Why Start a Business in Paraguay: Advantages, Features, and Challenges

Paraguay is one of the lesser-known yet promising countries that offers ample opportunities for earning and business ventures. If you are seeking promising solutions, Paraguay is definitely worth your interest.

Located in South America, Paraguay is often referred to as the heart of the continent due to its central position within the landmass. Over the course of more than 200 years of independence, the country has experienced ups and downs, losses and gains. Currently, it seems to be entering a stage of growth that not everyone has noticed. You now have a unique opportunity to tap into a new market and explore a fresh business niche in this expanding economy.

Business in Paraguay

Despite the crises of recent years, the country’s GDP is gradually growing and recovering from the challenging year of 2020. According to the International Bank, the poverty level is decreasing, and the business sector and expanding market are attracting a growing number of domestic and international investors.

The stabilization of Paraguay’s economy has led to an increase in trust in state institutions. The market is regulated to an appropriate extent, which allows for freedom of action while also relying on the support of laws and the government.

Are you planning to move to Paraguay for permanent residence? Check out our complete guide to living in this country.

Paraguay also has a moderate tax policy. The corporate tax rate is 10%, the value-added tax (VAT) is 10%, and social security taxes amount to 25.50% (combined for employees and companies).

Nowadays, Paraguay is considered an outstanding business platform in the region. In practice, this means that by establishing a business in Paraguay, you can generate profits both domestically and internationally, targeting major neighbors such as Brazil and Argentina.

Furthermore, Paraguay has no restrictions on the use of offshore companies or the repatriation of funds by residents. Experts already regard Paraguay as one of the freest markets in the Americas. You have the opportunity to conduct business for as long as it remains profitable and does not bring complications.


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5 reasons to start a business in Paraguay

Favorable business environment. Paraguay offers excellent conditions for conducting business, including:

  •  low bureaucratic barriers
  • minimal red tape
  •  simplified registration process.

Strategic location. Paraguay is located in the heart of South America and has access to key regional markets, which is advantageous for businesses. It shares borders with Brazil, Argentina, and Bolivia, providing enterprises with access to a combined market with a population of over 300 million people. This geographical advantage makes the country an ideal regional trade and expansion center.

Competitive tax incentives. Paraguay provides attractive tax incentives to encourage investments and entrepreneurship. The country has a favorable tax regime with low corporate tax rates of 10%, an 8% dividend tax, and no tax on royalties and interest. There are also incentives for specific business sectors such as manufacturing, agriculture, and tourism. These incentives can significantly reduce the overall tax burden for businesses.

Abundance of natural resources. Paraguay boasts rich natural resources, including fertile agricultural lands, hydroelectric power, and valuable mineral deposits. This makes it an advantageous location for conducting business in the following sectors:

  • agriculture
  • renewable energy
  •  mining industry
  • forestry.

Expanding consumer market. Paraguay has experienced sustained economic growth in recent years, leading to the expansion of the middle class and increased purchasing power. This growing market presents business opportunities in various sectors, including retail trade, e-commerce, consumer goods, and services. With a population of approximately 6.7 million people (as of 2021), there is a ready-to-tap domestic market within the country.

Are you looking for a promising place to start a business?  Discover the top 10 free zones with high economic activity.

What kind of business can be opened in Paraguay?

Determining the appropriate business to open in Paraguay requires thorough market research and consultation with experts. Understanding the specific dynamics of the industry, regulatory frameworks, and cultural aspects will contribute to the venture’s success.

Here are several business options in Paraguay that may pique your interest:

Agriculture and agribusiness. Paraguay possesses vast fertile lands, making agriculture a promising sector of the economy. You may consider exploring business opportunities in crop farming, livestock rearing, poultry farming, or even agro-industrial enterprises, such as:

  • food processing
  • packaging and export of agricultural products.

Tourism. Paraguay boasts a rich cultural heritage and diverse natural landscapes. Establishing a business in the tourism and hospitality sector can involve opening hotels, eco-lodges, restaurants, tour agencies, or providing adventure tourism services. As tourism in Paraguay continues to develop, businesses catering to both domestic and international travelers can be profitable.

Manufacturing. Paraguay offers competitive advantages for manufacturing enterprises due to low labor costs, access to raw materials, and strategic location. You can consider the opportunity to establish a manufacturing business in sectors such as:

  • textiles
  • automotive parts
  • electronics
  •  plastics
  • furniture production.

As mentioned earlier, the market for supplying goods is significant even within South America.

E-commerce and online retail. Internet access is rapidly expanding, reaching an increasing number of people. Digital technologies are also advancing. Therefore, e-commerce in Paraguay is on the rise. Opening an online retail business (either by creating your own platform or utilizing existing online marketplaces) can be a profitable venture. You can focus on selling a variety of products, ranging from electronics and fashionable clothing to consumer goods and handmade crafts.

Medical and wellness services. There is a growing demand for medical and wellness services in Paraguay. You have the opportunity to open a business in various sectors, such as:

  •  fitness centers
  • spa salons
  •  wellness centers
  • healthy eating establishments
  • specialized clinics.

You can offer a wide range of services, including physiotherapy, alternative medicine, or cosmetic procedures. Additionally, you could engage in the production of cosmetics using natural ingredients.

Education and training. Paraguay has a constant demand for quality education and skill enhancement. You can:

  • open a language school or a professional training center
  •  provide tutoring services
  • organize specialized courses in areas such as technology, entrepreneurship, or professional development.

In addition, companies specializing in financial services, consulting, investment, and wealth management are of particular interest in Paraguay. Why? Because these services are practically underrepresented in the local market, and the existing ones have a shallow level of quality. Access to modern technologies and international markets opens up opportunities not only for local residents but also for companies that manage to enter the Paraguay market promptly.

It is worth noting that foreign international companies have certain advantages over local businesses: they already have access to major stock exchanges, foreign bank accounts, and investment opportunities. The supply in Paraguay falls far short of the demand, so you have a unique opportunity to carve out a place in the sun in this country.

Currently, Paraguay heavily relies on the agriculture business and ranks as the 6th largest soybean supplier in the world. Agriculture provides employment for nearly a quarter of the population. It is followed by manufacturing (18% of GDP) and the service sector (60% of GDP).

Check out our overview of the best tax planning and business optimization strategies in 2023.

Company registration in Paraguay

When registering a business in Paraguay, you have the choice between a limited liability company (LLC) and a corporation (PLC). Two shareholders and one director will be required. PLC is more commonly used for large-scale projects.

The business registration process takes a considerable amount of time, up to 6 months. However, a personal visit is required for approximately one week if you need a local ID card (cedula). This card is necessary to become a director/manager of the company.

Renting a physical office in Paraguay is necessary, and opening a bank account is possible.

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Permanent residency in Paraguay by investment

By establishing a business in Paraguay, you may also consider the option of obtaining permanent residency in the country. We offer a three-step procedure to get this status. If desired, you can even forgo creating a business in the country and instead opt for a small deposit in a local bank.

For more information on obtaining permanent residency in Paraguay by investment, you can refer to our materials:

Do you have any questions? We are always ready to provide answers and the necessary information. Please feel free to email us at info@offshore-pro.info.

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