Paraguay Data Centers: Hydropower, AI and Law 60/90

Paraguay attracts interest from founders and investors in energy-intensive computing because its electricity generation is virtually all hydroelectric, and because Law 60/1990 offers tax exemptions on capital goods for approved investment projects. Whether a data center or AI project makes sense there still depends on site-specific due diligence: power contracts, connection capacity, connectivity and how the structure fits your home-country tax situation.

Why energy is the first question for AI and HPC projects

Training and running AI models, high-performance computing (HPC) and other compute-heavy workloads consume large amounts of electricity, both for the servers themselves and for cooling. For anyone planning infrastructure, the key variables are the price of power, its reliability, its carbon profile and whether the grid can deliver the required capacity to a specific site.

This is why countries with abundant hydroelectric generation tend to appear in conversations about computing infrastructure. Paraguay is one of them. Being part of the conversation is not the same as being the right choice for your project, however, and the sections below separate what can be stated with confidence from what you need to verify yourself.

The hydropower picture: Itaipú, Yacyretá and ANDE

Paraguay shares two large binational hydroelectric dams: Itaipú with Brazil and Yacyretá with Argentina. Electricity generation in Paraguay is virtually all hydroelectric, which gives the country a low-carbon grid profile. That matters to companies with sustainability commitments or customers who ask about the energy source behind their compute.

Distribution is handled by the state utility ANDE (Administración Nacional de Electricidad). For any serious project, ANDE is your counterparty for questions such as:

• Which tariff category applies to your expected load and voltage level.
• Whether there is available connection and transmission capacity at your chosen site, and what infrastructure you would need to build or finance.
• Contract duration, renewal terms and how tariffs may be adjusted over time.
• Reliability history and redundancy options for the specific substation or line serving your site.

Get these answers in writing before committing capital. Generic per-kWh comparisons that circulate online rarely reflect the conditions of a specific connection.

Law 60/1990: what the investment incentive regime actually does

Law No. 60/1990 is Paraguay's long-standing incentive regime for capital investment. In broad terms, it grants tax exemptions on capital goods for investment projects that are submitted and approved under the regime. For a computing project, the capital goods could include servers, networking gear, cooling systems and electrical equipment, but what is covered in your case depends on the approved project.

Some practical points follow from this:

• Approval comes first. Benefits are tied to an approved project, so the application should be prepared and filed before equipment purchases are made.
• Scope is project-specific. Each approval defines which assets, amounts and conditions apply. Do not assume blanket exemptions.
• Obligations follow benefits. Incentive regimes generally come with commitments and compliance follow-up. Your advisors should map these before you sign.

Paraguay also has a separate maquila regime under Law No. 1064/1997, which is relevant mainly to export-oriented production and services. Whether either regime fits a data center or AI business is a structuring question for a Paraguayan lawyer and accountant. For more on the energy-and-incentives angle, see our overview of Paraguay's investment-grade rating and its effect on investment.

The tax and legal framework at a glance

The table below summarizes verified reference points that English-speaking founders usually ask about first.

The currency is the guaraní (PYG), in use since 1943, under a floating exchange-rate regime with free capital movement. Our article on the guaraní and BCP monetary policy covers how that framework works.

Setting up the company: EAS, RUC and a legal address

Most founders building software, hosting or AI services start with an EAS. It can have a single shareholder and is incorporated through a simplified digital process, which suits a remote founder. Once incorporated, the company registers with the DNIT to obtain its RUC (tax ID) and then files through Marangatu. We explain the registration process in our guide to getting a RUC in Paraguay.

Both the company and its founder need a documented address in Paraguay. One option is a real legal and tax address in Asunción backed by a 12-month lease agreement on an apartment in the Eje Corporativo, plus a signed address certificate. We assign the unit, and the arrangement includes no physical use or keys. Utility bills (ANDE, Essap) stay in the owner's or management company's name, which is customary for rentals in Paraguay and does not usually prevent obtaining a RUC. Details and plans are on our pricing page.

Connectivity: verify, don't assume

Paraguay is landlocked, so international connectivity depends on terrestrial fiber routes through neighboring countries to reach subsea cable systems. For latency-sensitive workloads, ask carriers about:

• Physical routes and how diverse they are (how many independent paths leave the country).
• Measured latency to the regions where your users or upstream clouds sit.
• Service-level agreements, available capacity and pricing for dedicated links.

Batch workloads such as model training are usually far less sensitive to latency than real-time inference or user-facing applications. That distinction can determine whether a Paraguayan site makes sense.

Considerations for US, Canadian, UK and Australian investors

• United States: US citizens are taxed on citizenship, not residence. Owning a foreign company can bring additional reporting (for example under FBAR and FATCA), and moving abroad does not end US tax obligations. Coordinate with a US tax advisor before incorporating.
• Canada: Leaving Canada for tax purposes involves residential ties and possible departure tax considerations. Get Canadian advice before restructuring.
• United Kingdom: UK residence is determined under the statutory residence test. Check how a foreign company and your personal residence interact.
• Australia: Australian tax residency tests apply independently of where your company is incorporated.

If you are also considering personal residency in Paraguay, read our guide to residency under Law 6984/2022.

A practical sequence

1. Define your load profile, redundancy needs and latency tolerance.
2. Shortlist sites and request written information from ANDE on tariffs and connection capacity.
3. Obtain connectivity quotes and latency measurements from carriers.
4. Have Paraguayan counsel assess Law 60/1990 (and, if relevant, the maquila regime) and prepare the application before buying equipment.
5. Incorporate the EAS, secure a legal address and register with the DNIT for the RUC.
6. Align the structure with your home-country tax obligations.

If you want help with incorporation or accounting, our partner professionals work on a custom-quote basis through our services page.

Common mistakes

• Building a business case on per-kWh figures that have no source and were never confirmed by ANDE.
• Importing hardware before the incentive project is approved.
• Assuming a Paraguayan company changes your personal tax residency or citizenship-based obligations.
• Ignoring connection lead times and transmission upgrades at the chosen site.
• Treating "clean energy" as a full due diligence instead of one input among several.

This content is for information only and does not constitute legal or tax advice. Consult a licensed professional in Paraguay and a qualified advisor in your home country before making decisions.