Last modification: 15 Aug 22

Paraguay has held relatively free and regular presidential elections since the country's return to democracy in 1989.
Its government recognizes the need to diversify its economy and has taken steps in recent years to do so. In addition to looking for new commodity markets in the Middle East and Europe, Paraguayan officials have promoted the country’s low labor costs, cheap energy from its massive Itaipu Hydroelectric Dam, and single-digit tax rate on foreign firms. As a result, the number of factories operating in the country – mostly transplants from Brazil - has tripled since 2014.

Made up of 17 departments, most of the population resides in the eastern half of the country; to the west lies the Gran Chaco (a semi-arid lowland plain), which accounts for 60% of the land territory, but only 2% of the overall population

Chapter 1: Economic and business environment


population of 7.22 million (2021)
up 1.22% year-over-year

source: Statistics Times


Asunción (population 525,294)
2.2 million metropolitan region

Major cities
1 Asunción 525,294 (2.2 million metro residents)
2 Ciudad del Este 293,817
3 Luque 263,604
4 San Lorenzo 252,561
5 Capiatá 224,152

Spanish (official)
Guarani (official)


US$39 billion (2020)
up 10.2% year-over-year

US$5,402 per capita (non adjusted)

Unemployment rate

6.8% (Janyary 2022) 

Main industries

sugar processing, cement, textiles, beverages, wood products, steel, base metals, electric power


Paraguayan guaraní

Interest rate

8% (July 2022)

Political key info

President Mario Abdo Benitez and Vice President Hugo Adalberto Velazquez Moreno have held their positions since 15 August 2018. Both are directly elected on the same ballot by simple majority popular vote for a single 5-year term. Election last held on 22 April 2018 and the next will be held in April 2023. 


11.1% (July 2022)

Chapter 2 : Automotive market, segments & sales

Total Car park


Total car park 652,886 (just under 1in 10 people)


New vehicle registrations (Cars, LCV, Trucks)

1Q21: down 12.7% year-over-year to 5,854 units
source: Focus2Move

2020, 23,273 units
2019, 27,874 units
2018: 32,795 units
017: 27,851 units
source: OICA

Top 5 brands (total market)

1. Kia, down 0.1% (20% market share)
2. Chevrolet, down 17.3%
3. Hyundai, up 2.1%
4. Volkswagen, down 2.8%
5. Toyota, down 19.6%

source: Focus2Move

Model preference top 5 (total market)

The best-selling model in 2020 was the Chevrolet Onix with 2,713 units sold, up 9.2% year-over-year. (11.7% market share) source:Focus2Move

Other popular models are Toyota Hilux, Volkswagen Gol, Chevrolet S10, and Kia Rio.

Used car market/renewal cycle
  • Paraguay is a used car market haven
  • Approximately  60% of all car sales in the country - some 48,000 vehicles per year - are used car imports,
    according to the government of Paraguay. 
  • Most of the vehicles are coming from South Korea, USA, Japan, China, and Brazil.
  • Paraguay is the only country in Latin America which allows car imports of more than 10 years old 

The used car market, supported by local auto parts providers known as "maquiladoras", is a very big business in Paraguay. However, the Paraguay government is being pressured by neighboring countries such as Brazil and Argentina to prohibit their used car import activities as they are unable to sell new cars in Paraguay.   

For instance, as Brazil is a large buyer of auto parts from Paraguay, the Brazilian government is threatening import tax on these auto parts unless Paraguay stop importing used cars.

One legislation being considered by the Paraguay government - as of 1H19 -  is a 10% tax on used cars being imported into the country. 

Chapter 3: Company car market

Evolution fleet sales (last 5 years)

In 2019, commercial vehicles sales dropped 4% to 7,275 units from 7,591 (source: OICA)
2018: 7,591 units
017: 9,003 units
2016: 6,700 units
2015: 9,500 units

Chapter 4: Taxation & legislation


The basis of company car taxation in Paraguay is reflected in this overview. Different types of taxes are considered here: taxes related to the registration of the vehicle, income taxes and VAT aspects. Expected future developments are also briefly listed, if any. 

  1. Car taxation
    1.1 Registraion tax
  • Taxable event

The import of vehicles and production carried out by assembling companies installed in Paraguay, the transfer onerous or free of charge.  

  • Taxable person

Individuals and legal entities. 

  • Tax due

Flex vehicles are exempt from the customs tariff payment at the moment of importation, as a promotion for the consumption of absolute alcohol and alcohol fuel. 

Likewise, as an incentive for the importation of flex vehicles, it is established that the State Bodies and Entities must acquire a minimum of 30% of these vehicles. The volume of purchase should increase gradually until achieving the total change of the fleet of vehicles propelled by biofuels. 

  • Taxable period

In the import, and sale of vehicles made by the assembly companies.

    • 1.2 Annual circulation tax

    • Taxable event 

      It is paid in each municipality in which the owner of the vehicle has obtained his driving record and corresponding rating. 


      Taxable person  

      Individuals and legal entities that have registered the vehicle in the corresponding municipality where they have established their residency.  


      Tax due 

      The tax is settled according to the characteristics of the car, year, model, brand, value of the vehicle. 


      Taxable period 

      The tax is paid annually. 


1. Income tax

  • The income obtained from the alienation of the vehicles within the Paraguayan territory. 

  • The income tax is settled on the income resulting from the commercialization of the vehicles after deductions accepted by the Tax Administration. The general tax rate is 10%. 

  • The income tax is for annual liquidation. 


3.1 Deduction


  • -The tax credit originated in the importation or local purchase of the vehicle is used to compensate with the fiscal debit originated in the sales. 

  • -The settlement of the Value Added Tax is done on a monthly basis. The tax rate is 10% for the alienation of vehicles. 

1) Tax Debit greater than the Tax Credit: Fiscal Debit - Tax Credit = Value Added Tax payable (Tax rate 10%). 

2) Fiscal Debit less than the Tax Credit: Fiscal Debit - Tax Credit = Balance in favor of the taxpayer to be used in the following periods. 

3.2 Hire Purchase

  • In case of financial leasing, the VAT rate is 10%. 

3.3 Leasing

  • The lease of vehicles is taxed at the 10% VAT rate. 




4.0 Company Car

4.1 VAT due on private use of company cars 

  • The lease of vehicles is taxed at the 10% VAT rate. 



  1. 4.2 Company car in personal tax returns – benefit in kind 

    • It is not regulated that the company's vehicles are part of the personal tax declaration. 




    1. 5. Electric vehicles

      • The import for the national market of electric vehicles and new hybrid vehicles is exempt from the payment of customs duties and VAT. 



Chapter 5: Car policies

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Chapter 6: Funding methods

Unlike the past, OEMs are offering accessible financing plans nowadays with the help of national development bank BNF. The bank has a credit line which offers financing for 0km first vehicles (imported or domestic) known as “Vehículo 0 Km para la gente” (0km Vehicle for the people). It offers loans of up to 100mn guaraníes (approx. US$16,028) with 8.95% annual interest or loans up to 150mn guaraníes at a rate of 9.95%. The loans periods run up to 60 months.  

It offers loans of up 100mn guaraníes with 8.95% annual interest or loans up to 150mn guaraníes at a rate of 9.95%. The loans periods run up to 60 months.


Chapter 7: Fuel

August 8, 2022
Average gasoline price per liter: US$1.41 (world average is US$1.39)
Average diesel price per liter: US$1.21 (world average is US$1.36)

December, 2021
Average electricity price per kWh Households: US$0.06 (world average is US$0.14)
Average electricity price per kWh Business: US$0.05 (world average is US$0.13)


Chapter 8 : TCO components

Some of the reginal characterestics which could curb TCO are the low cost of automobile maintenance, the strong autoparts industry, and the fact that there is no mandatory insurance related to bodily harm in the case of an accident. Running without insurance, however, may not be a good idea as this could cost you much more if a serious accident occurs.   

Chapter 9: Safety, insurance and telematics


Unlike many countries in Latin America, Paraguay does not require any type of mandatory insurance related to bodily harm in the case of an accident.

Currently, only about 30% of drivers have insurance which covers medical expenses as a result of an accident, according to the traffic and road safety agency of Paraguay.

Owing to this, the agency - in 1Q19 - was putting together a bill which establishes manadatory traffic accident insurance, SOAT, and it is expected to be debated in congress in 2019.

As for telematics, some of the largest companies are operating within the country but more for industrial firms and governments. 

Chapter 10: Environment

In the capital city of Asunción, despite the introduction of low sulfur fuels, vehicle emissions are still quite high as many of the cars in the city are old and poorly maintained.

There is a high concentration of Particulate Matter (PM) 2.5 in the city, with registered values being well above the limits set by the World Health Organization (WHO). 

In 2012, a tax incentive law for the importation of electric cars was approved in Congress. However, two years later, the regulation underwent modifications that practically rendered the benefits ineffective, according to representatives of the industry.

At the beginning of 2019, there were approximately 250 electric and hybrid vehicles circulating in the county. Most of them are imported from Miami.

Chapter 11: Mobility

In April, 2019, the Ministry of Public Works and Communications (MOPC) was analyzing regulatory changes to the Metrobús project in Asunción which is aimed at permitting the use of electric buses.

According to latest studies, the current passenger demand is some 12,000/hour.

Chapter 12: Key trends to watch