Brazilian companies are looking more closely at Paraguay as a lower-cost base for production, with manufacturers citing simpler taxes, cheaper energy and a labor regime they consider more flexible than Brazil’s. The movement has gained political weight as Brazil’s Congress debates ending the 6x1 work schedule, a common system in which employees work six days and rest one.
Gazeta do Povo reported that Luciano Hang, owner of the Brazilian retailer Havan, plans to visit Paraguay at the invitation of President Santiago Peña. Hang told Folha de S.Paulo, according to Gazeta, that he cannot be “the last businessman to turn off the lights,” arguing that suppliers and other entrepreneurs have already crossed the border.
Why Paraguay Appeals
Paraguay’s basic pitch is simplicity. The country is often described by business advocates as a “10-10-10” system: a 10% cap on corporate income tax, personal income tax and value-added tax. Gazeta contrasted that with Brazil’s heavier and more complex tax system, which companies often say requires extensive legal and accounting support.
Another draw is Paraguay’s maquila regime, which allows companies to import machinery, raw materials and inputs tax-free if production is destined for export. The regime charges a single 1% tax on the value of exported goods, according to the reports. Gazeta said Paraguayan industry ministry data show that 65% of production under the system goes to Brazil.
The contrast matters for sectors with tight margins, including textiles, plastics and metalworking. A Paraguayan commercial attaché quoted by Gazeta said the combination of proximity to Brazil, lower operating costs, cheaper energy, lower taxes and lighter labor rules can reduce final production costs by as much as 40%.
Lupo as a Case Study
Brazilian textile company Lupo has become one of the clearest examples. La Nación reported that Lupo opened its Paraguay operation in Ciudad del Este on June 15, 2025, with 130 workers, and had already exported 600,000 pairs of socks to Brazil in two shipments by December.
Rogério Bartkevicius, director of Lupo Paraguay, told La Nación that the company’s investment was budgeted at R$30 million, or USD 6 million. He said the maquila incentive reduced Lupo’s costs by an average of 28%, and cited Paraguay’s lower tax burden, simpler social charges and energy costs that he said were 60% lower than in Brazil.
The company expects to reach 350 employees and, at full operation, produce 20 million pairs of socks a year. La Nación reported that the plant is Lupo’s first international expansion unit, while Gazeta said full capacity was expected in 2026.
The Labor Debate
The timing has made Paraguay part of a broader argument over Brazil’s cost of doing business. A proposal approved in Brazil’s Chamber of Deputies would end the 6x1 schedule and reduce the weekly working limit to 40 hours; it still requires Senate approval, according to Gazeta.
Hang has argued that the change could raise costs by 15% to 20% for retailers and hurt small and medium-sized businesses. Supporters of shorter workweeks generally frame the reform as a labor-rights issue, but the supplied sources focus mainly on business concerns and do not detail the case made by unions or pro-reform lawmakers.
Migration figures suggest the movement is not limited to companies. Gazeta said more than 17,000 Brazilians obtained residency in Paraguay in 2025. Click Petróleo e Gás, citing Paraguay’s National Directorate of Migrations, reported a higher figure: 20,852 Brazilian residencies by the end of November, with Ciudad del Este serving as a major processing hub.
Paraguay’s image has also shifted in the debate. A report carried by Portal da Fronteira said Hang presented the country in a video as an example of economic efficiency and investment attraction inside Mercosur, the South American trade bloc. Whether that becomes a campaign theme in Brazil’s 2026 election, the business logic is already visible: for some firms, Paraguay is no longer just a shopping destination across the bridge. It is a production base.