Countries › Paraguay › Guide › 9. Trade and customs › Free zones in Paraguay: the 0.5 percent export tax, local sales limits and controls

Free zones in Paraguay: the 0.5 percent export tax, local sales limits and controls

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

Paraguayan free zones are fenced private areas run by concessionaires for 30 years, where commercial, industrial and service users exporting to third countries pay a single 0.5 percent tax on export income instead of all other taxes. Users may sell up to 10 percent of their sales into Paraguay under that tax; above that, industrial and service users pay income tax with a 70 percent reduction on the local share. The 2019 tax reform kept the regime, and breaches are fined up to 1 percent of planned investment, triple for serious offences.

USD figures use PYG 5,868.31 per US dollar, the Banco Central del Paraguay reference quotation in the planilla of 28 October 2026. Conversions are for orientation only.

Key facts

Free zone single tax on export sales	0.5 %Ley 523/1995 art. 14, as of 2026-10-28 · in force
Local sales allowed under the free zone tax	10 percent of gross sales %Ley 523/1995 art. 16, as of 2026-10-28 · in force
Income tax reduction on local sales above the cap (industrial and service users)	70 %Ley 523/1995 art. 17, as of 2026-10-28 · in force
Concession term (extendable)	30 yearsLey 523/1995 art. 6, as of 2026-10-28 · in force
Lock in after choosing between free zone tax and income tax	4 fiscal yearsLey 523/1995 art. 18, as of 2026-10-28 · in force
Corporate income tax (IRE) rate	10 %Ley 6380/2019 art. 21, as of 2026-10-28 · in force
BCP reference rate used for conversions (28 Oct 2026)	5868.31 PYGBCP planilla de cotizaciones, as of 2026-10-28 · in force

The rule

1. What a free zone is. Free zones are areas of national territory authorised by the Executive, on private land, fenced off from the customs territory with a single entry and exit, and outside the customs territory for tariff purposes. Users may carry out commercial activities (intermediation without transformation, including storage, sorting and mixing), industrial activities (manufacturing for export, including assembly) and repair and maintenance services; other services for international markets may be authorised by the Executive at the request of the National Free Zone Council. The State can never be a concessionaire or user.Ley Nº 523/1995 Que autoriza y establece el régimen de zonas francas, Art. 1, 2, 3 and 8, 1995-01-16 official text · verified 2026-10-28

2. Concessionaire and user. The concessionaire is a company that, by contract with the Executive, develops, runs and operates the zone and builds its infrastructure, for 30 years extendable for the same term if it complied. A user is an individual or company that operates in the zone under a contract with the concessionaire; it must register as a trader, keep separate accounts, add Usuario de Zona Franca to its name, not be bankrupt or barred from disposing of assets, start investing within one year and, for industrial users, start production within two years of the contract.Ley Nº 523/1995 Que autoriza y establece el régimen de zonas francas, Art. 5, 6, 7, 9, 10 and 11, 1995-01-16 official text · verified 2026-10-28

3. The 0.5 percent free zone tax. Activities in the zone and the users' results are exempt from all national, departmental and municipal taxes, except the free zone regime itself. Users exporting exclusively to third countries pay a single Impuesto de Zona Franca of 0.5 percent of gross income from sales to third countries, settled with each export declaration. The exemption covers incorporation of the user company, remittance of profits or dividends abroad, and royalties, fees, interest, rentals and other payments for services from abroad. Users may opt instead for ordinary income tax and cannot switch back for four fiscal years. Later tax law changes do not apply to users unless they opt in.
Example: User exporting PYG 11,736,620,000 to third countries: free zone tax PYG 58,683,100, paid export by export. / US$2,000,000 of exports: US$10,000 of tax.Ley Nº 523/1995 Que autoriza y establece el régimen de zonas francas, Art. 13, 14 and 18, 1995-01-16 official text · verified 2026-10-28

4. Sales into Paraguay. Users may sell finished goods and services into the customs territory under the 0.5 percent tax if those sales do not exceed 10 percent of total gross sales in the fiscal year. Above 10 percent, industrial and service users pay income tax at a 70 percent reduced rate on the share of income from local sales (deducting expenses in the same proportion), and commercial users selling locally pay the ordinary income tax on that share; the 0.5 percent tax still applies to exports. Goods entering Paraguay from a free zone pay all import taxes including duty, unless industrial products meet the origin rules of the law or of trade agreements.
Example: Industrial user with local sales above 10 percent: corporate income tax at 10 percent reduced by 70 percent, an effective 3 percent rate on the local sales share of net income (IRE rate under Ley 6380 art. 21).Ley Nº 523/1995 Que autoriza y establece el régimen de zonas francas, Art. 15, 16, 17 and 20, 1995-01-16 official text · verified 2026-10-28

5. Flows in and out. Goods from Paraguay into a free zone are treated as exports for tax, customs and administrative purposes, so local suppliers get export treatment; entry of goods into the zone from abroad or Paraguay is free of all taxes except fees for services rendered, and exports and re exports from the zone are tax free. Capital goods, including leased goods, enter tax free but cannot be sold or leased into Paraguay without the buyer paying import taxes on their current value. Goods arriving for a free zone must go there immediately and cannot be held elsewhere except in authorised customs premises. Retail sales inside the zone are presumed to be imports into Paraguay.Ley Nº 523/1995 Que autoriza y establece el régimen de zonas francas, Art. 12, 22 to 30, 1995-01-16 official text · verified 2026-10-28

6. Still protected after the 2019 tax reform. Ley 6380/2019 repealed tax exemptions and special regimes in general laws but expressly preserved those in Ley 523/1995.Ley Nº 6380/2019 De modernización y simplificación del sistema tributario nacional, Art. 153, 2019-09-25 official text · verified 2026-10-28

7. Control, ports and origin. Customs, now the DNIT Gerencia General de Aduanas, controls goods entering and leaving the zones and transfers to ports. The national ports administration (ANNP) may charge only for services actually provided, at rates not above those of the Port of Asunción, and moves between a port and a zone are billed as one international transit operation. The Ministry of Industry and Commerce issues certificates of origin. Under the Customs Code, free zones, free ports and free warehouses must be created by law and Paraguayan zones abroad are controlled through customs delegations.Ley Nº 523/1995 Que autoriza y establece el régimen de zonas francas; Ley Nº 2422/2004 Código Aduanero, Ley 523 art. 26, 31 and 46; Code art. 287, 1995-01-16 official text · verified 2026-10-28

8. Sanctions. The National Free Zone Council fines concessionaires and users up to 1 percent of the planned investment, and can cancel the concession or the user's right to operate for repeated serious breaches. Serious user offences (not moving goods into the zone in time, taking goods out without an export declaration, false lists of exported goods) carry triple that fine; directors are jointly liable and barred for 10 years from managing a free zone company. Moving goods in or out in breach of the law is smuggling. Council decisions can be challenged by reconsideration within 5 days, then before the Executive within 10 days and then the Tribunal de Cuentas within 10 days.
Example: User with a planned investment of PYG 29,341,550,000: ordinary fine up to PYG 293,415,500; serious offence up to PYG 880,246,500. / US$5,000,000 planned investment: fine up to US$50,000, or US$150,000 for a serious offence.Ley Nº 523/1995 Que autoriza y establece el régimen de zonas francas; Ley Nº 6417/2019, Ley 523 art. 32 to 36 and 41; Code art. 336 j, 1995-01-16 official text · verified 2026-10-28

Flow	Treatment	Article
Inputs and capital goods entering the zone	Exempt, fees for services only	23, 27
Purchases from Paraguayan suppliers	Treated as exports for the supplier	12, 22
Exports to third countries	0.5% of gross income, per export declaration	14
Sales into Paraguay up to 10% of sales	0.5% tax; buyer pays import taxes	16, 20
Sales into Paraguay above 10%	Income tax with 70% reduction on that share (industrial and services)	17
Dividends, royalties, interest and fees paid abroad	Exempt	13

Tax treatment of a free zone user (Ley 523/1995)

Worked example

A logistics and assembly user exports US$2,000,000 (PYG 11,736,620,000) to Brazil and Chile and sells US$150,000 into Paraguay (7 percent of sales): it pays 0.5 percent on export income, PYG 58,683,100 (US$10,000); the local sales stay under the 10 percent cap, and the Paraguayan buyers pay import taxes on them. Dividends paid to the foreign parent are exempt.

Step by step

1. Choose an operating zone and negotiate the user contract with the concessionaire (Ley 523 art. 7).
2. Register the user company as a trader, add Usuario de Zona Franca to its name and keep separate accounts (art. 9).
3. Decide between the 0.5 percent tax and ordinary income tax; the choice locks in for four fiscal years (art. 18).
4. Start investing within one year, and production within two years for industrial users (art. 11).
5. Route every inbound shipment straight to the zone and every outbound sale through an export declaration (art. 29 and 34).

Common traps

Ley 523 art. 12 lets concessionaires seek benefits under Ley 60/1990, which Ley 7548/2025 repealed; concessionaires should look at the new incentive regime instead.
Retail sales inside a zone are presumed to be imports into Paraguay and pay import taxes (art. 30).
Selling capital goods that came in tax free to a Paraguayan buyer requires the buyer to pay import taxes on current value first (art. 28).
Taking goods out without an export declaration is a serious offence and smuggling, with director disqualification for 10 years (art. 34 to 36).
The 0.5 percent tax applies only to users exporting exclusively to third countries; commercial users with local sales pay ordinary income tax on the local share (art. 14 and 15).

Sources

Related: Paraguay country profile · live dashboard · central bank and release calendar · our posts on X · where Argentina is involved, see The Argentine Thread guide

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