Copyright © 2026 TAG Fields Inteligência Tributária Ltda. All rights reserved.

1st edition — September 2026.

Normative basis and sources verified through September 2026, with emphasis, in Paraguay, on Ley 7547/2025 and Decree 5714/2026 and, in Brazil, on EC nº 132/2023 [Constitutional Amendment], LC nº 214/2025 [Complementary Law], Leis [Laws] nº 14.754/2023 and nº 14.596/2023, as well as the updates to IN RFB nº 1.037/2010 [Normative Instruction].

This work is technical, informational and educational in nature. Although it was prepared on the basis of extensive documentary research, giving priority to official sources, its content does not constitute or replace legal, tax, accounting, customs, regulatory or business advice specific to a given operation.

Legislation, regulations and administrative practice are subject to change. For that reason, any business decision must be preceded by verification of the rules in force and applicable to the specific case and, where necessary, by analysis by licensed professionals in the jurisdictions involved.

Throughout the work, priority was given to primary and official sources, including laws, decrees, resolutions, regulations, administrative acts and publications of the competent bodies. Where there are divergent interpretations, no express provision, or questions that depend on the circumstances of the specific case, those limitations are presented transparently, in accordance with the methodological criteria adopted in this work.

Whenever relevant, topics are examined in their legal, tax, customs, operational, financial and strategic dimensions, so that the reader understands not only the content of the applicable rules but also their practical implications for structuring and for business decision-making.

I dedicate this work, first of all, to God, the source of resilience, wisdom, direction and purpose at every stage of this journey.

To my wife, Aline, and to my children, Augusto (in memoriam), Liz and Theo, for the love, the understanding and the precious support during the journey that gave birth to this blessed book.

To my parents, João (in memoriam) and Santina, and to my siblings, for the perseverance, the values and the unconditional love that shaped the foundations of who I am.

To all Brazilian business owners – persevering heroes who believe that internationalization is a strategic opportunity to build companies that are more competitive, more resilient and better prepared for the future, in which their efforts allow them to look at the business itself rather than at the adversities of the environment.

I also dedicate this work to the professionals who, every day, face the complexity of Latin America's tax, customs and regulatory environments and who seek technical knowledge to make safer decisions, promote economic development and create value for society.

A special dedication to the beloved Paraguayan people and their leaders who, by wise decision, chose to embrace prosperity with a warm welcome to those who dream of building legacies, offering a fair, safe and streamlined environment to foreign entrepreneurs and forming a solid base to further strengthen Paraguay's position as a world reference in competitiveness and economic freedom.

May this work help to reduce barriers, expand opportunities, strengthen the economic integration between Brazil and Paraguay and encourage productive investment, job creation, innovation and business cooperation.

This work was only possible thanks to the work carried out, over decades, by countless public and private institutions, researchers, professionals and agents who contributed to building and deepening knowledge about foreign trade, regional integration, international taxation, economic development and industrial competitiveness.

I extend my appreciation to the authorities, government bodies and other institutions that took part in the evolution and improvement of Paraguay's Maquila Regime, as well as to the entities that make available legislation, statistics, technical standards, studies, data and public information indispensable to research of this nature. The existence and quality of those sources make it possible to turn complex subjects into knowledge that is accessible, verifiable and useful for decision-making.

I also thank the business owners and members of the Cámara de Comercio Paraguay Brasil (CCPB), the Câmara de Comércio França-Brasil (CCFB), C12, Legendários, SAE Brasil, FIEP and ABIMAQ, as well as the countless clients, collaborators, teachers, friends, colleagues, partners and professionals with whom I have had the opportunity to live, learn and work throughout my career. The shared experiences, the challenges faced, the technical discussions and the accumulated lessons contributed significantly to the practical, multidisciplinary view presented in this book.

I extend my gratitude to the professionals and interlocutors who, at different moments, shared knowledge, experience, information, inspirations, questions and perspectives that contributed directly or indirectly to the making of this work. Each conversation, collaboration or experience added important elements to the understanding of the challenges faced by companies that operate, or intend to operate, in international environments.

Among them, I extend special, cordial and warm thanks to: Adolfo D’Ecclesiis • Alain Tissier • Alessandro Meliso Rodrigues • Aline Francielle Fracasso Campos • André Soares • Andreia Pinto • Anísio Romanini • Daniel Bergman • Dario Mechi • Edemilson Pinto Vieira • Eliane Lermen • Felipe Couto • Fernando Gonçalves Neto • Gilberto Schorr Grossl • Helio Samora • Ivo José Charvet • Joaquim Ferraz Martins Filho • John Peter Klein • Jorge Nishimura • José Ricardo Nogueira • Kenneth Stanley Kolpus • Luciano Pinto de Almeida • Luiz Bohatch • Luiz Osório Moraes Panza • Luiz Roberto de Souza • Marcelo Iwersen • Maria do Carmo da Silva • Marta Lorena Achucarro • Michel Rojo de Andrade • Pablo Kubo • Rafael Justus Barreto • Ruy Alves Henriques Filho • Sergio Sartori Junior • Sergio Simonetti • Stefan Sjogren • Stephane Wenceslas Raoul Klein • Thiago Nieweglowski • Vinicius Rossato • Wuil Carlo Manika.

Finally, I thank my family, whose understanding, patience, support and encouragement made it possible to devote the time and energy needed to turn years of study, research and professional experience into a work that hopes to contribute to knowledge, to more conscious business decisions and to stronger economic integration between Brazil and Paraguay.

To everyone who, in some way, contributed to this journey and to the making of this book, I record my sincere thanks.

I met Devanir about fifteen years ago, from the customer’s side. He owned an engineering company whose services I contracted, and our relationship began the way so many begin in industry: with deadlines, deliveries, specifications and, naturally, some pressure. Over time, however, I realized there was something there that went beyond a good supplier. With each project, each difficult conversation, it became clearer that we agreed on what really matters: that one’s word is as good as a contract, that a problem well understood is already half solved and that, behind any operation, there are people who deserve respect.

It was that alignment of values that turned a business relationship into friendship. And it is because of it that I am here, writing these lines.

Over those years, I was also able to follow the path of someone who never stopped learning. Devanir began as a designer at the drawing board, drawing parts and assemblies. He grew, qualified as an engineer, went into business and built his own engineering company. And he did not stop there: he went back to the books as many times as he judged necessary and also became a business administrator, an accountant, an economist and a lawyer. Few people I know can look at the same problem through the eyes of the engineer, the entrepreneur, the manager, the economist and the jurist. It is that versatility, built through effort and not by chance, that allows Devanir to read the landscape from different points of view and that gives this book its greatest quality.

I must be honest with the reader from the outset: I am not a specialist in Maquila, in international taxation or in foreign trade. My professional life was built in industry, first in consumer goods, then in agricultural machinery, where we learn early that an idea is only worth something when it works on the production line and, later, in the field, in the farmer’s hands, in the short window of each harvest. When Devanir invited me to write this foreword, my first reaction was to ask whether I was the right person. Today I think I understand the invitation. This book was not written only for specialists. It was also written for those who, like me, need to make decisions without having all the technical answers at hand.

And that is exactly how I read it: with the questions of a manager, not of a tax specialist. I expected a dry text, full of articles of law. I found rigor, but above all clarity. Devanir has the gift of taking a complicated subject and organizing it so that a layperson can follow it and, more importantly, can ask the right questions. He does not promise that Maquila is for everyone. On the contrary: he devotes a good part of the effort to showing when it does not make sense. Few works have that courage.

There is one subject, however, that stayed with me throughout the reading, and that I cannot fail to mention. Anyone who has worked in Brazilian industry for some time knows that we are living through a long and painful process of deindustrialization. Over my career, I have seen suppliers close their doors, production chains shrink and fellow professionals lose ground. Industry, which was once the engine of the country’s economy, has carried less and less weight year after year, squeezed by high interest rates, a complex tax system, the uncertainty of the rules and costs that never seem to stop rising.

That is why I admit I opened this book with a certain discomfort. Would a book that teaches how to produce in Paraguay not be, in some way, contributing to hollowing out our industry?

I finished the reading with a different view. I understood that Maquila is not the cause of the Brazilian problem, but a reflection of it. Companies do not look across the border for lack of love for Brazil, but because, very often, that is the way to go on existing. And, when done well, that decision can be complementary: some stages of production cross the border, while engineering, development, suppliers and the market stay here. The author himself sums this up in a sentence I have kept: “labor-intensive production travels well; the laboratory does not.” In many cases, the real alternative is not keeping everything in Brazil, but losing the product, the factory and the customer to a competitor from another continent.

That does not lessen the urgency for Brazil to face its own difficulties. But it made me see this book not as an exit manual, but as a tool for Brazilian companies to remain competitive.

There is something else I recognized in these pages, and it has more to do with the author than with the subject. This volume deals with people: with hiring, rights, obligations, and the care for those who will work in the operation. That does not surprise me. Over these years, I have always seen Devanir treat his employees as part of a commitment, and not as numbers on a spreadsheet. That mark is present here, in the way he reminds us, at every turn, that a business decision is only a good one if it also works for those who will carry it out.

The book’s honesty also caught my attention: Devanir says clearly what is certain, what is interpretation and what still needs to be confirmed, and even invites the reader who finds an error to let him know. In a subject surrounded by easy promises, that humility is rare.

For all these reasons, accepting this invitation was, for me, a way of repaying fifteen years of companionship, learning and friendship.

May the reader find here what I found: not a shortcut, but a map. And, along with it, the company of an author who has shown me, for so many years, that technical competence and solid values not only can go together, but always should.

Sergio Sartori Junior

Director of Research and Development — Máquinas Agrícolas Jacto S.A.

Although organized in sequential chapters, this book was conceived as a manual for permanent reference. Each chapter can be read independently, according to the reader's needs.

Business owners will find a strategic view for evaluating investments; lawyers can deepen the normative analysis; accountants will have an integrated view of the tax impacts; executives will understand the operational and governance aspects; and consultants can use the comparative tables, decision flows and checklists as support tools for internationalization projects.

Throughout the work, several resources were built in to make the practical application of the knowledge easier, among them comparative tables, technical tables, case studies, checklists, flowcharts, executive alerts, frequently asked questions, good practices, main risks and strategic recommendations.

Whenever relevant, topics are examined from three complementary perspectives: Brazil, Paraguay and the international context. Several chapters also incorporate the effects of the Brazilian Tax Reform, allowing the reader to assess how legislative changes may influence present and future business decisions.

The three-volume series. This work is published in three volumes: Volume 1 — The Regime and Its Legal Framework (Chapters 1 to 12, with 4-A, and the Entrepreneur's Toolkit); Volume 2 — Operating in Paraguay (Chapters 13 to 38, with Appendices I to IV, next to Chapter 25); Volume 3 — Economic and Tax Implications in Brazil (Chapters 39 to 45-G, with Appendices D and E). The numbering of chapters, sections, examples, figures and tables is that of the complete work and does not change from one volume to another; a cross-reference to a chapter not in the volume in hand is located through Appendix A, present in all three volumes. The sources (Appendix B), the glossaries, the list of acronyms and the index of each volume cover its own content; the complete glossaries are in Volume 3.

Conventions used in this collection

The statements in this work rest, whenever possible, on verified primary sources, such as official legal texts, government publications and documents issued by the competent bodies, indicated in the body of the text and in the footnotes.

The provenance of each statement is made explicit in the text itself. When a conclusion follows from a reasoned interpretation rather than from an express normative provision, that is indicated. Likewise, when a given piece of information still depends on official confirmation or on the circumstances of the specific case, the work identifies the point to be confirmed and, whenever possible, the competent body or the licensed professional responsible for that validation.

The points where verification is indispensable are consolidated in the Consolidated Table of Local-Validation Alerts, located in the References section and organized under three categories:

CONFIRMED — the statement is supported by a verified primary source, such as an official legal text, a government publication, a document of the competent body or another primary source whose validity has been checked.

PROBABLE — the conclusion follows from a reasoned interpretation of the normative text, of legal scholarship, of documented administrative practice or of convergent institutional sources, with no express provision capable of settling the question entirely.

REQUIRES LOCAL VALIDATION — the rule does not expressly settle a given point — such as a procedure, deadline, amount, requirement or interpretation — or its application depends on the concrete circumstances of the operation. In those cases, the answer must be confirmed with the competent body, in Paraguay or in Brazil, depending on the subject, or submitted to the analysis of a licensed professional.

The highest-risk points falling under this last category are indexed in the Consolidated Table of Local-Validation Alerts. In the body of the work, however, the caveat appears in the wording itself, indicating what must be verified, why and, where applicable, with whom. No specific visual markings are used in the running text to identify those situations.

This category must not be confused with a verification gap. There is a verification gap when the rule or the competent source contains the answer, but the corresponding data or document could not be accessed or confirmed during the preparation of this edition. In those cases, the work itself reports the limitation and, where relevant, the verification attempts made. It is a pending editorial verification, not an obligation transferred to the reader.

General verification rule. No statement in this work dispenses with checking the legislation in force and the concrete circumstances on the date of the decision. The wording itself seeks to indicate the nature and provenance of each statement, while the Consolidated Table of Local-Validation Alerts identifies the points where confirmation with a competent body or licensed professional is indispensable.

Validation tools. Module 24 of the Entrepreneur's Toolkit consolidates, by project phase, the topics that must be examined with the respective advisors before a decision is made. The Consolidated Table of Local-Validation Alerts, in turn, gathers the highest-risk points whose confirmation is indispensable. These tools complement the caveats inserted directly in the body of the text.

Section suffixes. Sections identified by suffixes, such as 5.4.1-B, deal with developments of the same topic and are a normal part of the numbering. The numbering adopted and the respective internal cross-references remain valid.

Sources. The references used are indicated in the body of the text and in the footnotes, and consolidated in the appendices and in the References section. As a general rule, the normative basis of this edition reflects the legislation in force through September 2026. The methodological conventions and the reliability criteria adopted are presented in this section and detailed in the Methodological Note.

Business owners interested in implementing maquila operations are advised to read the whole work before starting any project, since several concepts presented in the opening chapters are the basis for understanding the analyses, risks and decisions dealt with in later sections.

This book was written from Brazil, with Brazilian business owners, accountants and lawyers as its original audience. The editions in other languages reproduce the same work, with no cuts or additions specific to other jurisdictions. This section therefore exists so that the reader from any country knows, before starting to read, which contents can be used directly, which reflect specifically the Brazilian reality, and which questions need to be examined in light of the legislation of their own jurisdiction.

What applies regardless of the investor's country of origin. The structure of the Maquila Regime is governed by Paraguayan legislation. Ley 7547/2025 and Decree 5714/2026 (Chapters 8 and 9), the maquila program (Chapter 19), the contract (Chapter 20), the submaquila (Chapter 21), the customs procedures — temporary import, export, re-export, guarantees and inspection (Chapters 26 to 32) —, the Mercosur rules of origin (§27.5), the Single Tax (Chapter 33), the Paraguayan VAT — IVA, Impuesto al Valor Agregado (Chapter 34), the IRE (Chapter 35), the IDU (Chapter 36), the INR (Chapter 37), Pillar 2 (§38.6 and §§38.12 to 38.14) and Paraguay's treaty network (§38.2) are part of the Paraguayan legal framework and therefore do not depend on the investor's nationality. The same principle applies to the Paraguayan corporate structure (Chapters 13 and 14), to hiring staff and the IPS (Chapters 41 and 45-A), to foreign exchange and remittances (Chapter 45-E) and to the implementation roadmap presented in the Toolkit.

What is specifically Brazilian. The tax treatment of the partner, investor or controlling company in its home jurisdiction varies with the legislation of each country. In this work, Brazil is the case analyzed in depth, especially in Chapter 39 and its developments (39-A, 39-B and 39-C), in the structures examined in Chapter 15, in the reporting of assets held abroad dealt with in §45-E.6 and in the general regimes compared in Appendix E (§E.2).

On those points, Brazil works as a case for applying the method, not as the geographical limit of the work. Brazilian legislation is examined because it is the home jurisdiction adopted as the reference and because it makes it possible to show, with numbers, legal provisions, assumptions and failure modes, how the analysis must be structured. Conclusions based on Brazilian legislation must not be automatically applied to tax residents of other countries; they do serve, however, as a model for identifying the questions that need answering in each reader's jurisdiction.

The five questions for your own jurisdiction. They are essentially the same questions that Chapter 39 examines for Brazil. The reader from another country should take them to their local advisors. The references to Brazilian legislation indicated below work as an example of method, not as an answer applicable to other jurisdictions.

(i) Is there a controlled foreign company (CFC) regime capable of reaching the profit of the Paraguayan entity before it is distributed? In Brazil, there are specific rules on the subject, examined in §39.1 — for individuals, under Lei nº 14.754/2023, and for legal entities, under Lei nº 12.973/2014 —, as well as in §§15.4 and 38.5. If the reader's jurisdiction has no CFC rules, the taxation of the income may follow a different logic; if it does, their effects must be recalculated under local legislation.

(ii) Is there a double tax treaty between your country and Paraguay — and is it in force? Brazil has no treaty of that kind in force with Paraguay (§38.1). Paraguay's network of international treaties is examined in §38.2, country by country. The existence of a treaty can significantly change the treatment of dividends, interest, royalties and certain services. In the absence of a treaty, the domestic rules of each of the jurisdictions involved must be examined, a situation addressed in §38.8.

(iii) How does your jurisdiction tax dividends or profits received from abroad, and which taxes paid in Paraguay can be used as a credit? In the Brazilian case, the taxation of the results of controlled companies abroad and the credit mechanisms follow their own rules, examined in §39.1 and, as to the creditability of the Single Tax, in §38.8. The Paraguayan IDU and INR are examined in Chapters 36 and 37. Those taxes belong to the analysis of Paraguayan legislation; the treatment given to them by the investor's jurisdiction of residence must be determined under the legislation of that country.

(iv) Are there transfer pricing rules applicable to transactions with related parties in Paraguay? Chapter 40 examines the two dimensions in the Brazil–Paraguay case: Paraguayan legislation and Brazilian legislation, including the effects of the new Brazilian transfer pricing regime (§40.13). The analysis corresponding to Paraguay is part of the local legislation applicable to the operation; the other end must be examined under the rules of the country of origin, including methods, documentation, ancillary obligations and deadlines.

(v) Is there an obligation to report shareholdings, assets or investments held abroad — and what are its thresholds and conditions? In Brazil, certain positions abroad are subject to the Capitais Brasileiros no Exterior (Brazilian Capital Abroad) report to the Central Bank, subject to the applicable thresholds, criteria and frequency (§45-E.6), in addition to the obligations related to taxation and to the income tax return examined in Chapter 15. In other jurisdictions, the existence of the obligation, its thresholds, frequency, form of reporting and the consequences of any non-compliance must be checked.

The essential warning. The answers provided by Brazilian legislation cannot be automatically transported to another jurisdiction. Rates, deadlines, thresholds, obligations and consequences described specifically for Brazil apply only when the respective assumptions of Brazilian legislation are present. This work does not seek to ascertain, estimate or presume the domestic legislation of all other home jurisdictions.

What can be transported is the method of analysis: separating what belongs to Paraguayan legislation from what belongs to the investor's home jurisdiction; answering the five questions before making any calculation; demanding a provision, a validity date and a source for each conclusion; and identifying, in each alternative, its conditions of application, limitations and failure modes.

With that distinction, the reader from any country can use directly the analysis of the Paraguayan legal framework presented in this work and take the Brazilian case as a methodological reference for identifying the questions that must be examined in light of the legislation of their own jurisdiction.

Reference table — Brazilian institutions and terms and their rough U.S. parallel. Each term receives, at its first appearance in this book, a short explanation in brackets; this table gathers those explanations together with the limits of each comparison. The parallels are functional approximations verified at official Brazilian and U.S. sources (consulted October 15, 2026), never legal identity: they do not transplant one country’s rules onto the other. Where no equivalent exists, the table says so.

List of the acronyms and abbreviations most used in this work, with the official name in the original language and, where useful, the translation or explanation in English.

ACE — Acordo de Complementação Econômica (Economic Complementation Agreement, ALADI/Mercosur)

ANDE — Administración Nacional de Electricidad (Paraguay)

BACN — Biblioteca y Archivo Central del Congreso Nacional (Library and Central Archive of the National Congress, Paraguay)

BCB — Banco Central do Brasil (Central Bank of Brazil)

BCP — Banco Central del Paraguay (Central Bank of Paraguay)

BPO — Business Process Outsourcing

CBE — Capitais Brasileiros no Exterior (Brazilian Capital Abroad, Banco Central do Brasil)

CBS — Contribuição sobre Bens e Serviços (Contribution on Goods and Services, Brazil)

CDT / DTT — convention or treaty for the avoidance of double taxation; DTT: Double Tax Treaty

CFC — Controlled Foreign Company (rules for taxing the profits of controlled companies abroad)

CIDE — Contribuição de Intervenção no Domínio Econômico (Contribution for Intervention in the Economic Domain, Brazil)

CNIME — Consejo Nacional de las Industrias Maquiladoras de Exportación (National Council of Export Maquiladora Industries)

COFINS — Contribuição para o Financiamento da Seguridade Social (Contribution for the Financing of Social Security, Brazil)

DEMPE — Development, Enhancement, Maintenance, Protection and Exploitation (relevant functions for intangibles — OECD)

DGPEJBF — Dirección General de Personas y Estructuras Jurídicas y de Beneficiarios Finales (Directorate-General of Legal Persons and Structures and Beneficial Owners, Paraguay)

DGRP — Dirección General de los Registros Públicos (Directorate-General of Public Registries, Paraguay; functions brought together in the RUN by Ley 7.424/2025)

DNIT — Dirección Nacional de Ingresos Tributarios (Paraguay)

EAS — Empresa por Acciones Simplificadas (Simplified Stock Company, Paraguay)

EP — Permanent Establishment

IBS — Imposto sobre Bens e Serviços (Tax on Goods and Services, Brazil)

ICMS — Imposto sobre Circulação de Mercadorias e Serviços (Tax on the Circulation of Goods and Services, Brazil)

IDU — Impuesto a los Dividendos y a las Utilidades (Paraguay)

IFRS / NIIF — International Financial Reporting Standards / Normas Internacionales de Información Financiera (Spanish)

IMMEX — Industria Manufacturera, Maquiladora y de Servicios de Exportación (Mexico)

INR — Impuesto a la Renta de No Residentes (Paraguay)

INTN — Instituto Nacional de Tecnología, Normalización y Metrología (Paraguay)

IPC — Consumer Price Index; in the Paraguayan context, the BCP's Índice de Precios al Consumidor

IPCA — Índice Nacional de Preços ao Consumidor Amplo (Broad National Consumer Price Index, IBGE, Brazil)

IPI — Imposto sobre Produtos Industrializados (Tax on Industrialized Products, Brazil)

IPS — Instituto de Previsión Social (Paraguay)

IRAE — Impuesto a las Rentas de las Actividades Económicas (Uruguay)

IRE — Impuesto a la Renta Empresarial (Paraguay)

IRRF — Imposto de Renda Retido na Fonte (Withholding Income Tax, Brazil)

IS — Imposto Seletivo (Selective Tax, Brazil)

ISS — Imposto sobre Serviços de Qualquer Natureza (Tax on Services of Any Kind, Brazil)

IVA — Impuesto al Valor Agregado (Paraguay)

M3 — designation of a monetary aggregate; see the Glossary in Appendix C

MAAC — Multilateral Convention on Mutual Administrative Assistance in Tax Matters

MEF — Ministerio de Economía y Finanzas (Paraguay)

Mercosur — Southern Common Market

MIC — Ministerio de Industria y Comercio (Paraguay)

MTESS — Ministerio de Trabajo, Empleo y Seguridad Social (Paraguay)

NCM — Nomenclatura Comum do Mercosul (Mercosur Common Nomenclature)

OECD — Organisation for Economic Co-operation and Development

PIS — Programa de Integração Social (Social Integration Program, Brazil)

RECOF — Regime Aduaneiro de Entreposto Industrial sob Controle Informatizado (customs regime of industrial warehousing under computerized control, Brazil)

RUC — Registro Único de Contribuyentes (Paraguay)

RUN — Registro Unificado Nacional (Paraguay; Ley 7.424/2025 — brought together the functions of the former DGRP)

SA — Sociedad Anónima (corporation, Paraguay)

SaaS — Software as a Service (software as a service)

SE-CNIME — Executive Secretariat of CNIME

Selic — Sistema Especial de Liquidação e de Custódia (Special System for Settlement and Custody, Brazil); the system is to be distinguished from the Selic rate

SET — Subsecretaría de Estado de Tributación (Paraguay; functions integrated into DNIT)

SIMEX — Sistema Integrado de Maquila para la Exportación (Paraguay) — name used by the MIC; Art. 11 of Decree 5714/2026 calls it "Sistema Informático de Maquila"

SINAFOCAL — Sistema Nacional de Formación y Capacitación Laboral (Paraguay)

SNPP — Servicio Nacional de Promoción Profesional (Paraguay)

SRL — Sociedad de Responsabilidad Limitada (limited liability company, Paraguay)

TEC — Common External Tariff (Tarifa Externa Comum, Mercosur)

TPM — Tasa de Política Monetaria (monetary policy rate, Paraguay)

VAN — Valor Agregado Nacional (national value added — one of the two possible bases of the maquila Single Tax; the greater of VAN and the invoice applies; Paraguay; see Chapter 33)

VUE — Ventanilla Única del Exportador (Paraguay)

We are living through one of the deepest transformations of the world economy since the consolidation of globalization. Companies of all sizes now compete in markets beyond their national borders, production chains have become more distributed and interdependent, services are provided and exported digitally, and tax decisions have ceased to be mere accounting matters and have taken a central role in the strategy, competitiveness and sustainability of businesses.

In this new environment, producing, providing services, hiring, investing and organizing international operations requires an integrated view. Comparing rates or apparent costs is not enough. It is necessary to understand logistics, legislation, taxation, corporate structure, labor relations, customs controls, transfer pricing, governance, technology, regulatory risks and operational capacity. Internationalization is no longer an alternative restricted to large corporations; it has become part of the planning of mid-sized companies and even of specialized businesses seeking efficiency, scale and access to new markets.

In this context, Paraguay has consolidated the Maquila Regime as one of the most relevant instruments for attracting investment, industrializing and promoting exports in South America. Over the last decades, companies in many sectors have used this model to join international production chains, add value locally, expand exports, reduce operating costs and increase their competitiveness.

Proximity to Brazil, the integration provided by Mercosur, the availability of energy, the strategic location, access to the Atlantic Ocean through the Paraguay–Paraná Waterway and the evolution of the institutional environment have all increased business interest in the country. However, those factors alone do not guarantee the viability of a project. Each operation needs to be evaluated according to its structure, its sector, its markets, its contracts, its logistics and its long-term objectives.

At the same time, the modernization of Paraguayan legislation and the implementation of the Brazilian Tax Reform open a new stage for business owners who want to structure international operations in a safe, efficient and sustainable way. Changes in the rules on consumption taxation, on the export of goods and services and on the organization of relations between companies of the same group make it indispensable to have an analysis that simultaneously considers the legal, tax and operational effects in both countries.

Understanding the maquila, therefore, takes much more than knowing a law or repeating that the regime is subject to differentiated taxation. It is necessary to understand its economic logic, its objectives, its limits, the substance requirements, the international contract, the program approved by the Paraguayan authorities, the control mechanisms, the obligations of the maquiladora company, the tax impacts in Brazil and in Paraguay and the risks arising from structures conceived without proper planning.

It is also necessary to distinguish a legitimate business operation from superficial models based solely on the pursuit of tax reduction. The maquila must not be treated as an automatic formula or as a universal solution. It is an instrument of productive integration and internationalization that can produce relevant results when there is real economic activity, planning, governance, control, compliance and consistency between what was approved and what is actually carried out.

It was to fill that gap that Maquila Demystified was born. This work was conceived to turn a subject often presented in a fragmented way into a complete, integrated, decision-oriented guide. Its purpose is not to convince the reader to set up an operation in Paraguay, but to offer knowledge, criteria and tools so that the reader can evaluate that possibility with rigor, independence and strategic vision.

In the following chapters, the reader will go through the historical evolution of the regime, its normative basis, the tax incentives, the administrative procedures, the institutional structure, the industrial maquila, maquila services, digital exports, customs controls, governance, compliance, corporate and contractual relations, the impacts of the Brazilian Tax Reform, the most common risks and the best practices for implementing internationalization projects.

The work also connects legal, tax, economic and operational aspects that are often analyzed separately, even though they are part of the same business decision. More than explaining rules, this book seeks to offer a strategic view capable of relating legislation, business, regional integration and international competitiveness.

By the end of the reading, the aim is for business owners, executives, lawyers, accountants, consultants and other professionals to be better prepared to distinguish real opportunities from simplified promises, ask the right questions, identify risks, evaluate alternatives and make well-founded decisions.

If the reader completes this journey with greater confidence, a critical spirit and a long-term view for evaluating international projects, Maquila Demystified will have fully accomplished its mission.

Part VI begins in Volume 2 — Operating in Paraguay, with Chapters 33 to 38 (Single Tax, VAT, IRE, IDU, INR and international taxation), and continues here with the tax treatment in Brazil (Chapters 39, 39-A, 39-B and 39-C) and transfer pricing (Chapter 40). The numbering is that of the complete work.

Reading note. This chapter consolidates two complementary treatments of the same subject (§39.1), deliberately preserved because they serve different readings: the legal framework is gathered in a single table, and the in-depth treatments live in the satellite chapters 39-A, 39-B and 39-C, indicated in the route map below.