Incorporate a Company in Paraguay: A Practical Guide

Published on September 29, 2025 and written by Cyril Jarnias

Paraguay, a landlocked country in the heart of South America, is attracting more and more foreign entrepreneurs thanks to its business-friendly environment and advantageous tax system. Here is a detailed guide to help you establish your company in this opportunity-rich country.

Paraguay, an El Dorado for Entrepreneurs

Paraguay offers numerous advantages for entrepreneurs looking to establish their business there:

Highly attractive tax system: With corporate tax capped at 10% and one of the lowest VAT rates in South America (10%), Paraguay allows for significant optimization of your company’s profitability.

Reduced operating costs: Labor and real estate costs remain highly competitive compared to other countries in the region, helping to control expenses.

A growing market: The Paraguayan economy has experienced sustained growth for several years, offering excellent development prospects.

Strategic geographic location: Located at the heart of Mercosur, Paraguay enjoys privileged access to major South American markets like Brazil and Argentina.

Simplified administrative procedures: The Paraguayan government has implemented accelerated procedures to facilitate business creation by foreigners.

The Most Suitable Legal Structures

Several legal forms are available to entrepreneurs wishing to establish a company in Paraguay:

Sociedad Anónima (S.A.): Equivalent to a corporation, this is the most common form for large companies. It requires a minimum capital of 400 million guaraníes (approximately €50,000).

Sociedad de Responsabilidad Limitada (S.R.L.): Similar to a French SARL, it’s suitable for small and medium-sized enterprises. The minimum capital is 10 million guaraníes (approximately €1,250).

Empresa Unipersonal de Responsabilidad Limitada (E.U.R.L.): Ideal for individual entrepreneurs, it allows for separation of personal and business assets.

Sucursal de Sociedad Extranjera: This structure allows a foreign company to open a branch in Paraguay without creating a new legal entity.

One of the Most Competitive Corporate Tax Systems in South America

The Paraguayan tax system stands out for its simplicity and attractive tax rates:

Corporate tax: 10% on profits, one of the lowest rates in the region.

VAT (IVA): 10% for most goods and services, with reduced rates for certain sectors.

Dividend tax: 15% for non-residents, but many tax treaties allow for its reduction.

Social security contributions: 16.5% for employers and 9% for employees.

Tax exemptions: Paraguay offers attractive tax incentives for foreign investors, particularly in free zones and for export activities.

Establishing Your Company in Paraguay: A 7-Step Process

Here is the procedure to follow to establish your legal structure in Paraguay:

1. Choose a name for your company: Check its availability with the Paraguayan commercial registry.

2. Draft the articles of incorporation: Engage a local attorney to ensure compliance with Paraguayan legislation.

3. Open a temporary bank account: To deposit the share capital.

4. Obstatute approval: Submit them to the Abogacía del Tesoro for validation.

5. Register the company: Register it with the Public Registry of Commerce (Registro Público de Comercio).

6. Obtain the tax identification number: Request it from the tax administration (SET).

7. Register with social security: Register your company with the Social Security Institute (IPS).

Paraguay vs. Other Offshore Jurisdictions: A Serious Competitor

Compared to other popular destinations for tax optimization, Paraguay stands out with several advantages:

• More advantageous taxation than Panama or Costa Rica
• Lower operating costs than Uruguay or Chile
• Greater political and economic stability than Venezuela or Bolivia
• Easier access to residence and citizenship compared to many Caribbean countries

Paraguay thus offers an excellent cost/benefit ratio for international entrepreneurs, positioning itself as a credible alternative to traditional offshore jurisdictions.

Streamlined Social Obligations for Employers

Paraguayan companies benefit from a relatively flexible social framework:

Legal working hours: 48 hours per week, allowing for great flexibility.

Paid leave: 12 working days per year, gradually increasing with seniority.

Severance payments: Relatively low compared to other Latin American countries.

Social security contributions: 16.5% for employers, a competitive rate in the region.

Opening a Corporate Bank Account: Step-by-Step Guide

To open a professional bank account in Paraguay, follow these steps:

1. Choose a bank: Opt for a recognized institution like Banco Itaú or Banco Continental.

2. Prepare the necessary documents: Company articles of incorporation, identification documents for directors, proof of address, etc.

3. Schedule an appointment with an advisor: Physical presence is generally required for opening.

4. Make an initial deposit: The minimum amount varies by bank.

5. Wait for validation: The process can take from a few days to several weeks.

The Most Promising Business Sectors in Paraguay

Several areas offer excellent opportunities for entrepreneurs in Paraguay:

Agribusiness: The country is a major producer of soybeans, beef, and dairy products.

Renewable energy: Paraguay is betting on hydroelectricity and solar power for its energy development.

Digital services: The country aims to position itself as a regional technology hub.

Tourism: A rapidly expanding sector, particularly ecotourism.

Logistics: Paraguay’s geographic position makes it a strategic logistics center for Mercosur.

Building Your Team: Keys to Recruitment in Paraguay

To recruit effectively in Paraguay, follow these tips:

Focus on recent graduates: The country has many talented individuals trained in local universities.

Use online recruitment platforms: Sites like Buscojobs or CompuTrabajo are very popular.

Engage specialized recruitment agencies: They have good knowledge of the local job market.

Offer attractive benefits: Private health insurance, continuous training, etc.

Respect local legislation: Paraguayan labor law imposes certain obligations regarding contracts and working conditions.

Conclusion

Establishing a company in Paraguay offers numerous advantages for international entrepreneurs: attractive taxation, reduced costs, growing market, and simplified formalities. With adequate preparation and local support, you can quickly launch your business in this opportunity-rich country.