactivity, free competition and respect for private property.Ley Nº 5542/2015, Art. 10, 11 and 23, 2015-12-11 official text · verified 2026-10-28

7. Approval, transfer and audit. The Investment Council is the only body competent to give its opinion on applications, and approval is granted individually by a resolution signed by the Ministers of Industry and Commerce and of Finance; a person designated by the President signs the contract for the State. Annual financial statements must be externally audited. If the company is sold or part of its shares transferred, obligations and benefits continue for the remaining term. Applicants must comply fully with environmental and public health rules. Disputes go to the national courts unless the contract provides for arbitration.Ley Nº 5542/2015, Art. 14, 15, 16, 17, 18, 19 and 24, 2015-12-11 official text · verified 2026-10-28

8. Arbitration law referred to in the contract has changed. Ley 5542 art. 24 allows arbitration under Ley 1879/2002. Ley 7561/2025 De Arbitraje repealed Ley 1879/2002 except its mediation title, so new arbitration clauses in investment contracts operate under Ley 7561; proceedings already requested or started before it came into force stay under the old law unless agreed otherwise.Ley Nº 7561/2025 De Arbitraje, Art. 70 and 71, 2025-12-23 official text · verified 2026-10-28 · changed: Ley 7561/2025, promulgated and published on 23 December 2025, repealed Ley 1879/2002 (except articles 53 to 67 on mediation), which Ley 5542/2015 art. 24 names as the arbitration framework for investment contracts.

9. High social content industries. Investments located in preferential development areas defined by the National Economic Team, that use significant labor, add value to raw materials through industrialisation and do not significantly or irreversibly degrade the environment qualify for extra benefits: exemption from the former 5 percent additional income tax on distributed profits, and a cut in the rate on profits remitted abroad of 1 percent for every 100 direct jobs, up to a maximum of 50 percent of the applicable rate, as long as the requirements are kept.
Example: The cut is capped at half the applicable rate. If it applies to today's 15 percent dividend tax for non residents (Ley 6380 art. 43), the floor would be 7.5 percent: on a PYG 5,868,310,000 dividend, tax of PYG 440,123,250 instead of PYG 880,246,500. / On a US$1,000,000 dividend, the 50 percent cap would mean US$75,000 of tax instead of US$150,000. Confirm with DNIT and MIC how the reduction maps onto the current IDU before relying on it.Ley Nº 5542/2015, Art. 20, 21 and 22, 2015-12-11 official text · verified 2026-10-28

Investment	PYG equivalent at 5,868.31	Maximum stability term	Capital pay in deadline	Condition
Up to US$5,000,000	Up to PYG 29,341,550,000	10 years	2 years	Productive, job creating project
Above US$5,000,000 and under US$50,000,000	PYG 29,341,550,000 to PYG 293,415,500,000	10 years	5 years	Productive, job creating project
US$50,000,000 to under US$100,000,000	PYG 293,415,500,000 to PYG 586,831,000,000	Up to 15 years	5 years	Depends on the investment's features
US$100,000,000 or more	PYG 586,831,000,000 or more	Up to 20 years	5 years	Industrial projects only, exceptional

Stability term by investment size under Ley 5542/2015 (verified 28 October 2026)

Worked example

A foreign group plans a US$120,000,000 (PYG 704,197,200,000) industrial plant expected to earn US$15,000,000 (PYG 88,024,650,000) of taxable profit a year once running.
It forms a dedicated S.A., files the project, obtains the biministerial resolution and signs the contract by public deed in 2026, locking the 10 percent IRE rate for up to 20 years from start up.
Yearly IRE: PYG 8,802,465,000 (US$1,500,000). If the general rate later rose by 2 points, the contract would save PYG 1,760,493,000 (US$300,000) a year.
Capital must be fully paid in within five years; capital can be remitted abroad two years after start up, profits at any time, after the 15 percent dividend tax for non residents.
On the MIC sheet's 1 percent annual canon, a year in which US$40,000,000 is invested would cost about US$400,000 (PYG 2,347,324,000); weigh this against the expected value of stability.

Step by step

Check that the project is a productive, job creating, value adding activity under art. 1, and size it against the US$5 million, US$50 million and US$100 million bands.
Form a dedicated S.A. (or adapt the bylaws of an existing one) for the contracted activity; see the sociedad anónima page for formation steps and cost.
Prepare the project with investment schedule, start up date, financing and environmental licence, plus the documents the MIC sheet lists (tax and IPS compliance certificates, last three financial statements or opening balance, beneficial owner filing, bank reference, foreign direct investment record with the Central Bank where applicable).
File with the Ministry of Industry and Commerce; the Investment Council gives its opinion and the Ministers of Industry and Commerce and of Economy and Finance approve by joint resolution.
Sign the contract by public deed with the State representative designated by the President; include an arbitration clause under Ley 7561/2025 if wanted.
Pay in the capital within the contractual deadline, start operations by the stated date, file the yearly investment statement and external audit, and keep environmental and health compliance.

Common traps

Stability covers only the income tax rate, not the tax base, IVA, the dividend tax or other levies.
The term runs from start up, so a slow build does not eat into it, but missing the contractual start up or capital deadlines can trigger administrative sanctions.
Ley 5542 still refers to the Investment Council of Ley 60/90 and to Ley 60/90 customs benefits; Ley 7548/2025 repealed Ley 60/90 and created a new Investment Council, so confirm with the MIC which body and which capital goods regime now apply.
The extra benefits of art. 22 were written for the old Ley 125/91 tax system (a 5 percent additional IRACIS rate that no longer exists); how the remittance rate cut applies to today's IDU needs confirmation from DNIT before it is priced in.
Capital can leave only two years after start up, and capital gains only through a sale of the shares or a liquidation, which also triggers payment of import taxes exempted up to then.
The 1 percent annual canon appears on the MIC sheet, not in the law itself; ask the MIC for the current figure and basis before modelling.

Sources

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