Countries › Paraguay › Guide › 12. Sectors › Forestry plantations and timber in Paraguay: Ley 536 incentives, INFONA plans, the forestry surface right and how timber income is taxed

Forestry plantations and timber in Paraguay: Ley 536 incentives, INFONA plans, the forestry surface right and how timber income is taxed

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

Commercial plantations in Paraguay run on three laws: Ley 536/1995 on forestation and reforestation, which promises a 75 percent state bonus on direct planting and three years of maintenance costs for approved plans on land rated as forestry priority; Ley 3464/2008, which made the Instituto Forestal Nacional (INFONA) the forest authority; and Ley 4890/2013, which lets a landowner grant a separate, registrable and pledgeable forestry surface right over the trees. Approved plantations are shielded from agrarian reform and expropriation except for national infrastructure, plans are deemed approved if INFONA does not answer in 60 days, and failing to plant or to follow the plan triggers fines of 5 to 50 percent of the land's fiscal value. Timber income is taxed under the 2019 tax law: a forestry business may opt to compute net income as 30 percent of sales and pay the 10 percent IRE on it, while the old Ley 536 tax exemptions are not among the regimes Ley 6380 kept.

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

State bonus on direct planting costs (once per area)	75 %Ley 536/1995 art. 7, as of 2026-10-28 · in force
Years of maintenance costs covered at 75 percent	3 yearsLey 536/1995 art. 7, as of 2026-10-28 · in force
Deadline for the forest authority to approve a plantation plan (tacit approval after)	60 daysLey 536/1995 art. 5, as of 2026-10-28 · in force
Deadline for Hacienda to pay plantation certificates	60 daysLey 536/1995 art. 10 as amended by Ley 1639/2000, as of 2026-10-28 · in force
Minimum plantation survival for a certificate	80 % per hectareLey 536/1995 art. 9, as of 2026-10-28 · in force
Maximum yearly fine for failing an approved plan	50 % of fiscal valueLey 536/1995 art. 20, as of 2026-10-28 · in force
Fine for cutting without a registered plan	2x commercial value (3x if sold) Ley 536/1995 art. 23, as of 2026-10-28 · in force
Optional deemed net income for forestation activities	30 % of salesLey 6380/2019 art. 19, as of 2026-10-28 · in force
Property tax deduction on land under a forestry surface right	50 %Ley 4890/2013 art. 11, as of 2026-10-28 · in force
Time to replant after forest destruction to keep the surface right	2 yearsLey 4890/2013 art. 8, as of 2026-10-28 · in force

The rule

1. Plantation plans and protection. The State promotes forestation and reforestation on land of forestry priority, based on a forest management plan. Owners who want the incentives file a forestation or reforestation plan stating the main investment objective and are oriented on site by a forestry or agronomy engineer; the land must first be rated as forestry priority. The authority may suggest changes; once accepted, it must approve the plan within 60 days of filing, failing which the plan is deemed approved and a Certificate of Approval must be issued. Planting must start within one year of the certificate. Plantations on forestry priority land with approved plans are not subject to agrarian reform or expropriation, except for public utility national infrastructure such as roads, bridges, canals and dams. The authority was the Servicio Forestal Nacional; Ley 3464/2008 created INFONA and transferred to it all of the Servicio's staff, assets, budget, rights and obligations.
Cost to do it: No filing fee in Ley 536; the plan must be prepared with a forestry or agronomy engineer.
Example: A company files a 1,000 hectare eucalyptus plan with INFONA on 1 March; if INFONA has not answered within 60 days of filing, the plan is approved and planting must start within a year of the certificate. / A US$3 million plantation with an approved plan cannot be taken for agrarian reform; only national infrastructure works can justify expropriation.Ley Nº 536/1995, de fomento a la forestación y reforestación; Ley Nº 3464/2008, crea el Instituto Forestal Nacional (INFONA), Ley 536 art. 1 to 6; Ley 3464 art. 18 and 24, 1995-01-16 official text · verified 2026-10-28 · changed: Ley 3464/2008, promulgated 6 May 2008, created INFONA and transferred the Servicio Forestal Nacional to it.

2. The 75 percent bonus and its payment. The State pays a one time bonus of 75 percent of the direct costs of planting each forested or reforested area on rural land rated as forestry priority, and 75 percent of the direct maintenance costs during the first three years if done under the approved plan. The authority fixes each March the direct cost per hectare by zone, soil, species and other factors, indexed to the BCP consumer price index. Bonuses are paid against certificates issued from 12 months after planting once survival is at least 80 percent per hectare. Annual totals must be budgeted in the Presupuesto General de la Nación, and the Ministerio de Hacienda pays certificates within 60 days of presentation. The Banco Nacional de Fomento is to offer long term preferential credit against the approval certificate, and imported propagation material authorised by the authority clears free of duties. Beneficiaries may not change the use of land in the programme, and if the land is sold the obligations pass to the buyer. Bonuses received are not taxable income of the owner.
Cost to do it: The bonus covers 75 percent of direct planting and three years of maintenance costs at the per hectare value the authority sets; the owner bears the remaining 25 percent and all indirect costs.
Example: If INFONA's table puts direct planting cost at PYG 5,868,310 per hectare, a 1,000 hectare plantation could claim a bonus of PYG 4,401,232,500 after 12 months with at least 80 percent survival, subject to budget. / On US$1,000 per hectare of direct cost, the bonus is US$750 per hectare, or US$750,000 for 1,000 hectares, paid by Hacienda within 60 days of the certificate if funds are budgeted.Ley Nº 536/1995, as amended by Ley Nº 1639/2000, Ley 536 art. 7 to 12 and 17; art. 10 as replaced by Ley 1639 art. 1; Ley 1639 art. 7, 2000-12-20 official text · verified 2026-10-28 · changed: Ley 1639/2000, promulgated 20 December 2000, lengthened Hacienda's payment term from 30 to 60 days, removed the late payment interest, authorised up to PYG 50,000 million in treasury bonds to pay arrears and barred beneficiaries from changing land use. BACN also lists Ley 1968/2002 as a later amendment of Ley 536.

3. Penalties for failing the plan and for unauthorised cutting. Not starting the approved plan on time, or failing its programmes for reasons attributable to the owner, triggers fines on the fiscal value of the rural property: 5 percent in the first year, 10 percent in the second, 20 percent in the third, 40 percent in the fourth and 50 percent from the fifth, applied to the share of the plan not met; resuming needs a new approval and does not cancel fines already accrued. Any cutting or harvesting of plantations under the law needs a management plan filed and registered with the authority beforehand, signed by a forestry or agronomy engineer if the forest exceeds 30 hectares (a forestry or agronomy technician below that), and a final cut must provide for replanting at least the same area. Unauthorised cutting is fined at twice the commercial value of the products, which are confiscated, or three times if they were already sold, and the authority can stop the works with police help.
Cost to do it: Plan failure fines of 5 to 50 percent of the fiscal value of the property; unauthorised cutting fines of two or three times the commercial value of the timber.
Example: On a farm with a fiscal value of PYG 1,173,662,000 that misses its whole planting programme, the fine is PYG 58,683,100 in year one and PYG 586,831,000 a year from year five. / Selling US$100,000 of timber cut without a registered plan exposes the seller to a US$300,000 fine.Ley Nº 536/1995, de fomento a la forestación y reforestación, Art. 20 to 24, 1995-01-16 official text · verified 2026-10-28

4. The forestry surface right (DRSF). A landowner can grant third parties (surface holders) a right to use or dispose of trees planted, or natural forest standing, on its land, exercised under environmental law. The right is autonomous and separate from ownership; while it lasts the land can have no other use than the one agreed, and the trees are treated as movable property. It is created by contract, for value or free, or by will, always by public deed registered with the Dirección General de los Registros Públicos, including a licensed surveyor's report and, for natural forest, the management plan. The owner may still sell the land, but the buyer must respect the right, and the owner may not grant other use rights over the affected area. The holder can pledge the right with registration. The right survives total or partial destruction of the forest if the holder replants within two years, and ends by waiver, expiry, a resolutory condition, merger of owner and holder or mutual consent. The land gets a 50 percent deduction of the property tax while the right lasts. The legal forest reserve under Ley 422/1973 art. 42 cannot be placed under a surface right.
Cost to do it: Notary and registry costs for the public deed and a surveyor's report; the property tax on the land is cut by half while the right lasts.
Example: An investor pays a landowner PYG 2,934,155,000 for a 15 year surface right over a 2,000 hectare plantation, registers it by public deed and then pledges it to a bank as collateral. / The same US$500,000 right can back a registered pledge loan; if a fire destroys the trees, the right survives if the investor replants within two years.Ley Nº 4890/2013, del derecho real de superficie forestal, Art. 1 to 9 and 11, 2013-04-25 official text · verified 2026-10-28

5. How timber income is taxed today. Under the business income tax (IRE) at 10 percent of net income, a taxpayer in forestation activities may opt to determine taxable net income as 30 percent of the sale value, with no evidence to the contrary admitted; the tax rate then applies directly. Gains from biological transformation of plants, including forest growth, are taxed when actually realised by sale, while costs of agricultural, livestock and forestry activities may be deducted as accrued. Ley 6380/2019 art. 153 repealed all provisions of general or special laws granting tax exemptions or special tax regimes except those it lists; Ley 536 is not on that list, so its exemption from other taxes and its presumption that net income equals 10 percent of the value of timber cut should not be relied on.
Cost to do it: IRE at 10 percent; under the optional presumption the effective rate is 3 percent of gross timber sales.
Example: A plantation company selling timber for PYG 5,868,310,000 that opts for the presumption declares PYG 1,760,493,000 as net income and pays PYG 176,049,300 of IRE. / On US$1 million of timber sales the optional presumption gives US$300,000 of deemed net income and US$30,000 of IRE; the option makes sense when real margins exceed 30 percent.Ley Nº 6380/2019, de modernización y simplificación del sistema tributario nacional (consolidated text, DNIT), Art. 7, 19, 21 and 153, 2019-09-25 official text · verified 2026-10-28 · changed: Ley 6380/2019, promulgated 25 September 2019, replaced the old IRACIS regime with the IRE and, by art. 153, repealed special tax exemptions not on its list, which leaves out the tax chapter of Ley 536/1995.

Year of default	Fine on fiscal value	On a fiscal value of PYG 1,173,662,000 (US$200,000)
First	5 percent	PYG 58,683,100 (US$10,000)
Second	10 percent	PYG 117,366,200 (US$20,000)
Third	20 percent	PYG 234,732,400 (US$40,000)
Fourth	40 percent	PYG 469,464,800 (US$80,000)
Fifth onward	50 percent	PYG 586,831,000 (US$100,000)

Fines for failing an approved plantation plan (Ley 536 art. 20), on the share of the plan not met

Worked example

Plantation economics: a 1,000 hectare plan with direct planting costs of US$1,000 per hectare (US$1 million, PYG 5,868,310,000) could recover 75 percent, US$750,000 (PYG 4,401,232,500), through Ley 536 certificates after 12 months if survival is at least 80 percent and the bonus is budgeted, plus 75 percent of three years of maintenance costs.
Harvest: timber sold for US$1 million (PYG 5,868,310,000) under the IRE option of art. 19 gives deemed net income of US$300,000 (PYG 1,760,493,000) and IRE of US$30,000 (PYG 176,049,300), with no evidence admitted to the contrary once the option is taken.

Step by step

Have the land rated as forestry priority and prepare the plantation plan with a forestry or agronomy engineer.
File the plan with INFONA and obtain the Certificate of Approval (60 days, tacit approval if no answer).
Start planting within one year of the certificate; keep records to show at least 80 percent survival per hectare after 12 months.
Apply for bonus certificates for planting and for each of the first three years of maintenance, and present them to the Ministerio de Hacienda.
If the trees will be held by an investor other than the landowner, grant a forestry surface right by public deed with a surveyor's report and register it with the Registros Públicos.
Before any cut, file and register a harvest management plan with INFONA and plan replanting of at least the area cut; obtain forest authority waybills (guías) stating quantity, species, volume, origin and destination before transporting or selling timber (Ley 422/1973 art. 26).
Choose each year between real IRE accounts and the 30 percent deemed income option of Ley 6380 art. 19.

Common traps

The 75 percent bonus depends on budget appropriations: Ley 1639/2000 had to authorise PYG 50,000 million in treasury bonds to pay arrears, so model the bonus as uncertain cash.
Do not model the Ley 536 tax chapter (exemption from other taxes, 50 percent property tax exemption, 10 percent presumed income): Ley 6380 art. 153 repealed special exemptions not on its list, and Ley 536 is not on it.
Land in the programme cannot change use, and a buyer of the land inherits the plan obligations (Ley 1639 art. 7).
Fines for plan failure are charged on the fiscal value of the whole property, scaled to the share of the plan not met, and keep rising to 50 percent a year.
The legal reserve forest (rural properties over 20 hectares in forest zones must keep 25 percent of their area in natural forest under Ley 422/1973 art. 42) cannot be placed under a forestry surface right; see the real estate forests page for clearing limits and the Eastern Region ban.
The 50 percent property tax deduction for land under a forestry surface right comes from a 2013 law; confirm with the municipality that it still applies after Ley 6380 art. 153.

Sources

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