Countries › Paraguay › Guide › 12. Sectors › Biofuels in Paraguay: biodiesel blend mandate, ethanol in gasoline, producer licensing and tax benefits

Biofuels in Paraguay: biodiesel blend mandate, ethanol in gasoline, producer licensing and tax benefits

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

Paraguay requires biofuel in its road fuels: every diesel (Gasoil Tipo III) must carry biodiesel and gasoline below 97 octane must be blended with anhydrous ethanol, and the Ministerio de Industria y Comercio (MIC) sets the percentages by resolution. Since Ley 7635/2026 the legal band for the biodiesel blend is 5 to 20 percent; MIC Resolution 565 of 24 July 2026 sets a minimum of 7 percent until 31 December 2026 and 8 percent from 1 January 2027, only MIC licensed domestic producers using Paraguayan feedstock may supply it, and imports of biodiesel are banned. MIC licensed biodiesel producers get IVA exemption on sales and direct inputs, import duty exemption on capital goods and property tax relief for the life of the 20 year regime (to November 2039), now also for exports; ethanol blending must give preference to sugarcane alcohol, with at least 50 percent from cane.

USD figures use PYG 5,868.31 per US dollar, the Banco Central del Paraguay reference quotation in the planilla for Wednesday 28 October 2026. Amounts set in daily minimum wages (jornales) use PYG 117,077 and those in monthly minimum wages use PYG 3,044,000, both in force since 1 July 2026 under MTESS Resolution 670/2026. Conversions are for orientation only.

Key facts

Minimum biodiesel blend in Gasoil Tipo III to 31 December 2026	7 % v/vMIC Res. 565/2026 art. 1, as of 2026-10-28 · in force
Minimum biodiesel blend in Gasoil Tipo III from 1 January 2027	8 % v/vMIC Res. 565/2026 art. 2, as of 2026-10-28 · in force from 2027-01-01
Legal band for the mandatory biodiesel blend	5 to 20 %Ley 6389/2019 art. 5 as amended by Ley 7635/2026, as of 2026-10-28 · in force
Biodiesel imports for the mandatory blend	Prohibited Ley 6389/2019 art. 5 and 13, as of 2026-10-28 · in force
Duration of the biodiesel promotion regime	20 years from 21 November 2019 Ley 6389/2019 art. 2, as of 2026-10-28 · in force
Minimum share of sugarcane alcohol in ethanol for blending	50 %Ley 5444/2015 art. 7 as amended by Ley 7357/2024, as of 2026-10-28 · in force
MIC deadline to certify a biofuel project (tacit approval after)	60 calendar daysLey 2748/2005 art. 7 as amended by Ley 3163/2007, as of 2026-10-28 · in force
Flex fuel or hydrated alcohol pumps required per 10 stations	2 pumpsLey 5444/2015 art. 4, as of 2026-10-28 · in force
Maximum MIC fine under the biofuels law	200 daily minimum wagesLey 2748/2005 art. 19, as of 2026-10-28 · in force

The rule

1. Biofuels framework and MIC certification. Biofuels are fuels made from animal or vegetable raw materials, agro industrial products or organic waste that meet MIC quality parameters; the law names biodiesel, absolute (anhydrous) ethanol for blending with gasoline and hydrated ethanol for dedicated engines, and the Executive may add others by decree. Investment projects by persons resident in Paraguay qualify for the regime; the MIC certifies that an investment or industrial activity is directly involved in biofuel production. The project is filed with the MIC, which must issue its certificate within 60 calendar days of a complete filing, failing which the project is deemed approved. Producers must use domestic raw material unless the Ministerio de Agricultura y Ganadería (MAG) officially declares a shortage, file production and sales returns with the MIC before the tenth day of every third month, and the MIC has 30 calendar days to object or the declared output is certified. The Executive may not charge biofuel producers inspection or other fees. Fuel distributors must offer biofuels through their station networks.
Cost to do it: No MIC certification fee: art. 14 bars inspection or other charges on producers.
Example: A Paraguayan S.A. building a biodiesel plant files its project with the MIC; if no rejection arrives within 60 calendar days of the complete filing, the project counts as approved. / A US$20 million plant can plan on a 60 day statutory window for its MIC certificate, with no government fee for the certificate itself.Ley Nº 2748/2005, de fomento de los biocombustibles, as amended by Ley Nº 3163/2007, Art. 2, 3, 6, 7 (text of Ley 3163 art. 1), 10, 11, 12, 13 and 14, 2005-10-07 official text · verified 2026-10-28 · changed: Ley 3163/2007 (promulgated 30 March 2007) rewrote art. 7 and dropped the original second paragraph that said no environmental impact assessment was required for biofuel production.

2. Biodiesel blend mandate. All biofuel for the mandatory blend may be produced and supplied only by producers licensed by the MIC, who must use domestic feedstock; refineries, storage and dispatch plants and fuel distributors (the blenders) must buy from them, and importing biodiesel is prohibited. Anyone in the chain (production, storage, sale or blending) must be licensed by the MIC or the activity is treated as clandestine for the purposes of the regime. Since Ley 7635/2026 the mandatory local blend of biodiesel in Gasoil Tipo III may not be less than 5 percent nor more than 20 percent, and the MIC defines increases and reductions inside that band. MIC Resolution 472 of 19 June 2026 had set 8 to 10 percent; Resolution 565 of 24 July 2026 abrogated it and set a minimum of 7 percent v/v from its signature until 31 December 2026 and a minimum of 8 percent v/v from 1 January 2027, with compliance checks starting 60 days after signature. The regime runs for 20 years from the day after promulgation of Ley 6389 (20 November 2019).
Cost to do it: No fee in the law; blenders bear the cost of buying licensed domestic biodiesel at the mandated share.
Example: A distributor selling 10,000,000 litres of Gasoil Tipo III in November 2026 must include at least 700,000 litres of licensed domestic biodiesel; from January 2027 at least 800,000 litres. / On the same volume, each percentage point of blend is 100,000 litres; a 20 percent ceiling would allow up to 2,000,000 litres if the MIC raised the blend.Ley Nº 6389/2019, as amended by Ley Nº 7635/2026; MIC Resolución Nº 0565/2026, Ley 6389 art. 2, 4, 5 (text of Ley 7635 art. 1), 6 g), 7 and 13; Res. 565 art. 1 to 4, 2026-07-24 official text · verified 2026-10-28 · changed: Ley 7635/2026, promulgated and published on 27 May 2026, replaced the original art. 5 (gradual 1 percent yearly increases up to a 5 percent maximum) with a 5 to 20 percent band, extended the tax benefits to exports and abrogated art. 9 (inter agency monitoring unit). MIC Res. 472/2026 (8 to 10 percent, in force 30 days after 19 June 2026) was abrogated by Res. 565 of 24 July 2026 (7 percent to end 2026, 8 percent from 1 January 2027).

3. Biodiesel tax benefits. Domestic producers licensed by the MIC that make biodiesel, for the local mandatory blend or for export, enjoy for the whole duration of the regime: exemption from IVA on sales of that fuel, also covering purchases of raw materials, inputs, equipment, installations and other goods used directly in production; exemption from import duty and any other import charge on capital goods needed for production; and exemption from the tax on capital for the real estate needed for the activity. These benefits add to those of other special laws. Because Ley 6389 was promulgated after the 2019 tax reform, its benefits were not swept away by Ley 6380 art. 153.
Cost to do it: No fee; licence from the MIC is the condition.
Example: A licensed producer selling PYG 5,868,310,000 of biodiesel saves the 10 percent general IVA rate that would otherwise apply, PYG 586,831,000, and pays no IVA on its direct inputs. / On US$1 million of biodiesel sales the exemption is worth US$100,000 of IVA not charged, a price advantage for blenders that cannot recover IVA on an exempt purchase.Ley Nº 6389/2019, art. 15 as replaced by Ley Nº 7635/2026, Art. 15 (text of Ley 7635 art. 1), 2026-05-27 official text · verified 2026-10-28

4. Ethanol in gasoline. Gasolines below 97 octane must be blended with anhydrous ethanol in the highest possible percentage, by volume and based on MIC technical studies, and the MIC sets the percentages by resolution according to alcohol supply. Under the text given by Ley 7357/2024, preference goes to alcohol from sugarcane produced in Paraguay, guaranteeing at least 50 percent of cane origin, with a control system to check purchases by raw material. Distributors must guarantee national coverage of flex fuel pumps (E85, 85 percent ethanol and 15 percent gasoline of at least 85 octane, or hydrated alcohol), at least two pumps for every ten stations, under MIC rules phased in with the flex vehicle fleet; licensed ethanol plants must open a pump in their municipality; and state bodies buying light vehicles must include at least 30 percent flex fuel vehicles. Ley 7391/2024 gives the MIC the sanctioning power over the alcohol and biofuel laws, and both laws were regulated by Decreto 5968.
Cost to do it: No fee in the law; ethanol plants bear the cost of the mandatory local pump.
Example: A distributor with 50 licensed stations must offer flex fuel or hydrated alcohol at no fewer than 10 pumps once the MIC phases in the requirement. / An ethanol buyer sourcing 100,000 cubic metres for blending must buy at least 50,000 cubic metres from sugarcane alcohol.Ley Nº 5444/2015, de fomento de consumo de alcohol absoluto y alcohol carburante, art. 7 as amended by Ley Nº 7357/2024; Decreto Nº 5968/2026, Ley 5444 art. 2, 4, 5, 7 and 11, 2015-07-13 official text · verified 2026-10-28 · changed: Ley 7357/2024 rewrote the second paragraph of art. 7 (the original 2015 text let other feedstocks be used only after domestic cane alcohol was exhausted) to require a minimum of 50 percent cane origin; the MIC published Decreto 5968 regulating Ley 7357/2024 and Ley 7391/2024 in 2026.

5. Sanctions. Breaches of the biofuels law or MIC quality standards are sanctioned by the MIC after an administrative proceeding with a right of defence: warning, suspension or annulment of benefits, confiscation and fines of up to 200 daily minimum wages, with at least five business days to appeal to the Tribunal de Cuentas. For the biodiesel regime, MIC fines are calculated under Ley 904/1963 as amended by Ley 5289/2014, and the MIC may also apply non monetary sanctions graded by regulation.
Cost to do it: Fine ceiling under Ley 2748: 200 daily minimum wages, PYG 23,415,400 (about US$3,990).
Example: A distributor found selling gasoline below the MIC ethanol standard risks a fine of up to PYG 23,415,400 and confiscation. / The Ley 2748 fine ceiling is about US$3,990; loss of benefits for a producer usually costs far more.Ley Nº 2748/2005 and Ley Nº 6389/2019, Ley 2748 art. 19; Ley 6389 art. 16, 2019-11-20 official text · verified 2026-10-28

Period	Blend	Source
Legal band since 27 May 2026	5 to 20 percent	Ley 6389 art. 5 as amended by Ley 7635/2026
30 days after 19 June 2026 until 24 July 2026	8 to 10 percent	MIC Res. 472/2026 (abrogated)
24 July 2026 to 31 December 2026	At least 7 percent	MIC Res. 565/2026 art. 1
From 1 January 2027	At least 8 percent	MIC Res. 565/2026 art. 2

Biodiesel blend over time (Gasoil Tipo III)

Worked example

Blender: a distributor sells 10,000,000 litres of Gasoil Tipo III in December 2026. It must blend at least 700,000 litres of biodiesel bought from MIC licensed domestic producers (7 percent), and plan for at least 800,000 litres on the same volume from January 2027 (8 percent).
Producer: a licensed biodiesel plant sells PYG 5,868,310,000 (US$1,000,000) to blenders and exporters in a year. It charges no IVA on those sales (a PYG 586,831,000, US$100,000, saving against the 10 percent general rate), pays no IVA on direct inputs and equipment, and imports its capital goods free of duty.

Step by step

Incorporate in Paraguay: the Ley 2748 regime is for persons resident in the country and the Ley 6389 benefits are for national producers licensed by the MIC.
File the investment project with the MIC under Ley 2748 art. 7 and obtain the certificate (60 calendar days, tacit approval if no rejection).
Obtain the MIC licence (habilitación) for production, storage or blending facilities under Ley 6389 art. 7 and register as a promoted producer; MIPYMES get preferential attention.
Secure domestic feedstock and keep MAG origin certification; imported feedstock is only allowed during an officially declared shortage under Ley 2748 art. 12.
Obtain the separate environmental licence: Ley 3163/2007 removed the old statement that no environmental impact assessment was required.
File quarterly production and sales returns with the MIC before the tenth day of every third month, and track MIC blend resolutions, which can change the mandate mid year.

Common traps

The MIC can move the blend inside the 5 to 20 percent band by resolution with little notice: in 2026 it set 8 to 10 percent in June and cut it to 7 percent in July.
Ley 2748 art. 15 grants the benefits of Ley 60/90 and Ley 2421/2004, but Ley 6380/2019 art. 153 repealed Ley 2421 chapters III and IV and special exemptions not on its keep list, and Ley 7548/2025 repealed Ley 60/90; model only the Ley 6389 art. 15 benefits for biodiesel and check the Ley 7548 regime for ethanol plants.
Biodiesel benefits require MIC licensing; an unlicensed producer is treated as clandestine and gets none of them (Ley 6389 art. 7).
Importing biodiesel for the mandate is banned outright, so a blender cannot cover a domestic shortfall with imports.
The current ethanol blend percentage is set by MIC resolution; read the resolution in force on the day rather than relying on percentages quoted in the press.
For Argentine feedstock or fuel trade, the domestic raw material rules (Ley 2748 art. 12 and Ley 6389 art. 13) limit what can count toward the Paraguayan mandate; see The Argentine Thread guide for the Argentine side.

Sources

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